How do you identify ideal customer profiles and operationalize them as a part of your GTM strategy?

If you understand the customer problems or market gaps you’re solving for, then you should be able to hone in on your target buyer and the types of customers you want to attract. It’s a lot easier to narrow down to an ICP if your product is already established and you have a base of customers to pull data from. From there you can start looking for patterns to see if there are commonalities across a specific segment of customers: by region, industry, company size, or type of buyer (department, job level). If your product isn’t established yet, then you can leverage market research solutions (like a global panel via SurveyMonkey), to gather buyer feedback. Either way, once you’ve honed in on this, you would operationalize it by infusing it throughout your GTM strategy. Meaning, your messaging and positioning, pricing strategy, sales enablement, marketing content, etc. would be tailored to this audience.

Love this question! I also have to call out we love joking about this acronym and affectionately call it "Insane Clown Posse" like the hip hop duo versus the marketing term. BUT for the industry term... I use existing data to inform the define who their ICP IS and who their ICP IS NOT. 

Good ICPs typically are orgs who:

• Use your software (active, increasing ARR)
• Love your software (positive NPS, 8-10)
• Short sales cycle (depends on industry but typically less than 30 days)
• Scales with growth (no customizations needed)
• NRR (4+ integrations activated)

If you can 10x your ICP, what does that do your pipeline? More importantly, if you know who your ICP is not (and can get to no quickly for detractors) how much healthier is your pipeline?

For me, I use our CRM data to identify where I have the strongest penetration in our addressable market, isolate key attributes, and build ICPs from there. Remember, it's just as important to identify who you will NOT go after, as it is to identify who you WILL.

Looking at your current customer base and the characteristics of top customers (I do this based on ARR) is a great place to start! You can focus on relevant characteristics such as:

1. Industry/vertical
2. Employee headcount — companywide and within key departments
3. Annual revenue
4. Tech stack
5. Geography
6. Size of their customer base
7. Technologyical/digital maturity 
8. Public vs. private company (if they are looking to IPO, we have found great success in getting our foot in the door with NEW logos!)

If you want to dig into personas WITHIN those ICPs, that can be helpful as well, but it depends on what your GTM strategy is, of course this can change. For example, if you have "Verticals" as a GTM strategy, your ICP may look very different than an "ABM" approach.

To operationalize them, I have worked with our Demand Gen and Events+Field Marketing team to specifcally define HOW to target those ICPs. For example, if we want to drive MQLs via a LinkedIn paid campaign, we may want to look for people with x titles in y industry at a company that has over z number of employees. I also like to share this with SDRs as they as prospecting.

It is also important to define what companies/people are NOT a good fit. I have built a list of "disqualifiers" for sales and marketing so that we dont spend marketing budget on poor leads and sales doesnt waste time pitching to bad fit companies.

Ideally, before a launch, you have worked hand-in-hand with the product team to understand who the product is for, and what product it solves. But if you are coming into a situation where this is not defined, here are some ways to approach it: 

• Ask the "dumb" questions to your product and eng team (other people WILL want to know them too): Who is this for? What pain points does this solve? Why did we build this?
• Develop a hypothesis on who the customer is and test it, stat. This could be in the alpha or beta process, or in separate user testing. 

As far as operationalizing the ideal customer as part of your GTM strategy, once you are fairly confident about the ideal customer, I'd recommend:

• Reviewing your GTM checklist and making sure the channels align to where these customers are spending time. 
• Using results of the above-mentioned testing to make sure the messages align to what the customers care about. 
• Watch the results like a hawk. Are the customers you thought would buy actually buying? Why or why not?

In order to identify ideal customer profiles as part of your GTM strategy you should do the following in the early stages of the GTM planning:

1. Conduct market research. You can do this through surveys, interviews, focus groups, and other methods.

2. Dig into your existing customer base. This will help you understand who your current customers are and how they use your product.

3. Create customer personas. They help you understand the needs and wants of your ideal customer so you know how to speak to them. 

4. Validate and reiterate on your personas. Once you've developed your customer personas, you need to validate them by testing them with real customers. 

These steps will help you identify ideal customer profiles.

ICP is a funny topic. First, it's not about persona. I think there is confusion around ICP and persona. ICP is about the propensity to buy, which involves firmographic (what kind of company are they from), technographic (what kind of tech stack is favorable for you and your team), compelling event (usually people buy your product because of some pain or unmet needs), persona (title, background, etc..), and last the channels and community that they live in. 

Usually, you will need both qualitative and quantitative research, so a combination of interviewing current and prospective customers. You will need rev ops, or you can do it yourself, and analyze last year's wins and losses to get a sense of the common patterns. 

Once you established all the above, it's about alignment first, make sure GTM and product leadership agree and align with your findings. I would advise a regular check-in where you deliver updates on your efforts, so it's not a total surprise for everyone. Plus you will need their buy-in to operationalize your efforts. 

The operationalization of your findings will require cross-functional work. Marketing has to see how they can use your research for targeting, your sales can see if they can leverage your work for prospecting or playbooks, and your CSM team will see if they can incorporate your findings into their motions. The point is operationalizing your ICP Work isn't you alone. It's a team sport, and PMM should be a big advisor in the effort. 

Many methods exist to identify ideal customer profiles (ICP) for your product. The simple approach is to look inwards to understand product-market fit among your existing users.

1) Power Users: Identify your power users and understand why they love you. Typically, these cohorts help inform ideal targets for your ICP and how you go-to-market to acquire more customers that fit your ICP profiles. Analyze what quantitative and qualitative commonalities these cohorts share to inform your ICP profiles (e.g., industry, geographic footprint, annual revenue, use cases, pain points, key features used, etc.).

Key things to learn from your power users include:

• What pain points were they looking to solve with your product?
• Where did they hear about your product?
• What factors and/or criteria drove their decision to choose your product?
• How effective has your product been at solving their pain points?
• What aspects of your product do they enjoy the most?
• What outcomes or impact have they achieved with your product?

* Note: The "power user" criteria can vary by company - for example, you can define them by most loyal to your product, most profitable for your company, most active in your product, etc. Work with your Sales and Product teams to define the key metric(s) you want to optimize for your GTM efforts.

2) Emerging Promoters: Identify sizeable and attractive audiences for expansion.

In addition to power users, you want to identify other highly satisfied audiences that may not represent a sizeable share of your existing user base. Typically, these are incremental industry verticals or use cases your product is well equipped to serve based on functionality.

* Tip: Leverage product usage data and surveys to identify these opportunities. NPS and CSAT surveys are great tools to identify promoters of your product. Pack these surveys with firmographic, demographic, product usage, and attitudinal questions to fully understand these audiences.

3) Churners: Research your churners to understand why customers leave you. Typically, this will help you flag key audiences that may prove difficult to acquire and may be challenging to be candidates for your ICP (e.g., industry vertical, company size, use case). Understanding their key challenges with your product will inform when they can become candidates to be included in your ICP (e.g., once a specific feature or capability becomes available).

Summary

Understanding these three audiences (power users, emerging promoters, and churners) will help shape your ICP profiles and inform how you go to market. Net-net, you want to attract, acquire, and retain customer profiles that have proven fit for your product vs. depleting your resources on audiences that churn due to a weak product-market fit.

Too often I see folks trying to assemble the broadest ICP possible. The logic is that by inflating my TAM/SAM/SOM to the biggest number possible, I am increasing my odds of success.

Don't get me wrong, I LOVE big markets. I want markets big enough, that even if we f*ck it up, we can still be successful. It is infinitely easier to build a healthy business that is 1-5% of an enormous market than it is to build the same size business by capturing 80% of a much smaller market.

The value of an ICP is that it gives you information to inform core PMM work such as positioning, messaging, distribution, and even product strategy. When you make Ideal Customer Profiles too broad, spanning many industries, role types, or firmographic segments, it leads to weak messaging, poor targeting, a higher CAC, lower conversion, and higher churn.

Your challenge as a Product Marketer is to assemble ICPs big enough that they are worth pursuing, but specific enough that they help you pull in a perspective of the buyer, their challenges, and the things they care about into your product and GTM strategy. Finally, prove them in the real world, and iterate them based on learning.

It all starts with data! I typically segment my buyer profiles into company size (which is ultimately driven by how much money they spend with us), but there are many ways to determine profile categories.

Below are the steps I take to identify and create the ideal customer profiles: 

1. Internal Data: Gather data from sales to better understand your customer segments. For each segment (for ex, company size), you need to know the average deal size, length of the deal cycle, and how big the segment is. This information tells you the economic/financial details of the buyer profile. How much they typically spend in a given period and how long it takes them to make a decision. 

2. Buyer team details: Find out who from the customer company is on the buyer team. Typically, you’ll have a decision maker, recommender/influencer, and user. The buyer team will likely change by profile. Even in some industries, you may have a role that only exists in that industry (for example, in heavily regulated industries). 

3. Customer interviews: Conduct customer interviews or run a focus group with each of your hypothesized customer profiles (try to limit to 3 profiles total). The goal of the interviews/focus group is to uncover customer pains, budgets, and priorities which may differ by buyer profile.

Ultimately, these customer profiles will inform the research phase of your GTM strategy. You could include these profiles as “chapters” where the narrative of your portfolio adjusts slightly to better resonate with each profile. These profiles can also be very useful to your stakeholders/consumers of the GTM strategy across sales and marketing. These will be especially useful for creation and execution of the marketing strategy (which is different from a GTM strategy). 

This is all about the Ideal Customer Profile (ICP) comes in.

I'm going to start with the three main use cases for your ICP aka operationalizing:

1. For your GTM team the its meant to focus outbound marketing and sales efforts and to help you qualify in/out inbound leads.

2. Your ICP is the “Who” of companies that get the most value from your offering. Put it to work by defining outbound lists, ad targeting, creating lead scoring, building discovery and qualification questions, case studies to target, etc.

3. Don't use it to straight up DQ an inbound lead that doesn't check off all the boxes, rather use the ICP to qualify in/out that lead more aggressively.

Okay, what should the ICP look like? I have a few sections I try to include:

Must Haves: Target accounts must have 100% of these are the characteristics. There should be no edge cases this is the foundation of any segmentation you create.

Nice to Haves: These are the bonus characteristics you should look for in GREAT fit prospects. Rarely will you find companies that check off everything on this list. So don't waste time looking for those - instead use it to narrow your segmentation and test different combinations of characteristics. Messaging should strongly align with these as well.

Proceed with Caution: These are typically characteristics that don’t disqualify a prospect. They could be a positive for your deal... but they could also be a deal killer. These should be used in discovery to know when to really double down on a topic to qualify in/out prospects.

Stay Away: These are the characteristics you should segment out of any paid or outbound target list. For inbound these should be used for discovery to see if a prospect has low potential to be a good fit - note don’t auto-disqualify here!

The answer to this question varies dramatically depending on the size and stage of your company. Here is a model we build for B2B SaaS organizations:

We believe that ideal customer profiles (ICPs) are a means to an end, which is go-to-market alignment. By creating a shared understanding and agreement on customer target definitions, we are able to drive improved execution. Over time, this allows us to improve our product market fit (PMF). With improved PMF companies are able to create much more efficient growth as measured by LTV/CAC, Magic Number, and CAC Payback periods.

Product Market Fit Score (Weighting)

• CRM=50%

• Billing System=10%

• Product Analytics=20%

• Sentiment Analysis=15%

• NPS=5%

Data Enrichment Fields-Each Company Record Will Be Enriched With Following Fields

average_employee_tenure

employee_churn_rate

employee_churn_rate.12_month

employee_count

employee_count_by_country

employee_count_by_month

employee_growth_rate

Employee_growth_rate.12_month

gross_additions_by_month

gross_departures_by_month

industry

Inferred_revenue

Funding_stages

total_funding_raised

last_funding_date

Latest_funding_stage

number_funding_rounds

industry

inferred_revenue

last_funding_date

latest_funding_stage

location.geo

location.metro

naics

naics.industry_group

Naics.sub_sector

sic.industry_group

sic.industry_sector

Methodologies

Correlation Analysis

K-Means Cluster Analysis

Analyzing Results

Once segment product market fit scores are calculated, accounts are enriched, segmentation analysis can be completed to look for pattern matching.  Once segmentation attributions are agreed upon, TAM estimates need to be calculated to show the respective size of each potential market segment.  Once segments are agreed upon, accounts within the CRM will be tagged with ICP identifiers.

Operationalizing Results

Segmentation identifier lables need to be added at the account level within the CRM.  This will be done for all existing customers and prospects.  ICP prospect accounts and potential buyer committee contacts need to be added to CRM accounts and opportunities. 

First, the GOAL of an ICP is to help you precisely message, find, and qualify the right prospects. So ICPs need to be more than simple firmographics + titles. Double-click into discovering tech stacks, team sizes, past companies, tenure in role, etc. AND, the ICP should include the fact that those customers expand and renew! (that they also have low CAC and high Lifetime Value).

Then, to OPERATIONALIZE the ICP, you use the above detail to:

• Help know where/how to reach/access them

• Know how to precisely message each of them

• Qualify/disqualify them

• Prioritize sales targeting

• Use "ICP Fit" to assess customer/prospect base for forecasting.

BTW, check out www.alignicp.com (as an example tool) that derives ICPs using the above criteria.