Sales & marketing

ICP — Ideal Customer Profile

The precise definition of the company you actually want as a customer. The single document that decides whether a lead is a fit-or-skip in 5 seconds.

Definition

ICP (Ideal Customer Profile) is the structured definition of the company a B2B firm wants to acquire as a customer. For a UK alt-lender, it answers: which UK SMEs, exactly, do we want to lend to?

ICP vs target market

Easy confusion: target market is the broad universe ("UK SMEs"); ICP is the precise sub-set you actively serve. iwoca's target market is UK SMEs broadly; iwoca's ICP is closer to: UK Ltd with 12+ months trading, £100k–£3M turnover, in SIC ranges 41–47, 55–56, 62–63, 69–74, with a beneficial owner who can sign personally.

The 7-attribute framework

A good UK alt-lender ICP has 5–7 hard filters and 2–3 soft signals.

Hard filters (eliminate non-fits)

  1. Legal form — Limited company / LLP / sole trader (most UK alt-lenders exclude sole traders unless FCA-licensed for consumer credit)
  2. SIC codes — see SIC code glossary entry for the standard whitelist by lending product
  3. Size band — employees, turnover, balance sheet (typically expressed as ranges)
  4. Geography — registered office in England / Scotland / Wales / NI (some lenders exclude NI for regulatory reasons)
  5. Trading history — minimum age (newly incorporated for some products, 24m+ trading for others)
  6. Status — Active (not dissolved, in liquidation, or in administration)
  7. Financial structure — accounts category (Small / Medium / Full); presence/absence of existing charges

Soft signals (score remaining candidates)

  • Director appointment churn (low = stable = positive)
  • Concentration of directorships (serial entrepreneur = mixed signal)
  • Recent capital activity (charge satisfied / charge added)

Encoding the ICP

A working ICP can be expressed as a database query or a CRM filter:

SELECT * FROM uk_companies WHERE
  company_type IN ('Ltd', 'LLP')
  AND sic_code IN ('41201', '41202', '43210', '43320')
  AND employees BETWEEN 5 AND 25
  AND registered_office_country IN ('England', 'Wales', 'Scotland')
  AND incorporation_date <= NOW() - INTERVAL '24 months'
  AND status = 'active'
  AND existing_charges_outstanding = 0

If you cannot encode it, you cannot operationalise it. Memos are not ICPs.

Common UK alt-lender ICP patterns

Pattern 1 — Working capital, mature SME

Used by iwoca, Funding Circle, Lendable. Ltd, 24m+ trading, £500k–£5M turnover, mixed SIC whitelist, no existing senior charge.

Pattern 2 — Merchant cash advance, card-revenue SME

Used by Liberis, YouLend. Ltd, 12m+ trading, £200k–£3M card turnover, SIC 55–56 (hospitality) or 47 (retail), recent positive card-revenue trend.

Pattern 3 — Invoice finance, B2B sub-contractor

Used by MarketFinance, Bibby. Ltd, 18m+ trading, £500k+ turnover, SIC 41–43 (construction) or 49 (transport), customers with 30+ day payment terms.

Pitfalls

Over-broad ICP. "Any UK SME with cashflow needs" — not an ICP, not operationally useful. The funnel converts 0.1% because nothing is filtered.

Under-broad ICP. "Ltd construction firms in Greater Manchester with 7–9 employees, founded between Jan 2023 and Mar 2023" — too narrow to support volume. ICP must respect market size.

Aspirational ICP. The ICP you wish you had vs the ICP your funded book actually shows. Audit the last 90 funded loans before writing the next ICP version.

Related

Frequently asked

What is the difference between an ICP and a target market?

Target market is the broad universe; ICP is the precise sub-set you actively win. "UK SMEs" is a target market; the precise filter of size, sector, age and structure is the ICP.

How specific should an ICP be?

Specific enough that any lead can be quickly evaluated as fit / not fit, and ideally encoded as a CRM filter or Companies House query.

How many attributes should an ICP have?

5–7 hard filters plus 2–3 soft signals. More than 7 hard filters usually shrinks the addressable market past sustainability.

How often should the ICP be reviewed?

Quarterly. Sharper review after any major event (product launch, new geography, funding round, regulatory change).