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Ideal Customer Profiles, Buyer Personas, and Market Segments Simplified

I’ve known about and used the term “Ideal Customer Profile” for some time. But it was a recent conversation with a close friend that had me question my understanding of the term. You see, I was a buyer persona/market segment kind of guy.

 

I hate it when I have doubts about my understanding of things. And when I have doubts, I dig in. Hard. I set out on a quest to disprove the notions of my friend and prove I was right. I wasn’t.

 

The first thing I needed to nail down was a clear definition of an ideal customer profile — in plain language that mere mortals can understand. It turns out that if you ask four people for a definition of an ICP you get six answers. Ultimately, I found a definition of an ICP I can live with.

 

Ideal Customer Profile

An ideal customer profile (ICP) is a template of the types of companies that are likely to benefit the most from our product and become the most valuable customers for our business. That’s a definition I can relate with. An ICP loves our product because it solves a problem they care deeply about. They like it so much that they renew and stay customers for a long time. They enjoy working with us and we enjoy working with them. In the most simplest of terms they are easy to sell to and they spend money with us for a longer period of time.


An ICP is a blueprint for our dream customer.


So, how does an ICP differ from a Buyer Persona? An ICP is a company-level thing. It tells me the kinds of companies to target based on a set of attributes which, coincidentally, are similar attributes used in market segment definitions. In that sense, I can see how I, and others, can confuse the two. 


Here’s how I separated these concepts in my head. First, the ICP gives us a definition of the best possible customers we could ever want. I broke the attributes for an ICP into four categories:


  • Firmographics: Identifiable company attributes like industry, company size, location, and budget (can they afford our product?). This is super useful for targeting.

  • Challenges and Goals: The pain points, struggles, and business objectives. This is super helpful for positioning and messaging.

  • Tech Stack: Identify the technology considerations for our product. If it requires a big change in technology, it’s going to make for a harder sell. If you’re not in tech you have an equivalent. It could be the type of facility your customer has or the machinery they use. What is the ideal environment for our product? 

  • Behaviors: This one is tricky because I associate behaviors with buyer personas, not companies. That said, companies have patterns in how they make buying decisions. Some patterns are better suited to our ICP and some are not. It’s a first step in understanding who is involved in a buying decision. 



What About Buyer Personas?

If an ICP is about targeting and positioning, then what about buyer personas? Are they still relevant? In short, yes.


A Buyer Persona helps us build empathy around buyers and increases our ability to effectively communicate in our marketing messaging and our selling motions. 


A buyer persona is a template of the types of individuals who are likely to participate in a buying decision for our product.  They help us differentiate our message to connect with the pains and challenges buyers experience, and allow our selling machine to engage in conversations that are relevant to buyers. 


Which Leaves Us with Market Segments

An ICP is a template for our best customers, and a buyer persona is a template for the people who participate in a buying decision. So what is a market segment?


A market segment is a group of people with common problems, goals, buying behaviors, and communication channels. The confusing part is the clear overlap between an ICP and a market segment definition. They share firmographic, demographic, and behavioral attributes, and both concepts help us focus our GTM efforts. 


The difference is in the level of detail. An ICP is a highly detailed profile of a single, ideal customer. A market segment is a broader grouping within a larger market. If a market segment is a city with neighborhoods, some of the neighborhoods might be an ICP within the city. 


By example, we may discover a firmographic pattern in the banking industry of a certain size of bank, but our ICPs are found in the credit union and community bank neighborhoods.


The Sequence I Follow

Step 1: Define the Ideal Customer Profile for our product — a detailed profile of a single, dream customer.

Step 2: Identify the people most likely to participate in a buying decision for our product, guided by the ICP.

Step 3: Define buyer personas that represent the people from Step 2.

Step 4: Identify the neighborhoods in each market segment where we are most likely to find our ICP.

Final Thoughts

An ideal customer profile is the who — the dream customer we want to attract. A market segment is the where we find them — the broader market where our ICP resides.

 

A new Ideal Customer Profile Canvas was added to the Worksheets and Templates library. Feel free to download it and share it with others. 

 

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