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One of the most common issues with professional service firm growth is a lack of clarity on the specific clients a firm seeks to serve.
An Ideal Client Profile can be incredibly helpful in getting alignment and clarity, and will have immediate and long term impacts on marketing and business development. This is why it's the first pillar of Madison's Point of View framework.
Data supports this. According to a study by Marketo, companies that align their sales and marketing efforts using clear ICPs achieve up to 67% higher conversion rates.
In this article we’ll explain what an Ideal Client Profile is, why it matters, how to create one, and what to do with it once you have it.
Why Clarity on Your Ideal Client Profile Matters
Knowing your ICP impacts everything you do:
- It impacts the services you provide. Different clients need different services and products - an enterprise firm has very different needs than a mom and pop.
- It impacts how you price those services. Different clients have different budgets, different budget cycles, different ways they prefer to work with vendors, different expectations in terms of payment terms, etc.
- It impacts the messaging you use. Different clients have different terminology they use to describe their businesses, different ways of measuring success, etc.
- It impacts the marketing channels you use. Different clients means different social media platforms, different podcasts they consume, different conferences they attend, different associations they belong to.
- It impacts the business development process. Different clients mean vastly different sales cycles, different stakeholders (number, level of sophistication, degree and timing of involvement in the process, etc.)
- It impacts the team you hire. Different clients means different skills and competencies needed to serve them, which impacts the type of people you recruit and hire (as well as how much you pay them, how you build your leverage model, etc.)
- It impacts the financial performance of your business. All of these variables mean different expectations in terms of revenue per engagement, revenue per professional, hourly rate, utilization rate, profitability, and more.
What a Good Ideal Client Profile Looks Like
How do you know if you have a good ICP? Some factors to keep in mind:
- Does this ICP have a high likelihood of needing what you offer?
- Do they have the budget to make it work? If they don't have sufficient budget (or the authority to unlock it inside their organization), you're unlikely to build a viable business.
- Are the characteristics in your ICP easy to identify and measure? If it is cost prohibitive to capture the data you need to filter targets through your ICP, you won't realistically use it.
- If you apply the filters in your ICP, is your market size sufficient to create a viable business? A market of 1 is not ideal.
- Is your ICP able to be reached through homogenous marketing channels? This is key to creating marketing campaigns that are scalable. At a high enough price point, you can afford to invest in truly bespoke business development efforts. But generally you want to have some efficiencies.
Creating Your Ideal Client Profile
Your ideal Client Profile needs to simultaneously speak to the company and the decision maker(s) within that company. It also needs to cover both demographics and psychographics.
This dual-layered approach ensures a comprehensive understanding, allowing your firm to target both the organization as a whole and the key individuals within throughout the buying process.
Start with firmographics.
The first and easiest place to start is with firmographic fit. This is for several reasons. First, serving specific industries is a natural first place to look and the easiest way to create clear differentiation. It is also the easiest and most obvious filtering mechanism - you can quickly build lists by industry, revenue size, employee count, etc.
We generally look at industry first. We like using NAISC codes since many list providers use this classification approach. We also supplement with the equivalent or closest approximate industry on LinkedIn, since this is the primary social platform we tend to use.
We then layer on revenue and/or headcount. Companies of similar sizes tend to have similar issues, similar budgets, similar buying cycles, etc. And again this is easy data to acquire.
If relevant, we'll add geography. This depends on the nature of the business and how you seek to serve clients. If you prefer face to face (or they do), constraining geographically makes sense. Likewise, if your go to market strategy relies primarily on networking or speaking, having a geographic center makes it much. Lastly, many people use organic search to find vendors, and Google provides functionality making it easy to find service firms in specific geographies. That said, many more firms are not focusing geographically, as the internet makes it possible to have customers from all over the country.
Layer on operational factors.
Firmographics will get you a material of the way toward a useful ICP on the company side. But it's helpful to consider operational considerations as well. Some of the most useful:
- Purchasing behavior. This is mostly reelevant if you seek to serve larger organizations. Many will have procurement departments whose sole purpose is to filter out vendors based on things like size of firm, existence of large liability insurance policies, etc. In these cases you don't get a chance to talk about your Point of View, and Trusted Advisor status becomes largely irrleleant without a powerful internal stakeholder to champion your firm. Another consideration is their general willingness to hire consultants - some firms are averse to hiring outside firms as a rule of thumb.
- Sales cycle. Some firms can make purchasing decisions quickly while others are much longer.While one isn't necessarily better than any other, it's critical to understand this, as it informs revenue forecasting, what sales enablement materials are needed when, and many other business development decisions.
- Decision makers. Sometimes there's a single decision maker, but often (especially in larger organizations) there are several stakedholers that each require buy in to make a decision. Having a sense for who these players might be will be essential.
Consider situational factors.
Situational factors are harder to come by via research, but can be incredibly powerful in finding buying windows. Some examples:
- Strategic senior hires. Often these people are coming in with a mandate to enact change, but don't necessarily have a department or team under their employ yet. They might be more inclined to lean on external consultants to help.
- Key strategic initiatives. Are they undertaking a major strategy project? This often requires expertise from the outside to execute. This data can sometimes be found in larger organization's annual reports or shareholder calls.
- Recent acquisitions or investments. Did the firm recently get an infusion of capital from private equity? This almost certainly means their growth aspirations have changed, which will require a bunch of new initiatives and operational shifts to execute. It also often means they have the capital to invest in your services.
- Mission or values alignment. One benefit of having a clearly defined Point of View is you tell the world what you value and why you exist. This can be a powerful differentiator. People love working with people who think like they do.
Understand the decision makers.
To have your ICP truly inform your marketing and business development initiatives, you need to not just understand the company but the decision makers as well. We tend to use personas for this.
A persona is a fictional representation of a target decision maker. It includes demographics and psychographics and helps teams understand their buyer at a deeper level.
One caveat: with complex sales with multiple decision makers, there is such a thing as too many personas. While you might have 15 decision makers involved in a sales process, it's borderline impossible to craft messaging or create sales enablement tools addressing every one of them.
We tend to cap this at 3 personas tops, focusing on the client champion, the financial stakeholder (if different), and if there is a key decision maker that could hamper delivery addressing them as well.
Things we like to include in the creation of a persona include:
- Job title. We want to make sure we understand the nuances of titles as it relates to the industry we are targeting. For example, some industries might standardize around Chief Growth Officer, while others might call it a Chief Revenue Officer or even Chief Sales Officer.
- Goals and key objectives. A great way to find this information is through job postings for the company.
- Pain points. What are the key frustrations that people in this role tend to have? What are the problems that come up over and over again? This serves two purposes. First it helps inform service offerings. Second, it makes sure you don't to anything in sales or delivery to trigger one of these pain points.
- Who they report to. Having a sense of the corporate hierarchy can be helpful in determining how much relative power and authority they have in the organization, who they might need to impress (and what that person might care about, etc.)
- Influencers. Even if we don't make personas for each of the people involved in the decision process, we want to have an understanding of who those people are.
- Communication preferences. How do they prefer to communicate? Channels, frequency, etc.
- Professional affiliations and influencers. Knowing who they look up to, what they read, and where they hang out can be helpful when determining go to market approaches.
How to Use Your ICP Effectively
Too often firms create documents like an ICP and never look at it again. While there is some utility in getting it down on paper and getting the team aligned, the point is to make use of the ICP. Here’s how:
- Messaging: Use the language your ICP uses in all of your marketing and business development materials, including your manifesto or statement of your Point of View.
- Content Creation: Use your ICP to inform the content pillars you create content for, addressing the specific challenges and pain points of your ICP. If your ICP's company struggles with regulatory compliance, produce content that provides insights into navigating these challenges.
- Sales Playbooks: Give your partners or managing directors playbooks with strategies and talking points catered to your ICP. Trusted advisors understand the nuances of their client’s business.
- Channel strategy: If you prospective clients are there, you should be as well.
- Service offerings: Your ICP likely has additional pain points or problems that your firm can solve for. You can use your ICP to help drive future state service offerings and find potential cross-sell opportunities.
- New Client Onboarding: Knowing how your client operates can inform your new client onboarding process, specifically as it relates to decision points, meeting cadence, communication channels, and other expectations.
- Partnerships: Your ICP probably works with other consultants or vendors as well. These can potentially become productive and lucrative sources of new business.
- Feedback & Refinement: Your ICP isn't static. Continuously gather feedback from your partners and team to refine and tweak it. The market evolves, and so should your ICP.
Having a clear Ideal Client Profile isn't just a best practice. It's a critical step in defining your firm’s Point of View and Authority Marketing efforts. It ensures your efforts are laser-focused on what matters most to your potential clients.