Ideal Customer Profile: Customer Business Problem

donal_daly February 12, 2018

The attributes of your Ideal Customer Profile can be separated into the three categories:

  • Firmographics: Who should you call?
  • Customer Business Problem: What problem do they have?
  • Positive Impact Potential: Will they be successful?

In my last post I described what to do to get the Firmographics piece right. This post addresses Customer Business Problem.

(Much of this post is from my latest book: Digital Sales Transformation in a Customer First World)

Subject to meeting the firmographic test it follows naturally that, if a company has a business problem you can address, the company will likely fit your Ideal Customer Profile. Assuming you are clear on the top three or five business problems that you can solve, then you need to identify companies that are likely to have those problems.

At a high level, all companies are focused on growth. That may be measured by revenue growth, profit growth or market share. If everything was working well in all businesses then there would be no business problems to solve and the world of B2B commerce would grind to a halt. The reality though is that there are usually factors that create pressure on a company, causing them to act or react in order to meet their growth goals. These pressures are either external macro-factors like market trends, demographic shifts, economic volatility, evolution in technology, new competitive threats, or internal factors such as shareholder pressure, poor revenue performance, sub-optimal production facilities or employee attrition. When these pressures exist, there are business problems. The key therefore is to target companies that are likely to have the business problems that you can solve.

The majority of companies that I speak with all stress that one of the biggest challenges for their sales organizations is to shift from selling products to selling customer focused solutions. This is a direct consequence of increasing demands for customers to take an approach that is more about them than ever before. Our expectations as business professionals have been heavily influenced by our experience as consumers. While not every consumer is a businessperson, every businessperson is a consumer. The experience we have in consumer-land shapes our expectations in business-land. Our customers expect us to partner with them to solve business problems with a focus first on their needs.

The good news is that the number of desired outcomes your customer has is endless. Life in large corporations today is an endless struggle to improve, increase, transform or reduce. Your task is to determine which one, or two, of these outcomes you can facilitate, and what value you can deliver.

Here are some possibilities:

  • Increased revenues
  • Faster time to market
  • Increased sales per customer
  • Improved operational efficiency
  • Reduced cost of goods sold
  • Increased differentiation
  • Improved customer retention
  • Decreased employee turnover
  • Improved asset utilization
  • Decreased operational expenses
  • Decreased costs
  • Reduced cost of sales
  • Faster response time
  • Faster collections
  • Increased market share
  • Minimized risk
  • Additional revenue streams
  • Increased inventory turns
  • Improved time-to-profitability
  • Reduced direct labor costs
  • Reduced cycle time
  • Increased market share
  • Faster sales cycles
  • Increased billable hours

The question you want to answer is who wants what you’ve got. Your first task is to clearly understand, why someone should care about your offering. You need to ask yourself what benefit your product delivers. Does it make an existing process more effective, thereby increasing revenue for the customer? Will it deliver cost-efficiencies? It must do one or the other. Based on your current market knowledge, will it be an urgent purchase for the customer in the short term? The last thing you want is to spend your time promoting something that the customer finds interesting, but doesn’t feel the urgency to act on now.

It is useful to think about the value you deliver by distinguishing what I call measurable value from ambient value. Measurable value is tangible: reduce response time by 30 percent, increase market penetration by 10 percent, or reduce labor costs by half are all examples of measurable value, easily identified and easy to explain. Ambient value is hard to explain and harder to sell: improved image and stronger morale are examples of ambient value.

Sellers often fall into the trap of describing their measurable value as ambient value. Better customer satisfaction and increased productivity, unless quantified, are perceived by customers as ambient value and are hard to sell. But better customer satisfaction means a reduction in customer churn that typically results in a quantifiable lift in revenue, while increased productivity brings lower production costs or greater output for the same effort. Do the work, and run the numbers to quantify the benefit, and turn perceived ambient value into real measurable value.

Mega trends and business pressures

As has been said before, the only constant is change, and with change comes opportunity. Change is the single greatest indicator of pressures to which industry needs to respond, and the catalyst for business opportunity. In 2017, and for the foreseeable future, Digital Transformation and Customer First are two of the most significant developments that all companies need to acknowledge and design strategies to counter or leverage. I call these the Mega Trends.

Amazon, Airbnb, Uber, Netflix, and Apple all entered markets with innovative customer centric approaches that embodied Digital Transformation, and the retail, hospitality, taxi, video rental, and music industries were forever changed.

As a consequence of these Mega Trends, companies will face pressures or disruption in several different areas:

  • Financial
  • Customers
  • Competition

Financial: The Customer First demand may put pressure on the cost-to-serve, which will inevitably translate to a pressure on profit. Digital Transformation may dis-intermediate the value chain for commodity products where customers can transact online eliminating the middleman and his opportunity to charge for services, consequently reducing his revenue. An example of this is the travel industry. A further example might apply to a provider of HR software. If a company has a profit problem, then a HR solution might increase employee engagement and drive better productivity. Productivity of course will also impact a company’s ability to drive top-line revenue, so the provider of a HR solution has two distinct connection points – revenue and profit – with the customer.

IDEAL CUSTOMER PROFILE QUESTIONS: What trends are happening in the company’s industry that might be placing pressure on their financial goals? How does your solution help a company increase revenues or reduce costs? What specific problems are you solving? Where would you find information that tells you that the company has those specific problems? (See Finding the Information below.)

Customers: Customers are a different source of pressure. If a customer expects everything to happen at Internet speed (Digital Transformation) and in a personalized manner (Customer First) tremendous pressure will be placed on a company’s supply chain and all customer engagement functions. This will potentially make demands on product and service features, functionality, and cost. For example, if a bank does not provide online and mobile banking capability, their customers will defect. As the bank goes through this metamorphosis, each of their Sales, Marketing and Customer Service functions needs to be re-imagined. This provides an opportunity for suppliers who can help the bank through the change.

IDEAL CUSTOMER PROFILE QUESTIONS: What customer demands are being placed on companies in your target market? How does your solution help a company meet the requirements of those demands? What specific problems are you solving? Where would you find information that tells you that the company has those specific problems?

Competition: Does Digital Transformation allow new competitors to enter the market? Are there new competitive arrivals in the market that are more customer centric? Is the company losing market share to competitors as a consequence of either of the Mega Trends?

IDEAL CUSTOMER PROFILE QUESTIONS: What competitive threats are facing the companies in your target market? How does your solution help a company help them respond to those threats? What specific problems are you solving? Where would you find information that tells you that the company has those specific problems?

Operations: There has never been a time where the opportunity for companies to re-imagine their business operations has been so extreme. The mandate for speed (Digital Transformation) and flexibility (Customer First) impacts everything your customer must do from product idea through to cash collection. Product design is increasingly collaborative. Productivity is a key measure for all Sales Operations professionals. HR systems must cater for remote employees and on-demand workers. More companies are supporting distributed payment systems for customers.

IDEAL CUSTOMER PROFILE QUESTIONS: What operations challenges do the companies in your target market have to address? How does your solution help a company help them optimize their operations? What specific problems are you solving? Where would you find information that tells you that the company has those specific problems?

And there may be other more specific trends or disruptions that are more directly or obviously applicable to your target industry that you might want to consider:

  • Increased customer engagement
  • The rise of the subscription and sharing economies
  • Industry consolidation
  • Currency volatility
  • Growth in Mergers & Acquisition
  • Artificial Intelligence
  • Changes in globalization.
Finding the Information

The question you might now be asking yourself is how to find the ICP Category 2: Customer Business Problem information. Much of the available information from sources like Hoovers (www.hoovers.com) or Dun & Bradstreet (www.dnb.com), tends to provide the data to help with ICP Category 1: Firmographics. To understand the customer’s business problems, you might have to dig a little deeper. The following approaches will help:

  • Corporate Reports: Corporate reports are a treasure trove of information for investors: they tell you whether a company is making money or losing money – and why. You‘ll find this information in the company‘s quarterly reports on Form 10-Q, annual reports (with audited financial statements) on Form 10-K, and periodic reports of significant events on Form 8-K. Outside of the US you will generally find similar sources to discover information on public companies. It‘s usually easy to find information about large companies from the companies themselves, newspapers, brokerage firms, and the SEC. For smaller companies, some of the later approaches here will be more useful.
  • Earnings Calls: An earnings call is a conference call between the management of a public company, analysts, investors and the media to discuss the financial results during a given reporting period such as a quarter or a fiscal year. In the earnings call, the company leadership will often discuss their strategic direction and where they plan to focus. The interaction with analysts can uncover gems of information as the analysts probe on issues that have proven to be a struggle to the company. A great information source is Seeking Alpha (seekingalpha.com) where you can get the complete transcripts of earnings calls, including the audio and slideshow presentations.
  • Investor Relations: Most public companies have sections on their website dedicated to Investor Relations. In addition to their financial filings, you will often also find a copy of the annual report, or presentation to shareholders, or a ‘Letter from the CEO’ that highlights their strategic imperatives and commentary on the business broken down by functional or geographic areas.
  • Analysts’ Coverage: In the technology sector companies like Gartner (gartner.com) and Forrester Research (www.forrester.com) produce reports on companies’ capabilities, and their strengths and weaknesses relative to their competition, also highlighting the areas that they (the analysts) deem to be important.
  • Press Releases: Company press releases, whether they are announcing executive leadership appointments, new customers, product release or partnership agreements usually point to the reason why the news matters – from the company’s perspective. These announcements provide further insight into what the leadership in a company thinks is important.
  • Competitor Activities: When Amazon announced the acquisition of Whole Foods, the stock price of Walmart declined substantially. When one of your target companies’ competitors makes a strategic move, it usually foretells a reaction. Knowing that the company needs to make a move helps you to understand what might be important to them.
  • People Who Bought This Also Bought This: There are thousands of companies in the Salesforce ecosystem who provide products built on the Salesforce platform. Typically, customers of Salesforce buy their CRM system and subsequently add other capabilities from the ecosystem. When Salesforce announces a new customer (on an earnings call or in a press release) it makes sense that software companies in the ecosystem should look at that company as a potential Ideal Customer. Another example: if Caterpillar, the American corporation that provides machinery and engines, is awarded a large contract by one of its customers, providers of embedded analytics solutions might see this an opportunity to help Caterpillar customers monitor and optimize their fleets more effectively.

That checks off the second of the three ICP categories:

  • Firmographics: Who should you call?
  • Customer Business Problem: What problem do they have?
  • Positive Impact Potential: Will they be successful?

In the next post I will address Positive Impact Potential, possibly the most important of the three for companies who want to build sustainable customer relationships.

(All of this comes together in a framework in my latest book: Digital Sales Transformation in a Customer First World)

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Donal Daly is Executive Chairman of Altify having founded the company in 2005. He is author of numerous books and ebooks including the latest Amazon #1 Bestseller Digital Sales Transformation in a Customer First World (Nov 3, 2017) and his previous Amazon #1 Best-sellers Account Planning in Salesforce and Tomorrow | Today: How AI Impacts How We Work, Live, and Think. Altify is Donal’s fifth global business enterprise.