How CS can help define the right Ideal Customer Profile for each market segment?

Most SaaS companies have the Ideal Customer Profile (ICP) defined by their Marketing teams. They may ask the Sales and CS teams which customers have had the most success, are expanding and willing to be a good reference. They will dig further into each of these customers to interview them and create the success stories along with identifying the key roles within the customer team that appear to be the champions and economic buyer.

While this is a good approach to defining which customer profiles the Sales and Marketing teams should focus their sales and marketing tactics on for higher conversion rates, this can lead to GTM strategies not being as effective for delivering revenue growth.

Keep in mind that you can have a well defined ICP that delivers high conversion rates to sales, but the backend of the analytics might prove that this ICP is also a high churn type of customer.

This is where the CS team can be of tremendous benefit in working with the GTM leaders to provide more insightful analytics on the customer base to help further define the ICPs that can drive higher retention and growth rates.

There are many articles and tools that can help you develop the right ICPs for each target market. Here is a good one from Gartner:

How can CS help provide additional insights and contribute to future modifications to ICP definitions?

As part of the Customer analysis that CS conducts on a monthly basis, there are a few key metrics that CS has visibility to and in many cases incorporates into their health score calculations and statistical analysis that are good elements to review in defining an ICP:

1. Industry, size, revenue, etc.

2. Sales Cycle Times

3. Average Contract Value

4. Customer Tenure

5. Expansion Growth %

6. Starting Users

7. Users Year 1, 2, & 3 Growth (separately)

8. Usage Stats

9. ROI % realization

10. % High Value Outcomes Delivered

The Sales and Marketing team will use the standard metrics to identify ICPs with high conversion rates for sales, however, these additional metrics are required to help understand if the ICP is growing and investing in a long term relationship.

CS or the Business Operations team generally has a business analyst to analyze these metrics and conduct various statistical analysis to find patterns in the customer behaviors that can more accurately predict the growth in ACV and the probability of retention. If you don’t have a Business Operations person who has statistical analytical skills and experience, I would suggest finding a subcontract consultant to come in for a period to build this type of analytical platform and a CS Dashboard to continue to review and monitor trends over time.

By organizing the customer base into cohorts based on quarter and year of their contract start, the analyst team can look for trends as to which elements have the highest correlations to higher ACVs and tenure.

From the statistical analysis reporting, the CS team can provide more colorful insights and background around the customers that rise to the top of the list as having the right metric levels for each of the relevant elements. The CS team will have the details on the Customer Roadmap plan that was put in place for these customers to share how they were able to help these specific customers achieve their values and ROIs. The CS team will be able to share the specific tactics and any customizations or varying best practices that were delivered to achieve the results. If they begin to observe trends for specific services delivered or product usage, the CS team will be able to define these behaviors and deliverables as part of the Customer Roadmap plans for other customers in the same target market.

The key is to utilize the CS team to confirm the current ICP definition are the types of customers they are able to create consistent value and ROI results. If they observe a slightly different profile that is finding a higher level of success at a faster pace, then they can share the differences as well. This will provide the CS team with the information to transform all of their customers towards a set of goals they have confirmed are achieving a business impact to the customers. It also enables the CS team to modify their Customer Roadmap plans as needed to increase ACV and ensure retention.

By including the CS team in a quarterly round table discussion to review the customer base analytical trends with the Product, Sales and Marketing teams, as a company you will be able to consider any modifications to the definitions of the ICP based on data and results and not anecdotes.

Anecdotal stories of the successful customers are fine to start with in the early years, however, it is important to begin to collect as much customer information early on as possible. The sooner the CS organization matures its customer analytics, the faster the SaaS company can grow and stay in the leader quadrant in their space.

Having this level of customer analytics and quarterly discussions on the trends emerging, will help your SaaS company understand your ICPs and take advantage of changes in the market quickly to achieve consistent results from quarter to quarter and year to year.

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