Gregory Shepard walks through BOSS Startup Science's framework for building an Ideal Customer Profile: start with a customer-focused SWOT analysis, then layer in demographics or firmographics, identify whether customers want to make or save money, and specify the core problems you solve. A clear ICP aligns your whole organization and focuses growth on customers who actually fit.
Chapters
While it may seem counterintuitive, not all growth for a company is necessarily good growth. An exceedingly broad customer base can be very costly to service. And if your goal is to sell your company, customer growth not aligned with your potential acquirer's customer base is wasted effort. Defining your ideal customer profile is the first step in ensuring that your company's growth is focused on the right customers At the right time. A clear and accurate ICP keeps your entire company focused on growing and retaining the right customers. Whether you intend to market your product to other businesses, a B2B company, or direct to consumers as a B2C company, it's critical that your ICP is not overly broad, 100% resides within your SAM, and aligns with the majority customer base of companies which may acquire you in the future. The BOSS North Star pieces different sets of questions together to create your ICP. This culminates in an ICP statement, a single sentence that narrowly describes the most important characteristics of your ICP. Let's walk through these questions and create a sample ICP statement. First, we'll accomplish a SWOT analysis of your ideal customer. SWOT stands for strengths, weaknesses, opportunities, and threats. For each category, you'll list a maximum of 5 characteristics using single words or very short phrases. These characteristics should relate to your company's product and services. Strengths are characteristics internal or unique to your ideal customer. For example, if developing an ICP for a B2B company, then strengths for an ideal customer business may be experienced, cash-rich, or dedicated customers. For a B2C company, strengths for an ideal consumer customer may be Tech-savvy, confident, or motivated to buy. Weaknesses are also internal to your ideal customer. For a B2B company, ideal customer company weaknesses may be aging equipment or slow processes. A B2C ideal consumer customer's weaknesses may be easily distracted and depends on customer support. Strengths and weaknesses are internal to your ideal customer. Opportunities and threats are external. For a B2B ideal customer, opportunities could be an expanding market and new technologies. For a B2C ideal customer, opportunities could be new mobile device and prospective job opportunity. Finally, threats for a B2B ideal customer could be something like new competitors, And new regulations. And for a B2C ideal customer, potential job loss and risky investments. With our SWOT analysis complete, let's start to define our ideal customer more narrowly. If you're selling directly to consumers as a B2C, then you'll list ideal customer demographic characteristics like age, income, gender, and location. If you're selling your product to companies as a B2B, then you'll identify facts about your ideal customer company like, what's their industry? You can use research similar to what you used to identify your TAM. How many employees do they have? What's their annual revenue? Are they a global company or limited to one country or region? The picture of our ideal customer is becoming clearer. Now let's more closely tie our ideal customer to our products and services. By purchasing your product, does your ideal customer seek to make money or save money? Sometimes it's tough to quickly answer this question, especially when selling direct to consumers, but motivations nearly always tie to those 2 options. If your product or service saves your customers time, then carry that outcome one step further. What will they do with that extra time as it relates to making or saving money? Next, how specifically will your ideal customer use your product to achieve their goal? Maybe your product will streamline a process which saves them money. Maybe your software helps end users commute to work faster, saving them time, increasing their productivity, and therefore making them money. Finally, let's list the primary problems your ideal customer faces that your product addresses, like a company having outdated warehouse management software, or an end user always losing their public transportation tickets. Okay, we've gathered a lot of information about your ideal customer. Let's consolidate our answers into a single, brief ideal customer profile statement that summarizes who they are, and what they're looking for in the context of your product. Here's a sample ICP statement: My ideal customer is a mid-sized, U.S.-based janitorial company that needs to improve their cleaning supply acquisition process to reduce frustration and save money. Remember, your ideal customer profile will focus your entire company's efforts towards beneficial customer growth. Be methodical and confident in developing your ICP statement. ICP is about being obsessed with the right customer and benefiting them.
