It’s easy for a business – especially startups – to idealize expectations. This, in essence, is simply having faith in the enterprise: everything will work out as hoped, and the revenue will come in.
Of course, it isn’t that simple, and faith alone isn’t going to grow a business. Idealized hopes will only set you up for disappointment. Instead, what is needed is realistic expectations. There is nothing wrong with dreaming big. But to be big, you need to start small, and that means keeping your goals realistically achievable. However, as with so many things, there is an exception to the rule, and there is one way it can pay off to be idealistic: the development of an ICP profile.
An ICP – Ideal Customer Profile – is the descriptive terminology for a customer who will find your product the most beneficial and simultaneously give your business the most value back. The identifying and building of this imaginary reciprocal profile is crucial to optimizing marketing campaigns and promotional strategies. Almost three-quarters of all new businesses collapse within their first year. That’s a grim statistic. You have a far better chance of avoiding this large percentage by implementing the use of an Ideal Customer Profile. Here we take a quick look at some key points for how an ICP can better your business:
- What exactly is an ICP?
- Is an ICP really worth it?
- Know the competition
- Customer retention
So, What Exactly Is an ICP?
A well-developed ICP can be an invaluable bedrock to a successful marketing strategy. An ICP is your fictitious client role model. Every service or benefit that your particular product has on offer fits them perfectly. It’s as if your business was created around them and them only, tailored to fit in every possible way. Don’t let the ‘fiction’ confuse you. The ICP itself may be fictitious, but it’s built from real-life data inputs after careful research of the market you intend to enter.
For B2C (business-to-consumer) companies, an ICP will factor in such elements as age, pastimes, location, and consumer habits. Employment and income averages are also important metrics to be factored in. Analyzing such data will enable you to hone your most relevant target as you construct your ICP.
For B2B (business-to-business) enterprise, the ICP needs to be switched from an individual to another business entity. Your ICP will let you know the size type of a company you should try and appeal to, as well as their location, and other pertinent details such as tech stack and funding status. This will enable you to approach the company with an understanding of their organization and have you well-equipped with any proposals you intend to offer them.
The ICP itself may be fictitious, but it’s built from real-life data inputs after careful market research.
If you intend to enter the business world and have not yet created your company, the first step you should take is to select its structure. Does protecting your assets come first? Then an LLC is the right model for running a business, which will manage this task.
Next, once you have decided on how to manage your company, you should analyze your target audience. For B2C (business-to-consumer) companies, an ICP will factor in such elements as age, pastimes, location, and consumer habits. Employment and income averages are also important metrics to be factored in. Analyzing such data will enable you to hone your most relevant target as you construct your ICP
Is an ICP Really Worth It?
Simply put: yes. An ICP done right can be a huge time and resource saver by making your target marketing more efficient. With a defined model of what your ICP looks like, there is no longer any point in wasting time and money on chasing leads who don’t at all fit the product or are highly unlikely to. Now, with your ICP identified, you can hone your target customer engagements, funneling your resources towards an improved chance of success.
An ICP rids you of the need to cast a wide net or skim the surface of a large area in the hope of catching something or anything. Ideal Customer Profiles narrow the path and allow you to focus on genuine potential.
Know the Competition
The whole purpose of an ICP build is precision. It’s to get to the specifics of who is best suited to your product or service. So you need to know your peers: which businesses will you be in direct competition with? What are their success rates? How are they zeroing in on their target audience? Is there a gap in their operation that isn’t being covered that you can exploit for your potential advantage? Researching the competition is as crucial as researching the consumer.
Once you have secured valuable customers, you will want to keep them. Customer retention is crucial for two reasons: brand loyalty and cost-saving. Loyal customers not only keep coming back but that loyalty is the root of word-of-mouth, which is still one of the best ways in which a business can become trusted and sought after. Loyal customers who trust a brand are also more inclined to invest more money into it. Retaining the invested customers you have will save you money in the long run. It costs approximately five times more to lure new customers in than to keep the ones you already have.
Customer retention is a critical factor regarding a business’s success and growth.
After all the research you have carried out on both your target audience and your business competition, you will need to determine either the price of your product or the pricing strategies if you are supplying a service. An ICP will have assisted you with knowing the average revenue of your customer. Therefore, you may want to offer a monthly subscription service in addition to an annual one. Likewise, for any service offering tier packages, a well-researched ICP will help you define a competitive pricing strategy.
Your pricing strategy can also help define your business type. Will you be offering expensive premium services or goods, or will you be supplying merchandise or business services for smaller budgets? Freebies, discounts, promotions, and structured payment options all play a part in how you will be perceived. Your costs are integral to the identity of your brand and market placement.
Once your ICP has been built and implemented, don’t sit back and abandon it. You can make adjustments to it and repeatedly go back. Even if it was successful right out of the box, it can still be honed further once all the data has been analyzed. Putting the results under the microscope will allow you to see areas in which improvements can be made. You may see where a simple, small change in just one direction with your campaign could have increased the success even further.
ICPs are essential to growing a business. Not only can they help set your targets in the right direction, but they can also highlight where a hypothetical perfect match isn’t. Once built, they can serve your company or particular product for its lifetime and provide valuable market information for your business overall as it moves forward with the next product or service.
About The Author – Jean Wilson Murray
Jean Wilson Murray is a legal expert who is a co-founder of Best LLC Services and has been helping aspiring entrepreneurs start their own companies for seven years already. During this time, he has investigated all the pitfalls in choosing the financial and management structure of a business, the establishment of companies, as well as the legal structures of enterprises and has become a highly skilled professional in this field.