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Ideal Customer Profile B2B: the art and science behind the You Got Milk Case 

Ideal customer profile B2B Yoy got milk case

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If you sold milk, would you compete with Coca-Cola?

It is common to believe that the world of B2B sales is all about presenting a product and beating the competition. They forget the art and science behind every strategy, overlooking the fact that competition is important, but that creating an ideal customer profile is the key to hitting the target. More than understanding the competition, it is crucial to understand your perfect buyer and what their needs are.

An interesting example is the “Got Milk” case, a sales strategy that turned around an old sector in need of renewal and refinement.

In 1993, milk consumption declined considerably in the United States, causing a radical change in this well-positioned sector. After four decades of wasting millions on marketing campaigns and seeing no real results but declining sales, milk producers made a decision: they hired a marketing agency to conduct a thorough investigation of their customers.

The result? They’re still enjoying it: last year U.S. retail milk sales topped $45 billion.

 

The problem?

They targeted the wrong market.

The results of the research led the producers to understand that they were trying to convince Coca-Cola and Pepsi customers, yet these consumers were notable for not drinking milk, at least not for the most part.

On the other hand, they discovered that the Ideal Customer Profile (ICP) was made up of existing customers who already drank milk, but drank it along with a complementary food such as an Oreo cookie. This led them to launch the legendary “Got milk?” ad, aimed at existing customers. I’m sure you’ve already seen it, here’s a taste:

Now then, back to the topic. According to Gartner, one of the most important information technology companies, it has found that in some companies, CPI is not well understood as a concept or is poorly defined. Even in companies that have defined a CPI, its use is limited to marketing reports or new employee orientation sessions.

According to Gartner, companies that invest in a well-defined CPI achieve compelling business results, such as: faster sales cycles, higher conversion rates, higher ACV (annual contract value) and average LTV (lifetime value).

Interestingly, CPI drives GTM’s strategic and tactical moves in Marketing, Demand Generation, SDR/BDR, Sales and Customer Success. Betting on the wrong CPI can cost millions of dollars of burn and months and years of lost opportunity, if not company survival In Jeff Bezos’ 2021 shareholder letter, he stated that “customers complete 28% of Amazon purchases in three minutes or less…and half of purchases are completed in less than 15 minutes.”

 

What does this mean?

While, active CPI refinement is a cornerstone of GTM strategy and tactics art that it is not backed by sufficient actionable data and recommendations.

Currently, the reality is that there is no systematic and scientific way to suggest ICPs based on actual conversion behavior. Demand Gen and GTM teams end up with qualitative surveys, sales team feedback, spreadsheets, analysis and anecdotal evidence to build a hypothesis about the right CPI and iterate on the experiments to arrive at the ICP.

Most companies still use a mix of qualitative surveys, feedback from the sales team and sheets to analyze historical data to figure out ICPs. Don’t get us wrong: this is a fair approach. However, this approach is held back by the limitations of analyzing in spreadsheets and isolated tools used for the exercise. “Give me one more spreadsheet!” no leader ever said. It’s too time-consuming an activity for a market that is in constant motion.

Knowing who your ideal customers are (ideal customer) , leads to faster and clearly effective sales cycles. That’s true for a B2C business like Amazon and true for B2B. So, if you don’t know what your buyer needs and don’t offer value to a prospect immediately, you’ll be nothing more than a ghost before you even get a chance to greet them, let alone take them to a meeting.

That’s where the definition of ICP comes in.

The goal is to attract the right prospects and be ready to show them value, causing them to make quicker decisions that lead to shorter sales cycles.

Importantly, the Ideal Customer Profile is not a static element. It evolves. This evolution occurs as the company, its product, its competition, and its market and category transform and grow.

ICPs migrate across dimensions such as company size, vertical, buyer persona, title, region, etc. In fact, it is not surprising that conversions, velocities and success rates change even within a single quarter, especially in turbulent economic and market environments such as the current one.

Given this, the development of CPI aims to identify the leads and accounts most likely to convert into your high-value customers.

If you have a low conversion rate from qualified SDRs to accepted sales, it is evidence that your CPI segmentation is deficient.

 

How do you understand this?

In reality the following happens: until the sales department finally identifies that it is the wrong CPI, the marketing department has spent money on campaigns that attract the wrong leads and continues to do so.

By the time this happens, the SDRs have spent hours researching and warming up these leads, the sales department has spent hours preparing and demoing the product for them.

Only to realize – at the end of it all – that the lead/account was a bad fit all along and mark it as not accepted by sales, leading to poor SQL to SAL conversions.

After the development of the Ideal Customer Profile, you won’t be plagued with costly MQLs that won’t convert; your pipeline isn’t bolstered with unrealistic opportunities; and your forecast is closer to reality than ever.

The road to revenue is paved with one less hurdle to worry about: one big hurdle is solved.

Conversion behavior review, a form of refinement.

The most effective way to be really incisive when creating the Ideal Customer Profile is a systemic, data-driven approach. It is best to use feedback loops from the emerging conversion, pipeline generation, win rate and velocity behavior of the different segments in decision making.

Hence the need to implement a solution that continuously learns from the patterns in your data to validate your hypothesis of a CPI or, better yet, tell you if you are attracting the wrong prospects at the expense of your marketing budget.

 

Conclusion

The Ideal Customer Profile is not the result of an intuitive analysis, much less a concept to be taken lightly. Taking into account what has been explained above, we can affirm that it is the cornerstone of the marketing process.

The vague definition and the mess of data regarding the ideal customer are actions that must be measured, analyzed and studied. There are no magic formulas, no art that only a genius can perform.

The strategy is clear, that level of predictive analysis and pattern creation is the best solution. While it is feasible to leave this in the hands of technology, the truth is that approaching the analysis from the data will bring wonderful consequences.

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