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6 steps to create your Target Customer Profile and why you need it

mysterious man

 

Some CEOs or Sales directors find it hard to identify their Target Customer Profile. Most have a simple customer profile based on company size, industry and revenue, some just take leads after leads hoping that the next one will be a short close and a good deal.

If you want to be successful in Sales and in Business you need to know your Target Customer Profile on a more detailed level, so you know who to target and also why. You can’t afford your company to waste time on irrelevant leads.

Your Target Customer Profile will drive your sales but not only, it will also help your Marketing and your overall company. It will also make your sales more efficient.

If you follow these 6 steps you will be able to create your Target Customer Profile, easily and quickly.

 

What is a target customer profile and why you need it to become more efficient

Let’s start with the definition of a Target Customer Profile (target customer/segmentation).

A target customer profile is the portrayal of a company whose needs are met by your product/service and will give value to your enterprise.

 

Here you can see that companies which can be described as part of your Target Customer Profile are defined by two aspects.

First: their needs are met by your product or service, that means that your solution will answer a real need for them, not a superficial one. Your solution will create true, tangible, measurable value for them.

Second: these target customers should also create value for your company. By putting money in your bank account of course, but maybe also by referring your product/service, or entering a partnership with you. The idea here is that these dream clients will drive you in a good direction and will make your life easier in the future.

This a relatively simple definition but we think that this two aspects are the most important, if you want a deeper analysis of what is an ideal customer you can read this article from Woodpecker.

Why is it important for you to know your Target Customer Profile ?

Because if you compare your company with a ship, your Target Customer Profile is your heading. Without it you don’t know in which direction you should take your ship and you end up nowhere.

Indeed ,just as all the parts of your vessel from the mainsail to the rubber need to be aligned, if you want your company to move forward and truly perform you need a common goal, a shared direction for all your company’s departments.

ship

 

A Target Customer Profile as a perfect guide.

Your Sales department becomes wiser and learns how to separate a valuable opportunity from an uninteresting one. Your sales reps becomes more efficient reaching out to the right people with the right pitch. The lead generation routine of your sales rep is more accurate.

Your Marketing department is less distracted by the “noise” made by unqualified leads and start focusing on your dream clients. You can watch this video of Claire Hunsaker that how to use your Target Customer Profiles to identify the best leads from your website.

They become more accurate when writing custom made mailing campaigns.

Your Website and your Blog are more optimized and generate more qualified traffic.

 

These are just a few examples of the benefits : for your company, your sales department, your marketing department to have an identified TCP.

If you want to identify your TCP you can follow this 6 step method.

 

6 steps to identify your target customer profile (TCP)

Step 1 : Group your revenue

In the first step the goal is to separate your customers in 3 revenue streams : Large / Medium / Small.

This separation is used by many B2B companies because it clarifies your revenue streams. It’s not uncommon to call these different groups A, B, C customers.

 

You can use different metrics to separate your customers depending on your product or service.

  • If you are a SaaS company you can use the number of licenses per customer.
  • If you are a Consulting company you can use the annual revenue per client.

There is no magic rule to do the separation.

Many B2B companies draw the line between Large, Medium and Small customers on their own because each situation is unique.

 

Example : We are a Saas company selling a software per seat and  we have 400 paying customers.

We choose to divide our customers into 3 categories based upon the number of licenses/seats they have :

  • 1 – 5   : Small customers
  • 6 – 20 : Medium customers
  • 21+    : Large customers

 

Step 2 : Identify your most important revenue stream

Once you have grouped your customers into three separate groups : Small/ Medium/ Large then you need to identify which one is your biggest revenue stream.

Picking revenue as the main criteria to identify your biggest revenue stream is based upon the assumption that revenue is the clearest sign to see if someone is satisfied  with your product/service.

 

Is it the medium , the small or the large ?

The group formed by your largest customers is not necessarily your biggest revenue stream.

In the same idea even if you have 10 times more customers in the small customers group than in the large one, your may earn twice more revenue from your large customers than your small.

If the 3 groups puts the same amount of revenue in your bank account you can just pick the one you want to focus on in the future (profit, fastest deals etc.) or redefine your definition of Small/Large/medium until you have a slice significantly bigger than the other one.

 

Example : If I do the revenue pie of the previous SaaS company you can end up with a pie like this :

  • 60%     of the revenue is made by Large Customers
  • 25%     of the revenue is made by Medium Customers
  • 15%     of the revenue is made by Small Customers

 

Step 3 : Within your most important revenue stream identify your best customers.

You now have a quite fair understanding of which group of clients is the most important for you, which group of clients bring you the most value. That is a clear indication of where you will find your Target Customer Profile.

But not all your customers inside this group are relevant for you, you only want the more relevant customers to serve as template for your Target Customer Profile.

 

To do so you need to select specific customers depending on what you want to achieve. Your goals may change over the years and the different phases your company is going through. Here is an article about 5 types of metrics you can track if you are a Saas company

If you are an early stage company and you want to pursue a high growth you may choose the customers that has been the quickest to close.

If you have been growing for 5 years but never reached profitability and you want to become profitable you will choose the ones from which you make the highest margin.

If you are a new brand in the market and want to increase your customer fidelity you should target your deals with the longest average life-time.

 

Once you have picked a criteria you just have to select your 10, 20 , 50 best customers depending on the size of your portfolio.

A good rule to follow is the Pareto rule which states that 20% of your your customers make 80% of your turnover.

 

pareto_principle

 

 

The point here is that you want enough customers to see patterns among them but not too many because the more clients you select the less accurate your Target customer profile will be.

 

Step 4 : Analyze your best customers and identify your Target company profile

In B2B sales your will often identify companies as potential customers before knowing with which employee you will deal. That’s why your first job is to identify your Target Company Profile.

If you are working in B2C or dealing only with self-employed customers you may skip this part and go directly to Step 5 : Identify your Target Buyer Profile.
Your objective at this stage is to analyze these customers and find patterns, common traits among them. For each one of your best customers you need to answer these question.

 

Once you have done it for each of your best customers you must see some patterns among them.

 

For each sections pick the most common traits and build your Target Company Profile.
Example of a fictitious Target Company Profile :

 

 

Name of the Company

 

 

                          Target Company Profile

 

 

Industry type (IT, Bank, Food, Telco)

 

 

IT

 

 

Type of customers (B2B or B2C)

 

 

B2B

 

 

Number of employees

 

 

20 to 50

 

 

Country

 

 

United Kingdom

 

 

Annual Turnover

 

 

5 to 10 millions €

 

 

Market position (leader, challenger, new-entrant)

 

 

Challenger, among the top 10 / top 20 of their market

 

 

Growth (Recession, Stagnant, Moderate, Hyper-growth)

 

 

High Growth (20% to 50% YoY)

 

 

Step 5 : Analyze the actual buyers within your best customers

If you work in B2B, especially with medium and large companies, you know that having a clear view of which company you need to target is only half of the work, because you still need to know who will be the actual buyer.

 

The actual buyer is the person who will take the decision to buy your product and not necessarily be the one that signs the agreement. About that you can read this post on Reddit about how to identify and reach  the right person to call within a company.

In order to build your Target Customer Profile you will need to build your Target Buyer Profile. That is to say the most common trait in terms of company position, demographics, psycho-graphics and behaviour shared by your best buyers.

 

For each of your best customers you need to identify the actual buyers, the person who took the decision and fill this table.

 

 

Actual Buyers

 

 

                                         Target Buyer Profile                                                        

 

 

Role

 

 

Job title

 

 

Distance from the CEO (N-1, N-2)

 

 

Sex

 

 

Age

 

 

Education

 

 

Personality (Outgoing, Introverted)

 

 

Behaviour (Action oriented, Cautious) / DISC profile

 

 

Drivers (Power, Money, Fear, Efficiency etc.)

 

Other relevant things for you (experience in your field, experience from your product type etc.)

Once you have done it you will see common traits among your best buyers and you will be able to draw the portrait of your Target Buyer Profile.

Note :  Many in B2B doing an TCP miss out on the buyer’s personal behaviour and psychographics but these are vital to know how to communicate to your buyers, who are likely to buy or not, who can you expect fast deals from, profitable deals from etc. For example you can talk the same way with a dominant person and someone who avoid conflicts.

 

Step 6 : Create your Target customer profile

In this final section you will be able to wrap it up and create your final TCP by merging your Target Company Profile and your Target Buyer Profile and remove irrelevant data.

 

A final Target Customer profile might look like that :

 

 

Target Customer Profile

 

 

Industry type (IT, Bank, Food, Telco)

 

 

IT

 

 

Type of customers (B2B or B2C)

 

 

B2B

 

 

Number of employee

 

 

20 to 50

 

 

Country

 

 

France

 

 

Annual Turnover

 

 

5 to 10 millions €

 

 

Market position (leader, challenger, new-entrant)

 

 

Challenger, among the top 10/top 20 of their market

 

 

Growth (Recession, Stagnant, Moderate,Hyper-growth)

 

 

High Growth (20% to 50% YoY)

 

 

Role

 

 

In charge of the maintenance of the  SI infrastructure

 

 

Job title

 

 

DevOps

 

 

Distance from the CEO (N-1, N-2)

 

 

N-2

 

 

Sex

 

 

Male

 

 

Age

 

 

25 to 45

 

 

Education

 

 

Bachelor in Information System

 

 

Personality (Outgoing, Introverted)

 

 

Outgoing

 

 

Behaviour (Action oriented, Cautious)

 

 

Cautious

 

 

DiSC Profile

 

 

Blue

 

 

Drivers (Efficiency, Performance)

 

 

Efficiency

 

Now that you have your Target Customer Profile you will be able to be much more efficient in your :

  • Sales
  • Marketing
  • Customer success
  • Customer support
  • Product development

You can even pursue the segmentation and do the exact opposite choices to create your don’t profile. This is actually equally important, so you know who to stay far away from and don’t spend time talking to.

 

Then you will end-up with a segmentation in three parts : do or die, don’t and neutral.

  • Your do or die profile : This is your TCP, you should focus on them, put all your energy here
  • Your don’t : Don’t spend time on them, if they want the product it’s cool, if they don’t you lose nothing.
  • Your neutral : The neutral are the ones you can spend some time on but not too much.

do or die

 

 

One advice : do your do or dies

Recommendation: We highly recommend this exercise is done together by all the management group members, so all sections of the company are represented and get the picture.

 

 

 

I hope that you now realize how important it is for you and your company to identify and then target your Ideal Customer Profile.

You just need to gather your management group and  go  through this 6 steps methods. It is time for you to have a clear heading for your vessel because the journey can be long and full of obstacles.

You have seen that it is not very hard, this is why you must update it every 6 month (if you are a young company) / 12 – 24 months (if you are a mature company) in order to keep it in phase with your existing customers and the evolution of your service / product.

Only the leaders that manage to drive their whole company in the same direction, their TCP, will be truly successful.

 

 

Yvan pic (2)

 

Yvan de Canson

Digital Marketer Salesbox