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IdealCustomerProfileFramework

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Ideal Customer Profile Framework


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I cant over-emphasize howimportant


it is to have a clear definitionofyour
Ideal Customer.

Get the latest on Customer


Success

Your Ideal Customer Profile ICP

Take your Growth Hacking to


the next level

dictates (or should dictate) everything


from the features and functionality of
the SaaS

product you build, to the

Learn about Pricing, Free Trials,


and More!

wordsyou use and the emotion you


invoke or tap into in your marketing.

ENTERYOURPRIMARYEMAIL

I think people forget that you actually


get to choose your customers. You get
to choose who you want to do business with. So creating an Ideal Customer
Profile isnt limiting its empowering!

ADDMETOTHELIST>>>

In fact, if you dont choose who you want to do business with, your customers will
choose you and they may very well be less-than-Ideal.

As Seen In

There are obviously lots of ways to come up with your Ideal Customer Profile, lots
of methods and templates and canvases but over time Ive developed this very
framework that works well for me. And I continue to evolve it. When I do, I will
update this post.
If youre looking for informationon why you should create an Ideal Customer
Profile, here are a couple of articlesthat will help set the stage.
Whos your ideal customer?
SaaS Sales Funnel: Stop Optimizing for the Wrong Customers
SaaS Churn Rate Reduction Starts with Attracting the Right Customers
Where is Your Ideal Customer on the Awareness Ladder?

Not About Persona Development Yet


This Framework is not about persona development, its about the types of
Customers (generally, in a B2B setting a company).
Were not trying to come up withHRHenry or Marketing Maxine or define the
characteristics of theeconomic buyer, technical buyer, or coach. At least not yet.
http://sixteenventures.com/idealcustomerprofile

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IdealCustomerProfileFramework

You simply cant know what the personas look like let alone what Marketing
Channels, Pitch, Pricing, or Messaging to use until you are clear on your Ideal

5 Growth Hacks to Supercharge your


Invite or Referral System

Customer Profile.

The Myth of Unavoidable Churn

Think about it. theCMO at one type of customer will have different motivations

Customer Success: Achieving their Desired


Outcome

/ interest / desires / budgets / influencers / etc. than a CMO with


matchingdemographic and psychographic characteristicsbutat a different type
of company.
So get clear on your Ideal Customer then move on to persona development,
empathy mapping, etc. Thats all very important, but its not the first thing you
have to do; this is.

The Secret to Successful Customer


Onboarding
7 Sanity Checks for Sending Cold Email
Youre Doing Annual Pre-Pay Renewals
Wrong

But first, some bad news; there is no.


SEARCHTHISWEBSITE

SEARCH

Universal Definition of an Ideal Customer


Sorry.There is no Universal definition of an Ideal Customer; not for your
company not for any company.
Your Ideal Customer Profileis a living, breathing definition that youll come
back to and modify often.
In fact, your Ideal Customeris really specific to:
TheSituation Youre solving for
Your company / product / offer / campaign (or all of these)
Before you can develop your Ideal Customer Profile you must define the
situation

Archives
February 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014

Situational Awareness is Critical


A lot of folks are afraid of narrowing things down to one Ideal Customer even if
just for a single situation and thats due to FOMO (the Fear of Missing Out).

May 2014
March 2014
February 2014
January 2014

They think that if they focus on only one type of customer, theyll miss out on all
the rest.

December 2013
November 2013

But the reality is, when you dont focus, and instead try to be everything to
everyone, you end up making a connection with no one. When that happens, I
guarantee youre missing out.
Youre missing out on every one of those people who are, in fact, your ideal

October 2013
September 2013
August 2013

customer.

July 2013

So, when determining the situation youre solving for, consider:

June 2013
May 2013

Is this for
your product

April 2013

a specific offer

March 2013

your business as a whole


a new market
The Time Frame
1, 3, 6 months?
http://sixteenventures.com/idealcustomerprofile

February 2013
January 2013
December 2012

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IdealCustomerProfileFramework

Be Specific

November 2012

Know where you are today in the context of this situation


How do you know?

October 2012

What metric(s) are you measuring?

September 2012

Know your Situational Objective


How will you know if youre successful then?
How will you know if youre on the right track along the way?
Land Grab, User #, Revenue Goal, Launch period of time
Entire Company
Per Product (line)
For an Offer

August 2012
July 2012
May 2012
April 2012
March 2012

For a Use Case

February 2012

To enter a new market (segment)

January 2012

Next 30-days campaign, 90-Day Launch, etc.


To move to the next step you need to know:

December 2011

What situation youre solving for

November 2011

Where youre at today

October 2011

Where your objective is


What the timeframe for meeting that objective

September 2011

You may want to have an idea about what youre willing to spend for a

August 2011

customer Customer Acquisition Cost (CAC) but thats a topic for a

February 2011

different day
December 2010

Ideal Customer Profile Framework (Version: Q1 2015)

November 2010

If you can find a customer that is Ready, Willing, and Able, thats a great start.

October 2010

But if the customer is more likely to be successful with your product, you can
acquire and support that customer profitably, there is expansion potential there
AND theyll be an advocate for you that definitely is an Ideal Customer.
Okay, so heres the breakdown of the Framework, starting with the baseline
characteristics.

1. Ready

September 2010
June 2010
May 2010
April 2010
March 2010
February 2010

They have a problem they need solved / opportunity to take advantage of

January 2010

They know they have the problem / opportunity

September 2009

The problem / opportunity is acute theres a sense of urgency you can


take advantage of

August 2009
May 2009

2. Willing
Theyre ready to solve that problem by taking action
Even better if theyre exploring options to solve that problem
Theres a strong Catalyst driving change: M&A, Investments, Bankruptcy,
hiring/firing, RFP, etc.

April 2009
October 2007
March 2007
July 2006

3. Able
They have the means to solve the problem (i.e. they have the money)
They have the authority to solve the problem
http://sixteenventures.com/idealcustomerprofile

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The way you sell matches theirBuying Cycle / Procurement Process


Ready, Willing, and Able are the baseline characteristics of an Ideal Customer. But
you can do even better by applying the value-add inputs of Successful, Profitable,
Expansion Potential, and Advocacy.

4. Success Potential
They are likely to achieve success with our product
In the early stages as well as long-term
Consider all aspects of onboarding, customization, data
seeding/cleansing, etc.
What systems do they already need to have in place that you need to
integrate with/replace/etc.
Acquiring customers that are not likely to have success is pretty much the
antithesis ofCustomer Success
This will only lead to problems down the road for all parties involved
Leveraging a real Customer Success Management solution, like Gainsight,
can help you quantify success and use Customer Health data to drive this
input into the Ideal Customer.

5. Acquisition Efficiency
This means that its cost-effective to get in front of them
Could mean CAC < (LTV/x) where x = the lifetime of the customer in
months
If theyre strategic, the actual monetary cost to acquire may not
matter, but the ease of acquisition might
It may mean that you can reach them by leveraging existing
distribution channel knowledge, but it might not.
Dont let existing channel knowledge bias you if the other ICP
inputs tell you what you know best AdWords for example isnt
the right way to reach them
Include Onboarding & Support costs when considering cost effectiveness of
the acquisition
Its one thing to pay little to get the initial deal, but if they amount of
work required to deliver first value is too high, for a situation where
CAC matters, they may not actually be your Ideal Customer.
Figure in Estimated Lifetime (eLT) as well; this is ametric you should have
developed either without data or with data sourced from your Customer
Success Management system.
eLT will help you understand CAC efficiency and whether or not a
targeted cohort ofcustomers will be profitable, which would help
determine if a cohort youre evaluating fits your ICP or not.
You must know the Buying Cycle / Process of your customers to truly
understand if they fit into your situational ICP.
If youve decided that you want to add 25customers in the next 90days, your ICP for that situation will need to have a shorter buying
cycle, a buying cycle that doesnt have a procurement window or has
one thats within the next 90-days (schools in the United States, for
example, often procure products
Customer Success begins by acquiring the right customers see #4 above
but in itself drives use/consumption/revenue and extends the customer
lifetime, therefore driving up LTV and improving CAC efficiency overall.
http://sixteenventures.com/idealcustomerprofile

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IdealCustomerProfileFramework

Generally speaking this is how you improve the per-unit profitability of


a customer

6. Expansion Potential
This is Intra-Company Virality
Includes Additional seats (or licenses, users, etc.), as well as Upsell and
Cross-Sell
Cross-sell can be selling the same thing to different parts of the
company
Cross-sell can also be selling other (different) products to existing
customers
Cross-sell often re-introduces the sales organization into the mix as it
generally requires a new sales cycle
Upsell can often be handled by Customer Success Managers / Account
Managers
Expansion drivescustomer Lifetime Value (LTV)
Known expansion potential can lead to immediate ASV (Average
Subscription Value) boost throughstrategic discounting
This is a major consideration when deciding to sell to Enterprise Dept vs.
SME, Agency vs. Enterprise, etc.
Customer Success is absolutely requiredhere no success, no expansion

7. Advocacy Potential
This is Inter-Company Virality
Improves Customer Acquisition Cost Efficency
Spend $1 CAC to bring in 2 customers (1 refers another) and your CAC
drops to $0.50
Many ways to achieve Advocacy
Defined Customer Advocacy Programs
Use-based Virality
Referral / Invitation Systems
Word of Mouth
Network Effect = Built-in Social Proof
Social Proof logos that get more logos
Be careful with the customers you attract initially
Advocacy is generally horizontal; people will refer/advocate for you to
their peers
Customers will generally not bring in higher-value customers than
themselves; it may happen, but dont bank on it
So if you bring in low-value / less-than-ideal customers initially, if
there is advocacy potential, it will probably not result in higher-value
customers.
Customer Success is required here, too no success, no Advocacy

http://sixteenventures.com/idealcustomerprofile

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IdealCustomerProfileFramework

GetmyBESTCustomerEngagementhack(90%responserate!)
Follow
Lincoln Murphy
@lincolnmurphy

...includestemplate:

Chasing logos is fine, but chase


logos that get you more
GIVEMETHATTEMPLATE!
Enteryouremailaddress
logos instead of logos that just feed your ego or your
bank account shortterm
3:36 PM 19 Jun 2014
5 RETWEETS 3 FAVORITES

Some Quick Ideal Customer Sanity Checks


Here are some quick Sanity Checks to do before you run with the profile youve
created.

Ideal Customer POV


Would they know theyre your ideal customer if they looked at your site?
Would they feel comfortable in your app?
Would they feel like you

r service was designed for them?

Whos your less-than-Ideal Customer?


Make sure youre not going where they are!
Then make sure youre not actively attracting them
Would they think theyre your ideal customer if they looked at your
marketing assets? Thats bad. Fix it.

Ideal Customer Profile Defined; Now What?


Develop buyer personas with confidence!
See how your Ideal Customer prole compares to
the rest of your customer base
prospect funnel
customers that churned
current churn threats
prospects that didnt convert during the trial
cohorts by acquisition channel
Test or Complete your Hypothesis
Use the this Customer Development Hack
Use traditional Customer Development methods
Use my Competition-Customer Stalking method
Use the Ideal Customer Profile to get look-alike leads
Buy leads that match their characteristics
Give the prole to LeadGeni.us, Carburetor, or Growbots to nd leads or
people to talk to
Run the prole through Mintigo and nd others like them
Figure out how to get in front of them
I hope this helps you take your SaaS business to the next level!

About Lincoln Murphy


http://sixteenventures.com/idealcustomerprofile

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IdealCustomerProfileFramework
If you need help growing your SaaS, request at least a 15-minute call with
me via Clarity. My role of Customer Success Evangelist at Gainsight has
me super-busy, so I'm not taking on any new long-term consulting clients
right now. Clarity is it for now. Be sure to join my mailing list - I send cool
stuff to the list all the time - or circle me on Google+, connect LinkedIn or

follow me on Twitter.

You should read these articles, too


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5 Growth Hacks to Supercharge your Invite or Referral System

Comments
DAVIDPETHICKsays:
December 6, 2014 at 10:06 pm

Hi Lincoln as always, brilliant stuff. I thought we had our ideal customer nailed down,
but in the search for better conversion we started reviewing it and landed here. V2.0
targeting, here we come!
Thanks again.
David Pethick
Co-Founder, http://leading.io
REPLY

Trackbacks
CUSTOMERSUCCESSDEFINED:AGUIDEFORSAASCOMPANIESsays:
July 24, 2014 at 4:26 pm

[] Proof is amazingly powerful when your Ideal Customer prospects see


others like them using and succeeding with your product, theres a level of
validation []
REPLY

PRICEOBJECTIONSAREVALUEOBJECTIONSSAASGROWTHSTRATEGIESsays:
October 4, 2014 at 7:19 pm

[] and foremost YOU MUST KNOW WHO YOUR IDEAL CUSTOMER []


REPLY

YOURPRICEISN'TTOOHIGH...LINCOLNMURPHY@LINCOLNMURPHYsays:
October 4, 2014 at 7:28 pm

[] and foremost YOU MUST KNOW WHO YOUR IDEAL CUSTOMER []


REPLY

HENRIKJORGENSEN.NET|7REASONSWHYYOUCANTSELLTOYOURAUDIENCEsays:
October 13, 2014 at 9:10 am

http://sixteenventures.com/idealcustomerprofile

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IdealCustomerProfileFramework

[] more precise you can describe your audience the better. A greatway to
do this is by defining your ideal customer. Knowing your ideal customer will
make it a lot easier to engage withyour audienceand know []
REPLY

THESECRETTOSUCCESSFULCUSTOMERONBOARDINGsays:
October 22, 2014 at 11:09 am

[] various use cases as you often find in very horizontal products you
may want to pick an ideal customer to focus on initially), analyze that for
similarities and patterns, reduce it down to a handful of absolute []
REPLY

UNLOCKINGTHEPOWEROFRECIPROCITY:GIFTVS.REWARDsays:
October 25, 2014 at 5:57 pm

[] If you have 1000 t-shirts ready to give out to those who take action and
install your code, carve out 100 of those and send them to people at
companies that match yourideal customer profile. []
REPLY

5HACKSTOHELPEXPLAINERVIDEOSCONVERTCUSTOMERSsays:
October 25, 2014 at 6:08 pm

[] Know your Audience Whos your Ideal Customer? WIIFT (Whats In It


For Them) is the key emotional connection is the goal []
REPLY

DESIREDOUTCOMEDRIVESCUSTOMERSUCCESSsays:
November 30, 2014 at 12:44 pm

[] And, of course, if you dont know what type of experience your customers
want/need/require/expect you dont know your customers well enough.
[]
REPLY

THEMYTHOFUNAVOIDABLECHURNsays:
December 10, 2014 at 3:33 pm

[] you stop doing random things and get deliberate in your marketing and
customer acquisition focusing on your Ideal Customers and dropping the
whole vendor as victim mentality, youll not only []
REPLY

3PROFITABLEPRICINGPAGEDISCOUNTTACTICSsays:
December 21, 2014 at 5:35 pm

[] fact, and this is why you MUST know your Ideal Customers there are
some companies out there that, especially older and/or larger companies
that have []
REPLY

SAASMARKETINGPLAN:5WAYSTOGETYOURAPPTOSELLITSELFsays:
January 5, 2015 at 6:01 pm

[] Ideal Customer Profile Framework []


REPLY

http://sixteenventures.com/idealcustomerprofile

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22WAYSTOREDUCESAASCHURNWITHGROWTHHACKINGsays:
February 17, 2015 at 12:26 am

[] Develop your Ideal Customer Profile []


REPLY

HOWLOCALIZATIONHASEARNEDURBANESSENTIALSMORETHAN60%REPEATCUSTOMERS
says:
February 23, 2015 at 1:48 am

[] One of the biggest challenges businesses face in their early days is


knowing their audience. In their efforts to get their business out in the
market, they miss the fact that not everyone in their market is going to buy
from them. Hence, it becomes very important to focus on the persona of your
target audience and build a robust Ideal Customer Profile (ICP). []
REPLY

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