Identifying your Ideal Customers
Companies (and individual sales people) can and often do waste an awful amount of time, money and energy pursuing organisations that are never likely to buy - or, if they were to, are never likely to buy from your organisation.
Many marketers have jumped on the bandwagon of buyer personas over the past few years, but these are typically targeted at individual roles, and have served to conceal a potentially more important truth: companies have personas, too…
These personas are more important, and more complex, than a simple demographic segmentation based around company size, sector, location or function. Whilst demographics can provide an important foundation, in complex B2B sales environments there are many other factors that serve to define what an ideal customer looks like.
So what do we mean when we talk about an “Ideal Customer”? It’s an organisation that is likely to:
- Suffer from critical issues that you are really good at solving
- Be in the market now or in the future for your category of solution
- Be prepared to buy from an organisation like yours
- Turn into a good and profitable customer
- Evolve into a long-term strategic relationship
It should be obvious - as you reflect on your most attractive existing customers - that the common characteristics that unify these archetypal ideal customers go far beyond basic demographics.
For the tech-based businesses that I typically work with, there are usually three important additional ways of characterising these ideal customers: technographic, firmographic and situational. Let’s consider each of these in turn:
For any tech-based business, the technologies that have already been adopted by the prospective customer are incredibly powerful indicators. For example, in the early days of SaaS solutions, it was very useful to know whether the organisation had already implemented any other SaaS based applications.
For many early-stage or scale-up vendors, it’s also important to know whether the prospect has a track record of acquiring similarly innovative best-of-breed solutions in other areas of the business, or whether they typically default to buying from an established vendor even if their solution turns out to be less advanced. This can help avoid investing large amounts of effort in an opportunity where you get selected as the “best” solution but then get rejected when it comes it final approval.
Of course, you may be selling technology that works best or is most easily integrated with certain other systems, but knowing what existing technology is in use can also be a useful proxy for the stage of development of the prospective customer - different platforms tend to be associated with start-up, scale-up and mature IT environments.
Perhaps the most obvious aspect of organisational personas is what I’ll refer to as “firmographic” characteristics. For example, do your most attractive customers tend to be:
- Start-up, scale-up or mature organisations?
- Market leaders, challenger brands, or one of many players?
- Early adopters, innovators, in the mainstream or laggards?
- Seen as reference points for other companies in their sector?
- Centralised or decentralised decision-makers?
- Focused on new business or their on existing customers?
- Primarily B2B or B2C focused?
You’ll almost certainly - if you analyse your existing customer base hard enough - find other common characteristics. There will probably be just a handful that turn out to be particularly important indicators.
Demographic, technographic and firmographic characteristics can help to establish who your most attractive long-term prospects are - but it’s their situational characteristics that indicate whether they could be ready to implement your solution today.
Situational characteristics are associated with recent changes in your potential customer’s internal or external environment. These changes act as trigger events - they help the organisation to recognise that their current environment may not enable them to master their current and future challenges, and spark the recognition that it could be time to take action.
Common trigger events include:
- A change in senior management
- A new round of investment
- A merger or acquisition
- A new corporate initiative
- Launching a new product or entering a new market
- Accelerated headcount growth or staff turnover
- The introduction of new regulation or legislation
- Changes in the competitive environment
Once again, if you carefully analyse your recent wins and losses and survey your most attractive existing customers, you’ll inevitably uncover some patterns that can help identify when a prospective customer might be ripe for change.
INVEST IN YOUR OWN RESEARCH!
Whilst these indicators are incredibly valuable, they typically can’t be established simply by buying-in basic demographically organised databases or mailing lists. You can identify some of these factors through some of the better business intelligence services. But at the end of the day, there is no substitute for knowing what you are looking for and doing your own research.
PUTTING THE PROFILES TO USE
Creating your ideal customer profiles needs to be a collaborative effort between sales and marketing. It’s critically important that everyone agrees what sort of organisations your company should be targeting. Once you have that common understanding:
- Marketing can more effectively target their thought leadership, database building and pipeline building efforts
- Sales can more effectively qualify the right opportunities early on in the sales cycle, and implement the appropriate sales strategies
- Everyone can spend their time, money and resources more effectively
- You will see a direct positive impact on true pipeline value, sales cycle length, average deal value and sales win rates
What’s not to like? By the way, I think you'll also appreciate this guide to value selling.
ABOUT THE AUTHOR
Bob Apollo is a Fellow of the Association of Professional Sales and the Founder of UK-based Inflexion-Point Strategy Partners, home of the Value Selling System®. Following a successful career spanning start-ups, scale-ups and mature corporates, Bob now works with a growing client base of tech-based growth-phase businesses, equipping and enabling them to systematically create and capture mutually meaningful value in every customer interaction.