Finding your Ideal Customer Profile

- - Leadership, Sales

This is a recap of a web seminar https://mattermark.com/webinars/using-marketing-signals-identify-sell-high-growth-companies/ I did a while ago around identifying your Ideal Customer Profile. This is something that every company really needs to identify and revise often, your customers will change and evolve – you have to do the same.

Most growing SaaS companies face similar challenges: Optimizing sales and building effective marketing programs. The answers for all of these challenges can be found in your current customer base. The trick is to identify your best customers, understand what they have in common and what it is they love about your product.

Then find more just like them. To help us do that at WePay, we use a tool called Mattermark, which looks at market signals given off by the small but fast growing SaaS companies we’ve identified as our ideal customers.

On a recent webinar, Kurt Bilafer, WePay vice president of sales and customer success, chatted with Mattermark’s Dawn Poulos about what market signals are, and how companies can use them to find the right prospects and turn them into customers.

Dawn: Let’s talk about what market signals are. A market signal is really an indicator of growth in the business.

You could look at employee growth. You could look at the rounds and stages of funding. For some companies mobile downloads matter, or social followers matter, or what’s happening in the news matters. It’s not only recognizing the market signals, but which ones are key to your business, because it’s never the same formula. It could change for different segments of the business.

Kurt: You’re right. Specific to WePay, we have two different ideal customer profiles, based on where they are in their education around the payment space.

Dawn: Let’s talk about the ideal customer profile. When you look at a normal ICP, the three things people talk about are pain points, roles, and demographics. But if we really believe that the solution to our SaaS challenges lies within the customer base and that the most successful customers are key to understanding how to get more like them, then we have to take into account other items. Would you mind talking about how you arrived at your ICP?

Kurt: When we first started, we did focus on those three things. Partly that was because that was the information that was available, and we were comfortable with that.

We challenged the team to go back in time to when the purchase decision was made, and look at how those companies were performing then–so what were their levels of funding, what were their employee counts, what were their pain points, and who were we talking to when the decision was made, so we could actually build the ICP for what we should start selling at that state.

One of the big challenges that marketing and sales teams have is that they don’t go back in time and look at what was the criteria, and what was the growth stage where the customer made a purchase decision.

The other thing is getting access to that growth information. I’m a huge fan of Mattermark’s growth score. We actually use it in part of our lead score calculation.

We actually match our ideal customer profile against other companies that are in the Mattermark database to make a hunt list–a very targeted list of companies with similar attributes that we may not be speaking with yet.

Dawn: What you talk about that’s so important is, understanding who your customers are at the point of signing. A lot of people do it based on the size of the contract, but you might have a small contract for a company that might be growing like gang busters, and if you don’t recognize that and you’re not giving them the level of support they need you’re going to churn a potentially very high growth VIP customer.

Kurt: Yes, absolutely. I think the sales mindset used to be either improve your close rates or improve lead flow. The reality is the cost of acquiring meaningful leads has gone up significantly. And, we live in this sound bite world where people are inundated. To differentiate yourself in this market, you need to significantly reduce your target market segment so you can improve your close rates, but I also think there’s been a shift from people thinking they have to close monster deals to more of a land-and-expand approach.

The nice thing about that is, typically, the smaller the transaction, the easier it is to get it through the sales process, and if your product works you’re going to be able to quickly grow that.

Dawn: You mentioned that one of your ideal clients is FreshBooks. What makes FreshBooks such a great VIP customer for WePay?

Kurt: FreshBooks is the second largest accounting software company in North America, and they’re getting significant traction in the marketplace.

There are two things that make them unique. One is they service what they call “small to medium-sized businesses,” which is obviously a large market in North America. And the second thing is they’re now a self-sustaining entity. The last time they raised funding was two years ago. They only raised $30 million.

Our best customers are very focused, they’re growing employee count, but are doing it in a very measured manner. The other thing is they’re typically not in Silicon Valley. They’re picking secondary cities where the cost of talent isn’t as high. For us, believe it or not, those are actually really key attributes.

Companies like FreshBooks have a great trajectory. It isn’t a rocket ramp. It’s more kind of like a prolonged hockey stick ramp. Because of the way WePay’s API is, there’s a significant investment that WePay makes in doing integration that we don’t charge for. We don’t want to do an integration with a company that’s got a lot of buzz and then falls down in 12 months. We’re really looking for the long-term play, and so these are the key attributes that we look for.

Dawn: Kurt, one of our listeners wants to know how you went about creating your ideal customer profile and how you work with it.

Kurt: The first thing is to look at how you define what a successful customer looks like. Is it lifetime value? Is it annual contract value? Is it profit? Once we settled on that criteria, the first thing we did was look at who we actually sold to–the persona. Was it business or technical? What were the key themes or pain points that resonated with them, and how to we address them?

Once we got access to the Mattermark data, we took that information and then looked back in time at our win-loss reports. We said, let’s look at what their employee count was, and where they were in terms of funding, and look at how that’s changed, and go back and interview them now. What we’ve found is when they do references for us now, what they message as the value proposition is different than the reasons why they bought.

Once we clearly understood the customers at the buying stage, it was just a question of building out a profile inside of Mattermark that could find similarly-sized companies in similar spaces.

We actually ended up with two ICPs, and the reason is that “the journey of payments,” as we call it, is nuanced. There are people who are later in that journey and understand everything that’s unique about WePay, so there’s an ICP for that. In the earlier stages of the journey, they only understand half of our value, but we think we can move them along the journey, and so that has its own unique ICP.

Now that we have those profiles, we’ve continued to enrich them and add information. Now we’re hiring a research firm to go back and look at deals we’ve lost recently to validate our message. That’s one big thing we’ve learned with ICPs is that they evolve over time. So it’s a living, breathing document for us, but it certainly is more grounded in fact now than it’s ever been before

Dawn: This is an interesting question – are market signals only for small companies? You know, you could be a high-growth company and be well past the startup stage and well past the seed stage.

Kurt: I think you’re spot on. We sell to a variety of software companies regardless of stage and age and how big they are. You know, for small to medium-size companies, it’s obviously much harder to get growth information, which is where I think the real value with Mattermark is. But I also think big companies weren’t always big, so if you can look back at what their compelling events were or even get some insights into what’s happening at a company level, it is a great leading indicator of how active are they in the marketplace.

What I particularly like about growth score is that you’re monitoring their website traffic, and how many people are searching for them. Is their market heating up? Are they still relevant to their end customers? To me, that’s really important, because what we don’t want to do is waste time selling to big companies, because they’re hard to navigate. We really want to focus on the big companies if they’re focused on growth. That’s where we want to be, so that growth score is key.

Dawn: This is a really interesting question, Kurt: “Once you start combining the power of market signals and the ICP, how do you communicate this? How do you educate the team?”

Kurt: We work in cross-functional teams. By including marketing, our sales development reps and our sales teams, as well as sales operations, the ICP now has DNA from essentially all of the different stakeholders.

The most important thing is we want the sales and marketing to know who to cold call or who email and when. But it’s also important to feed back to our product teams so they understand why people buy. That helps us to make our product better, which I think is a really important part of this process. There’s probably a lot more we could do, but I think that cross-functional team collaboration is the first linchpin to make it a success.

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