An ideal customer profile and the strategy to reach those target buyers are the most important factors in positioning a tech company for fast growth. Firms that know exactly who they’re targeting are the ones most likely to grow. They invest in decisions about the target customer BEFORE making investments in technology, sales, or other processes.
Recently, I had the pleasure of interviewing Craig Rosenberg, a founder of TOPO. TOPO is an analyst firm that collects data from the world’s fastest growing companies to see exactly what they are doing to drive exceptional revenue growth. They use this “high growth dataset” to provide research and advisory services; custom sales playbooks, and events.
Craig and his partner launched TOPO three years ago, and they already have landed over 200 clients. So he definitely knows how make fast growth happen.
In this podcast, we dig into how successful businesses are using an ideal customer profile to drive fast, sustainable growth.
Free Resource Download From TOPO
Download “The Account-based Everything Framework,” a detailed model that you can use to build your own ABE go-to-market strategy and programs. To learn more about Craig and his company, go to the end of the episode transcript.
Transcript for the Ideal Customer Profile Episode
Candyce: Craig, thanks for joining me today.
Craig: Thank you for having me. It’s a pleasure to be here.
Candyce: You’re doing a lot of research right now on what is working to drive exceptional revenue growth. What are the three key areas you’re seeing where a small or mid-sized company, say a CEO running a firm that’s anywhere from $10 to $100 million, what can they do to focus on stimulating faster growth while still making sure it’s sustainable and profitable?
Craig: Wow. I’ll just say overall, and then I’ll get really specific. One thing that has been confirmed: in sales and marketing, the fundamental strategy that you put together is everything.
It sounds obvious, but I think all of us who have been in sales and marketing over the last 20 years, we’ve seen lots of tech rushes where people are mobilizing and building large tech stacks, or trying to go into social selling, or some sort of trend du jour. All of those things are important. But the one remarkable factor that you see with all these companies that grow really fast was they thought first about their strategy and process. About what they were trying to achieve. Those fundamentals were put in place before they made any other investments regarding tech, or sales methodology, you name it.
They put fairly rigorous thought around the ideal customer profile and the target buyer. We made significant gains in the last 15 years in terms of thinking about buyers. Things like buyer personas, et cetera. Those are really important to dig into the mindset of the people we sell to. But ultimately the key is to figure out what companies you sell to. Especially when you’re starting out.
Everyone says, “We’re young. We just want to get out there.” Sure, that’s fine. But if you’re trying to figure out how to manage resources in the right way, you have to make a good bet on who your ideal customer profile is. You need to know which accounts or companies are most likely to buy from you, at the contract levels that you care about, with the speed that you care about. These things are critical.
When I go into a company that’s growing fast, there’s no stuttering here. It is something that everyone in the company can articulate. “We sell to financial services firms that are in the $10 to $20 million range. (I’m just making all this up.) They have salesforce.com or some element here that we’ve determined will allow them to focus their resources from marketing to networking to sales that allow them to make really good decisions going forward on how they mobilize.
Everyone says, “Well, when we’re just starting out how do we do that to such precision?” Well, I agree that there’s a bet that will have to be made here.
But I just met with a company the other day that’s in the $3 million range. They looked at what the competitors and the lookalikes in their market are doing. They looked at their customers and realized that there was a trend. There was certain type of company that bought these products. So they made that company type their ideal customer profile, and they feel really good about it because the early returns on that are great.
That sort of is the stabilizer here. You make a lot of really good decisions on the type of companies and the market that you’re going after. Again, everyone knows this is fundamental.
Candyce: They don’t do it. They may know it, but they don’t do it.
Craig: No, they don’t do it. The other thing is they don’t make it a company-wide part of how they’re strategizing. Whether it’s how they build the product, how they outbound prospect, what conferences they attend. When you take a step back, you’ll realize that it’s the most important decision you can make, and it allows you to make other great decisions.
A lot of companies will just choose sexy, big events to attend. But I’m seeing more and more where companies are saying, “These are the companies we target. Are these companies going to be there?” That’s how they judge whether they’re going to go spend time or money at a conference. Really, it’s a pretty simple thing, but many don’t do it.
Anyway, it’s just a really big deal. You want everyone in the company to make their decisions based on the target market. I always mention product and engineering, and not just the front office folks. If this is our target market, then what’s the product that they’re going to want to buy and how do we make the best product for that target market? That’s an example of how important it is to be an organization-wide decision.
Candyce: I think probably one of the most difficult things to execute on an ideal customer profile is walking away from deals that look like good sales opportunities but don’t fit the target customer profile. I’ve worked with clients on deals where they know that the specific requirements from the prospect have been set by competitors. They know they don’t win against that competitor. I tell them, “Don’t compete for that deal. You’re wasting a tremendous amount of resources in your organization to try to close that deal. Your likelihood of winning that is pretty low. So you’re going to take resources away from a deal you could close, and it’s demoralizing if you can’t win it.”
Craig: It’s too hard.
Candyce: I think it’s even harder if you think you can win it, but it doesn’t match the ideal customer profile. Then it distracts your development resources and deployment resources. Your people don’t know that customer as well, so you can’t be quite as successful with that customer. So in this case, even if you can win, it is it the right win?
Craig: It’s so hard. It’s really counterintuitive. Interest actually doesn’t mean you’re going to close the deal. Let’s say from first call all the way through losing the deal, you’ve been getting positive feedback. The prospect has shown interest. They want to go do it, but we know they won’t. But it’s hard to let go. I tell CEOs that your ideal customer profile has to rule. Interest is actually a very, very dangerous distraction. You’ve got to be really careful here.
What a lot of my customers have done is they’ve said, “Well, look, here’s our ideal customer profile. If in our pipeline we are going to have someone that falls outside of it, it’s going to be rigorously scrubbed.” In other words, there better be a lockdown, everything aligned to a reason that it’s there. That works because, again, it’s the interest thing that throws everyone off.
You go on the first sales call and the prospect is saying, “Oh, this is amazing.” They make you do a lot of work [to sell to them]. You’ve got to be really discerning about whether this deal is worth taking a chance on. There has to be a middle ground [for prospects not meeting the ideal criteria]. The middle ground for many of my customers is overly rigorous qualification.
The other thing they do is manage it at the top [of the funnel]. Marketing and inside sales (or sales development) can lock in on the ICP (ideal customer profile) and focus efforts and campaigns in that area. We set the qualification criteria in the inside sales/sales development group. Then we can start to manage what ends up in the pipeline. But the point you made is really important. It’s hard for people to walk away. Frankly, I’d say 85, 90% of the time they should, and what distracts them is the 10%.
I’ll tell them, “You should walk away.” “Well, we did get this one deal from this one company….” Okay, 1 deal out of 25. You got 1 deal out of 25 that look like this deal…and you lost 24 deals.” That one [deal] is literally trying to throw you off your game. You have to fight through it.
Candyce: It’s a distraction. It’s a temptation. Do you find that the customers that are really succeeding, the companies that are making the growth happen, are they calculating cost of sale on lost deals? Do they understand what it costs them to pursue a deal that they’re not going to close?
Craig: No. I think that’s a good idea. I think just generally speaking if they do look back and try to make this decision they just kind of look at overall close rates and sales cycle times for that close rate. I don’t know that they look at cost, but I think that’d be a really good idea. In my experience, when you really show the numbers to a strategic thinker … My consulting team just did this a couple months ago. My team threw it up on the wall and showed them the numbers. We had a 25 slide deck. The CEO said, “Well, I don’t need to stay for the rest. Everything here speaks for itself.”
It was just close rates. It was obvious that this group was vertical based. Specific verticals of a specific size were the target market. Just on those numbers alone, that CEO literally said, “I’m leaving. You see those numbers? You know your ideal customer profile. Follow it. When can we start?” I think cost of sales would add to that, but I do believe just looking at your overall close rates, if that’s what you have, is a good leading indicator as well.
Candyce: It’s funny, when I started a company with a partner back in 2000 called IBSN (later rebranded as Selero, an equally unfathomable name). When I started, we had 7 big deals in the pipeline. This was a technology company that provided integration really deep in the client’s weeds. We had to know about how they do their business. We had in our pipeline: Nike, Public Storage, Gates Rubber Company, and two big financial services companies, and a couple of others. I can’t remember who they were, but it was really random deals in the pipeline.
We brought in a guy that I had worked with in the past who had a couple of very successful businesses that he had built and sold. He came on as an advisor for us, and the first thing he said is, “Do you remember how when you were a kid you took a magnifying glass and lit leaves on fire? Did you do it with a really broad stream of light coming through? No. You had to focus the light through the magnifying glass to get the tightest point of light possible, and that’s how you created a fire.” He convinced us, and it took some convincing, to get rid of all those deals except the two opportunities that were in the financial services space. Those were in a very specific vertical within a niche inside financial services. We focused there.
We managed to close both of those deals. Before, we hadn’t closed anything for like eight or nine months. Within a year we had 47 accounts just with a tiny team of eight of us. That led us to be able to get venture capital and build a company, but had we not focused we never would’ve gotten there.
Craig: Yup, it’s the truth. I love that analogy too. I may have to use that.
Candyce: Go for it. I use it all the time. Now, you said there were three. Ideal customer profile, and we don’t have a lot of time, but I do want you to be able to hit the others.
Craig: Well, I think there’s a second thing, which is engagement. We did a study with sales leaders, big companies with big, large sales teams, so very experienced sales leaders. We asked them, “What’s the most important thing that you care about?” 90% said “engagement…. Quality and quantity of engagement.” It was really interesting because the study was about tech. It was qualitative, and you listen to the interviews these guys would say, “Well, you can tell me I can send 200 e-mails, but what I really care about is can I get my team engaged with the right customers, more of them delivering quality engagement? That’s what I care about.” It was like 90%. It was a big number it was really healthy. I was just really pleased. There were no shiny objects there.
That doesn’t mean that they’re not tech-centric. Many of them were, but when they thought about tech they thought about, can it drive more quantity and quality engagement? When they thought about methodology, like a Challenger Sale or whatever, is that going to deliver quality engagement? When I think about starting a company it’s hard because you want to think about scale, but I have seen the most important thing is setting goals in terms of quality engagement with your target market. Especially early on. I wrote about that on my blog.[When we started TOPO,] we set a number for everyone in the company to go have 10 conversations a week with someone in our target market. We were not really discerning about the buyer personas at the time. We eventually became that, but we just wanted to engage with people in our target market. We created content that was incredibly deep. We did play with quantity because, look, we still come from a tech background, so we were thinking about SEO and all these things, and quantity around it. Our biggest, our best, and most important pieces of content we gave away. We gave away everything. Every member in the content marketing field says, “Just help and give it away,” but they never really do it. They say, “Well, I’ll give it away if you give me your name. I’ll give it away if you come visit me.” We just said No.
Literally, you could go do whatever it is we do. You’re on your own, but here, this quality content is driving quality engagement. We tried to have as many offline conversations as we could, because that was quality engagement. As I think about, everyone wants to be transformed to digital. I’m all in favor of that, but you have to think about, what’s the experience that I want to provide to that buyer? You can do that at any size, at any scale. You think about, “Before they know us, what are they going to see from us? Is it going to be quality engagement?” Content can talk to you, but how do we want to talk to them? What do we want them to say? We have to move off tempting them and just give them. That’s engagement. In my opinion, that’s quality.
Candyce: Get rid of the shallow content?
Craig: The shallow content … Look, if you go to my website we do throw in some shallow content, but the content that has the biggest impact is the quality content. We think about, what’s the first call? What’s that thing when we talk to them what will make that quality for them? When we do a presentation what makes that quality? Everything. When we meet an executive and we get five minutes, what does that engagement look like? These are things anybody can do and it’s really important. We always think about what we want to get. I think ultimately that’s good because we have to track. We have to do these things. We want to be metrics focused, but I think the most important thing, especially when you’re starting out in the market that you’re talking about, is if you can figure out who your target market is and figure out how you can give them the best experience with you as an organization, and that includes what type of engagement you will have with them and what’s that going to look like, it’s a really powerful concept.
I definitely see it. My favorite story was Zendesk. They rose quickly. They knew initially they were just going to hit small businesses that needed a very easy to use, out of the box, opinionated customer service application. They realized that, first of all, their market didn’t want to talk to salespeople, so they actually had their customer service people in the sales pit to engage with these customer service prospects. This was early on. Very early on as they were growing. They were very conscious of, what is quality engagement to our buyers? Even in their product, you could see that they engaged with you on the product. All these things were really thought-out and really thoughtful, and done at an early stage.
I know it’s conceptual, but I did give you an example of someone who thought about engagement and created really quality experiences for their buyers. Whether they bought or not, the engagement that they had with them ultimately paid dividends down the road as they became a really big company.
Candyce: think the concept and the example that you provide with TOPO is so important too. Meeting with 10 people. I think that in your blog you said that everybody in the company had to meet with no less than 10 people every week, and that could be a virtual meeting or it could be in person, but it’s not using social media and saying hi to somebody. It’s actually meeting with people and talking with them, and then asking for a referral of, “Who else do you think I should be talking to? Who do you think would find value in talking to me?” Getting those referrals and going deeper and broadening your base it allowed you to build a network of people that then allowed you to get to that ideal customer profile, I would imagine.
Craig: Yes. Absolutely. By the way, we were pretty right out of the gate on the ICP (ideal customer profile), but you’re right, really it continued to gel. I hate to say it because I’m a digital guy, but the offline engagement provided way more value early on than the digital. It just did.
Candyce: I don’t doubt you. We’ve started a roundtable series where we’re not in person because everybody’s all over the country and we’re doing hour and a half sessions, but Amanda Maksymiw is on it and has generously allowed us to use Fuze, which is a really cool product.
Craig: Yeah, it is.
Candyce: Everybody’s face to face on their computers, but it’s really building those relationships with all of these different senior marketers to talk about issues that they’re facing. The focus of the round table is to help each other. It’s so much better than just tweeting with somebody, or sharing a social blog, or even e-mailing back and forth, with “How are you doing?”, or participating in a Twitter chat, or something like that. Actually getting on the phone every month with the same people and building those relationships makes a huge difference.
Craig: Yeah, absolutely. Absolutely.
Candyce: We are running short on time here. I want to hear your last one, but can you make it like 30 seconds?
Craig: Well, that’s hard for me. I think the two I mentioned I would say are the biggest ones, I think. I would say most of the other things are similar around engagement. I think we’re good just leaving with these two big things. I think it’s a lot to chew on.
Candyce: It is. It’s really important. That ideal customer profile, making sure that you understand not just who the buyer personas are, but the companies themselves. What do those companies look like, and then focusing your entire organization on servicing those ideal customers and really focusing. I think it’s so crucial because it makes a difference across the entire organization, and then engaging with them across the entire organization from that perspective makes a massive difference.
Candyce: Thank you so much for participating in the podcast, Craig, and for sharing your wisdom. We really appreciate it.
Free Download from Craig
TOPO recently published a research note on how to implement an account-based strategy. Craig is making it available for free to TrendSpotters listeners. Click here to download “The Account-based Everything Framework.”
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