Are you struggling to grow revenue and win new business? Do you know the trigger events that put prospects in the market for your services? Are you talking to the wrong prospects? In this session, we’ll dive into strategies for identifying these trigger events and refining your ideal client profile (ICP) enabling you to offer a focused, niche service that resonates with the right prospects. Gain actionable insights on how to continuously focus your ICP to recognize when clients enter your market, helping you attract and win ideal clients that lead to revenue growth. Whether you’re defining your ICP for the first time or sharpening it further, this session will provide you with practical strategies to grow your business by targeting clients with high potential for alignment and success.
TRANSCRIPT
Greg Alexander: Hey, everybody. This is Greg Alexander, you’re listening to the pro serve podcast brought to you by Collective 54. This is a podcast dedicated to founders of boutique professional services firms who are trying to make more money, make scaling easier, and reach an achievable exit at some point. And on this episode, we’re going to talk about the ideal client profile, or maybe I should say, the journey towards determining and creating your ideal client profile. And I’ve got a guest with me today, a Collective 54 member. His name is John Iko, something something I always mispronounce it. Pronounce it, John, for those that don’t know who you are. Could you pronounce your name for us, and tell us a little bit about your firm.
John Ikosipentarhos: Yeah. So my name is John. I’m one of the co-founders of Zeroed In Consulting. We are an accounting and finance firm that started about three and a half years ago. We specialize in outsourced accounting, technical accounting, financial reporting, and audit readiness. So yeah, we are your nerdy accountants that you call when you don’t know how to do some complex work, and we come in there and help you out.
Greg Alexander: Alright sounds great. So the reason why we wanted to talk to you is because you’re on the journey of defining your ideal client profile which, given the fact that you just told us you’re three and a half years in business, I’m not surprised. I hate to be the bearer of bad news, but that journey is probably going to continue for a decade, plus because things change as we go on. So my first question is, you launch your firm. You’re three and a half years. One day you wake up and say, shit, I need a new ICP like what happened? What made you decide that you wanted to spend time on this.
John Ikosipentarhos: Yeah, I mean, I think, like everybody, when they first start their firm, we were just saying yes to everybody and anything that was anybody that was willing to pay right. And so we did that for a while. But we started to find that some clients were better than others right? And so it doesn’t mean that they’re bad clients, but like the work that we like to do matched maybe what they were providing us and other clients were not giving us the kind of work that we wanted right. And so I don’t know if we really knew that we were going down this journey until I actually really joined Collective 54. And this isn’t, you know, a humble brag to C54, although there’s many to be had there. I think it’s just the fact that I wasn’t aware that that was even something that I should care about. So yeah, to kind of maybe elaborate a little bit more, I’d say, you know about maybe earlier this year, I’d say, like probably March April of this year, we really started to kind of take a step back. Look at like who our clients were. I think that was like the biggest thing. And I did that analysis. And 60% of our clients ended up being in kind of this subset. And I was like, well, that’s kind of funny, because those are the clients that we really like to do business with that are really nice that, you know, aren’t trying to penny pinch us. They’re more partners than they are clients. And so I was like, Okay, we’re onto something. Here. Let’s kind of continue to explore that.
Greg Alexander: Okay? So in the academic world, we call that segmenting. So what you just did is you segmented your clients. And it started with, we like these types of clients based on the work we do. We don’t like these types of clients, some clients more profitable than other clients. Some clients are more price sensitive than other clients, etc. Once you go through that exercise, actually, I’m skipping ahead too much here. What was the source of data that allowed you to do the segmentation exercise.
John Ikosipentarhos: I would say, to no one’s surprise. I look at the accounting books, and I looked at the invoices, and I looked at the revenue. And I started to say, Okay, from our top line, revenue, you know who is our biggest segment. And then from there I also did like a gross profit, analysis. And again, lo and behold! The ones that ended up being the ones that we wanted to work with ended up being the ones that provided the higher, gross profit and the ones that we didn’t, we ended up having, you know, a lot of issues when it came to, you know gross profit, basically.
Greg Alexander: Now this term gross profit. Now you’re an accountant. You’re very comfortable with that term. You were looking at the accounting records to determine this? Are you tracking gross profit at the firm, level client, level and project level? How are you tracking it?
John Ikosipentarhos: I am so I would say we were always tracking it, tracking it at the firm level. We have been tracking it at the client level for at least a couple of years now, and I would say, this year we started tracking it at the project level. So now it’s just like part of my month. Close process to go in there by project, pull in the billable hours, pull in the labor rates, and then go in there and look at the invoices, and essentially go in there and say like, are these so? Because at the end of the day I want to understand what kind of projects are really profitable for us, because that’s what I want to go and market towards. I don’t want to go and keep marketing towards things that may have like a high dollar value, but end up really bringing us 10% at the end of the day. Right? So.
Greg Alexander: So the point I wanted to bring out here is pretty much all of our members, the people that are listening to this, track it at the firm level. A subset, a good amount, maybe 50-60%, track it at the client level. But unfortunately, very few people are tracking gross profit at the project level, which I really want to emphasize. How important that is because it’s at the project level. I mean, our firm’s profitability is the aggregation of the projects that we do. So by not tracking it at the project level, by not having that as a unit of measure, we’re missing something here. So you did all that. What was revelatory like? Were there any Aha! moments that came out of that?
John Ikosipentarhos: Yeah, there was a couple. So outside of the target market that we obviously want to go in and focus on, it was also the kinds of projects. We actually stopped really going towards the lower level bookkeeping services. About a year ago, we thought, “Okay, this is gonna be a genius idea. We’re gonna offer low level bookkeeping services because it’ll get the foot in the door. And then, as the company scales, we’re gonna be there to scale with them.” And guess what? The companies don’t scale as fast. We’re stuck doing a bunch of bookkeeping work that we don’t want to do, that’s not high margin. And so for us to get to that point where they’ve grown enough to be like, “All right, we can come in here and be your interim controller,” it never panned out. Those are the projects that people would get frustrated on. Those are the projects that people were blowing budgets on. So we basically said, “Listen, unless we’re able to price ourselves effectively,” which let’s be real, to price yourself effectively for a bookkeeping firm and keep it in the US is nearly impossible. Everyone’s going to be outsourcing that for fractions of a dollar. It’s just not going to work out. So we just said when they get sophisticated enough, that’s going to be our entry point. That was the first thing, and then obviously the target market, which I’m sure we’ll touch on later.
Greg Alexander: Well, let’s go there right now. So what did you learn about the target market?
John Ikosipentarhos: Funny enough, the ones that we like to work with are the ones that have money. So it’s high growth tech companies that just got series B or series C funding. The reason why we kind of fed into that is because it makes sense that they would need sophisticated accountants to be able to close their books to account for things in accordance with US GAAP. Before any serious funding, you could do cash basis, you could do modified accrual basis and kind of just hodgepodge your way through it. But the problem is, when you actually start getting some serious money, there are external stakeholders that expect you to have financials in accordance with US GAAP.
Greg Alexander: So that was a big learning. Again in academia, we call that the trigger event. What would cause somebody to need, what triggered them to have a need for John’s services was these external stakeholders. They have expectations. If you’re running a rinky-dink shop and you can’t meet those accounting expectations, you might not be able to raise that next round of funding, and so on. That’s the type of thing that comes out of really studying where you have had success and who your ideal client profile should be. Sometimes, in addition to the quantitative analysis, which is what you’ve been sharing with us so far, there’s also qualitative analysis. That might be things like surveys or client interviews, or win-loss interviews, etc. Did you do any of that? Are you doing any of that now?
John Ikosipentarhos: We’re trying to, to be completely honest with you. I think that’s probably one of our struggles right now, is figuring out a way to actually, I don’t even know if it’s having the confidence, but actually just being able to feel comfortable going to the client and actually doing surveys. This year we started to implement end-of-project surveys. I guess we haven’t really ended any projects since we launched that program, so I can’t really report with any good news or bad news. But it is something that Collective 54 has definitely taught me, in the sense that you need to be able to extract that information. You need to be able to essentially use that to propel you into the next stage. I know we have to be better about that, but I’m still struggling with the right approach.
Greg Alexander: Yeah, that’s okay. I mean, you’re on your journey, right? You know that it’s valuable. Now, the question is, how do you actually do it? That’s something that I think a lot of us fall into that category. You mentioned when you started your firm that all revenue was good revenue because you needed revenue coming through the till to keep the lights on. And now you’re three and a half years in, you realize that all revenue is not good revenue, which means you have to say no in certain situations. When that comes up, the timing of, “Okay, we’re now going to be selective as to who our clients are and what the projects are,” you have to be able to say no sometimes. There’s a lot of internal resistance to that. Did you have resistance inside your company? And if so, how did you overcome it?
John Ikosipentarhos: I don’t think we’ve had a lot of resistance there, because to be honest with you, I don’t know if we’re clearly saying no to everything. I think we’re just being more targeted on what we actually go and pitch. For example, this week, we pitched something that I know we’re not going to win. That’s not our market, and if we were to lose that, I wouldn’t be all that upset about it. But there are also three other ones that we pitched within the last two weeks that I’m very confident about. This is our market. We need to win this. This is not only our ICP, but the way that we went in and did a fixed fee retainer upfront, it’s just a well-structured deal for Zeroed In. Those are the ones that I want to continue to focus on. The other ones are kind of like if we win them, great. But I don’t have the confidence yet to just say no, but it’s more of like I’m putting more of my effort on the things that matter as opposed to equally putting in effort on all deals.
Greg Alexander: There will come a point where you’re going to have the confidence to say no, and that’s when supply and demand is in your favor. You know, when you’re swimming in revenue, and your issue is staffing, not necessarily revenue generation. So I hope you get to that point soon, and that’ll be a critical milestone for you.
Greg Alexander: Let’s talk about, you mentioned several times that so far the big benefit of targeting your market and having an ideal client profile is your outreach, spending your time on the things that you want to win. But yet you just told me you pitched a piece of business that was outside your ICP. So how are you enforcing that discipline?
John Ikosipentarhos: Historically, all of our marketing efforts have been around just general accounting advice, and it has quite frankly gotten us nowhere. We’ve also, at one point, hired a marketing consultant to come in and help us with our outreach. Again, it got us nowhere because we weren’t specific enough. We weren’t really tackling those pain points. I would say we’ve made a concerted effort in the last maybe three months to just hone in on our ICP and the pain points that they have, and actually going in there and providing true value. When we talk to our clients, we provide a tremendous amount of value. But for whatever reason, when we’re writing a blog, or when we’re running a LinkedIn post, or recording a video, we tend to stay more general because we don’t want to partition out a certain audience. I think that we kind of just have to stop doing that.
Greg Alexander: Time marketing time, sales time is precious, right? Those are non-billable hours. If you just peanut butter spread them all over the place, you get a low yield, which, unfortunately, you’ve gone through, but most of us do. The more targeted you get, as they say, the riches are in the niches, the better the yield is going to be. The next question I have regarding the ICP is, how have you validated it? Is it still a theory, or is it an empirical fact at this point?
John Ikosipentarhos: No, I’m fairly certain that it’s still a theory. Because of the location, we’re based in Southern California. There’s a lot of tech out here, but tech kind of branches out into a bunch of different industries. I feel like tech in itself is still maybe a little bit too broad. We’re actually trying to focus on media and entertainment tech, which is still a theory. We still want to do tech because we like the companies that come with tech. But we don’t know if media and entertainment is going to be the right niche there, or if we’re going to have to potentially pivot. I think that’s kind of the journey that we’re on right now.
Greg Alexander: Interesting. And that’s really my next question, which is, these things are never static, they’re dynamic. The ICP, ideal client profile, has to iterate over time. As a young growing firm, you want to run experiments that say, well, maybe I can get into that market or this market. That represents growth and running kind of targeted tests with defined timelines and clear pass-fail criteria. So you’re not just running around again, spraying and praying to everybody. So how are you testing that theory?
John Ikosipentarhos: As I’m sure you’re aware, audit season is coming up. At the end of this year, everyone’s going to have to close their books, and it’s going to start to become the busiest time of the year for us accountants. We’ve already launched a campaign that is hyper-focused on audit readiness for media and entertainment companies in Southern California. We are expanding it slightly to Nevada because we have some team members out there, but there’s not a lot of media and entertainment in Nevada. We want to see if we are able to actually generate some leads. I’ll be completely honest with you, we spend a lot of money and a lot of time, and we’ve gotten zero leads from our marketing efforts. I’m hoping that with this test, we at least get someone or something that I can say, okay, we have something here. Now, let’s see how we can expand on that.
Greg Alexander: So the money that you spent, and unfortunately, that didn’t produce a result was that before you okay beforehand, right? So now, the new test. The new dollars are going to be around. And I just want to repeat the 3 things he said, because this is how targeted you can get. So there was a geography, Southern California. There was an industry media and entertainment. and there was a use case. Audit readiness like that is super targeted. So you’re going to concentrate the limited resources. And we all have constraints around people, money and time, the limited resources against that. What is the pass? Fail criteria number of leads generated.
John Ikosipentarhos: Yeah, for right now it’s getting a lead generated. So if we get one, I will be happy. But no, I think if we can get honestly if we can get a deal close, that would be phenomenal. But if we can get leads generated, that means that it was on us, and we potentially failed during the, you know, like the sales process, because we’ve only sold to referrals or warm leads, and we have a high close rate, but it’s because they know us right? There’s some kind of like level of comfortability. However, when it’s a cold lead, it’s a lot different, right. And so I’m curious to see if we would show as well. With someone that doesn’t have that that leg up for us.
Greg Alexander: So if you have this high close rate with referrals and personal networking and all that, why bother? Why, why go outside of that.
John Ikosipentarhos: I believe that we are reaching the cap of what our network could potentially provide. So again, because time and money is important here, like we only have so many hours within the day. And my co-founder. He’s a grinder. He’s the one that you’ll find at all of the networking events. He only has so much time right? And so. Me, who doesn’t enjoy doing that as much I was like, well, how can I kind of help provide support there. And I was like, well, maybe we can do it, you know, from the comfort of my home and do it through marketing, right? And so that’s where I’m kind of coming in and saying, Okay, I can support you. But I’m going to do it in kind of my techie way, which is kind of my role versus kind of the old style way of kind of going out and meeting people and handing out business cards and stuff like that.
Greg Alexander: You know, John, the reason why we wanted to have you on the show today is because you’re in the middle of your journey, as it relates to this, you know your face is right smack in the middle of it. And you know, you’re figuring out as you go. What do you wish you knew now that you don’t know.
John Ikosipentarhos: Man. Well, you know, from an entrepreneurship perspective, I would just say that it’s a roller coaster ride like the highs are high and the lows are low. And sometimes those happen in the same week. So it’s kind of you know it. It definitely takes a brave soul to be able to kind of like, go on this journey. But I think I’ve said this before is that I didn’t know what I was doing 3 and a half years ago, jumping out with a partner. but I think the best decision I ever made was not doing this alone. So obviously collective 54 is important because it provides community to a bunch of different entrepreneurs. But a lot of them are solo entrepreneurs, right? And you know the ones that aren’t collective. 54 is great, but I kind of already had my kind of safety net with my partner, Kyle. And so that’s why it’s kind of like, I would say, either bring someone with you or join a community because it gets lonely. It gets dark. It gets really high, too. But, like, you know, it’s all about balance.
Greg Alexander: You know, 3 and a half years is a long time. You know, and sometimes people are afraid of going on the entrepreneurial journey, because it takes a while to figure it out. and the opportunity cost for somebody like yourself, who’s in their prime, earning years to spend 3 and a half years and potentially more kind of figuring this all out scares people away. So the objective of learning from your peers in a variety of different ways, collective 54 being one of many, is to shrink the time, compress the time, pay as little dumb tax as possible. So you, you have helped us today. There’s people who are going to listen to this. And there’s people going to attend our Friday role model session that you’ll be the featured role model on that are going to learn from your story. So on behalf of the community, John, I just wanted to thank you for being a great member and being able to come on and say, Hey, this is what I’m going through. I don’t have all the answers yet, but this is what’s worked. This is what hasn’t worked. This is what I’m trying right now, and to be continued. So appreciate you very much.
John Ikosipentarhos: Yeah, no, definitely. Thank you for having me, and I’ll just end on. I’ve paid lots of dumb tax, and I’m sure there’s more to be paid. But I’m not afraid of it anymore.
Greg Alexander: We all have all right. So 3 calls action for listeners. So if you’re not a member of collective 54, you want to become one. Go to collective 54.com. Fill out an application. We’ll get in contact with you if you are a member, and you want to hear more about John’s kind of in-flight journey to figuring out the ICP. Attend his role model session. Look for that. Invite that’ll come out on Friday. and if you’re not ready for either of those 2 things, you just want to learn more. Check out my book. It’s called The Boutique how to Start scale and sell a professional services firm written by yours truly, Greg Alexander, you can find that on Amazon, but until next time I wish you the best of luck as you try to grow scale, and hopefully someday sell your professional services firm.
Note: This transcript was generated by Zoom.