Sales and Marketing teams need the path of least resistance to achieve their revenue goals in this new era of efficient growth. Focusing on companies that are the best fit for your solution, typically called your Ideal Customer Profile (ICP), is this path of least resistance.
A well-defined ICP can help you focus your Sales and Marketing resources on companies that are most likely to result in a closed won deal. Not just that, but an accurate ICP can help you create messaging that resonates with your target audience and acquire customers that are likely to be loyal and profitable in the long term.
Unfortunately, most companies handicap themselves by not having an accurate, updated, and data-driven ICP definition. In this post, we will break down how AI can help you create a more accurate ICP definition and how you can apply this to drive efficient growth.
The Importance of a Well-Defined ICP
An ICP is a detailed description of the types of customers that a business should target to achieve the best results. This profile typically includes industry, company size, geographic location, budget, pain points, goals, and purchasing behavior attributes. By targeting the right customers with personalized campaigns, B2B companies can reduce their sales cycles, increase conversion rates, and improve customer retention.
Unfortunately, most companies’ ICP is based on Firmographic data alone. It’s also typically a static document that’s not updated based on pipeline and revenue outcomes. As a result, the ICP ends up being shelfware. The lack of a well-defined and adopted ICP can result in wasted resources and lost revenue as the company may target the wrong audience or fail to reach the right prospects. This can lead to wasted resources and lost revenue. Let’s see how companies can address this issue.
Best Practices for Creating a Better ICP
Here are some best practices that a B2B business can follow to create and update an effective ICP that accurately represents its target audiences:
- Don’t Limit Yourself to a Single ICP: It’s quite common for B2B businesses to have more than one ICP, especially if they offer a diverse range of products or services. Having multiple ICPs allows a B2B business to tailor their marketing strategies to different customer segments and increase its reach. For example, a software company may have one ICP for small businesses and another for large enterprises. Each ICP may have different pain points, needs, and buying behaviors, so the company would need to create different messaging and content to appeal to each one. That being said….
- Apply the Goldilocks Principle: An ICP that is too broad may result in a marketing message that is too general and fails to resonate with anyone, while an ICP that is too narrow may limit the potential customer base and miss out on potential opportunities. Finding the right balance is key. Each ICP requires specific marketing strategies, sales processes, and customer support, which can be resource-intensive. Therefore, businesses should prioritize their ICPs based on their potential revenue, market size, and fit with their capabilities and strengths.
- Go Beyond Firmographics: While firmographics are important, they don’t tell the whole story. B2B businesses must consider additional factors such as pains, needs, initiatives, tech stacks, and events when creating their ICP. You can learn more about this approach here.
- Involve the Right Team Members: Often, the responsibility of creating an ICP falls on the marketing team. However, it is important to involve other departments, such as Sales and Customer Success, who have direct interaction with customers and can provide valuable insights into their needs and behaviors.
- Base the ICP on Data: An ICP that is based on assumptions and guesswork is likely to be inaccurate. Businesses must conduct research and gather data to truly understand their target audience and create an effective ICP. The goal here is to create a strong connection between your ICP and closed won revenue. We recommend that you start by analyzing the characteristics of existing customers, especially the ones that we’ve laid out in the third bullet above. This information can be gathered through customer interviews, surveys, or analysis of existing data.
- Revisit the ICP Regularly: Customer needs and behaviors can change over time, so it’s important to regularly review and update the ICP to ensure it remains relevant and effective.
It is in the last two contexts that Artificial Intelligence (AI) can be a true game changer for B2B businesses in creating and applying their ICP.
How AI Can Help You Create a More Intelligent ICP Definition
Artificial Intelligence (AI) can help B2B businesses create a better Ideal Customer Profile (ICP) by discovering underlying attributes, automating the data analysis process, providing insights into customer behavior, and identifying patterns in the target market. Here are some ways in which AI can assist in creating a better ICP:
- Data Collection & Integration: AI can collect data from various sources, including social media, news sources, web analytics, and customer databases, and integrate this data to create a complete customer profile that maps to the framework that we’ve laid out in bullet 3 above.
- Signal Discovery: AI can quickly and accurately analyze large amounts of data, including demographics, behavior, and purchasing patterns. AI can help B2B businesses discover signals that may not be immediately apparent and use this information to develop a more accurate and effective ICP. An example of this is AI discovering trends and topics in data sources such as job listings, earnings calls, and news. This information can also be used to identify commonalities between customers and prospects and to refine the ICP.
- Signal Analysis through Natural Language Processing: AI-powered natural language processing (NLP) can analyze large amounts of data that humans don’t have the time or the resources to analyze. This includes all text-based data including but not limited to social media, news articles, and customer feedback to identify patterns in customer behavior and preferences. This can help to improve the effectiveness of the ICP by incorporating the customer’s voice into the analysis.
- Predictive Analytics: AI can use predictive analytics to forecast which prospects are most likely to become customers, based on their behavior and past interactions with the business. This can help to identify the most promising opportunities to target.
- Machine Learning: AI can use machine learning to continuously analyze data and adjust the ICP as new patterns and trends emerge. This can help businesses stay ahead of the curve and adapt to changing customer needs and preferences.
AI can have a significant impact on developing an ideal customer profile (ICP) by providing an intelligent definition that goes beyond simple keyword matching or a list of attributes. Traditional methods, such as conceptual clusters or industry segmentation based on single-word matching, can be limiting and reduce the accuracy and breadth of identifying relevant accounts.
For instance, simply segmenting by industry using a single keyword match may be too broad. We should look at sub-industries and related services to identify good matches that might otherwise be missed. The same goes for using high-level criteria like ARR or the number of employees – we need to consider second-order attributes like ARR per employee to get a better idea of how efficiently a company is run and how much extra money they have to invest.
AI is a game-changer in this regard, as it can discover, refine and iteratively learn these attributes that define the best ICP. This allows us to go beyond simple keyword matching and identify the most promising prospects with greater accuracy. By leveraging AI’s capabilities, companies can develop a more comprehensive and accurate ICP that improves their marketing and sales strategies and drives business growth.
Are you interested in learning more about ICP development and how AI could help? Relevvo’s AI-powered platform tracks your buyer’s online activity for signs of pains, needs, and initiatives so you can target ICP companies that are the best fit for you right now. We’d love to chat, drop us a line here!