IT firms often service a range of industries, as companies of all types need some level of IT support. But concentrating on a certain vertical market—a group of similar clients doing business in a specialized field—can mean higher revenues, better margins, lower cost of sales, and more and larger orders. Moreover, getting into a vertical market gets better and better; selling accounts will take progressively less time as you build references in the market and become better at communicating what sets your services apart.
Here are 10 steps that can simplify the complicated process of getting started in a new vertical market:
Step 1 Select a target vertical market: Look at your existing clients and note similarities in the markets they’re in, their size and how they do business. From there, look at your current capacity and what it’d take to specialize in that market, as well as the overall trajectory of the market itself.
Step 2 Create a profile for clients within the vertical market: Identify those clients providing the majority of your revenue, then look at their common characteristics and determine how many clients of this type are in the vertical market you’re considering.
Step 3 Estimate the localized market value for your chosen vertical: By determining the number of prospects you can identify and how many fit your client profile, how many buying decisions they make per year and how many of these you can expect to secure for your firm, and what your margins will be on these deals, you can estimate the value of this vertical and decide whether or not to get into it.
Step 4 Commit to the vertical: Once you’ve decided to get into a vertical, commit. Immerse yourself in it, not just financially but philosophically. Learn about how it operates, what its culture is, what technology it’s using and who are the key vendors in the space, as well as what regulations affect it directly.
Step 5 Identify key industry groups, websites and publications: Identify and get involved in any associations relevant to the industry and carefully study what they offer. Subscribe to and read any publications covering this industry and get directly involved with them on an editorial level if possible.
Step 6 Develop training programs: Ensure that your employees know as much about this vertical market as possible. Encourage and support their attendance at relevant trade shows.
Step 7 Identify key industry influencers: Identify thought leaders servicing this vertical market; such as top consultants, lawyers, accountants, etc. You may even seek to organize an advisory council built around these individuals to regularly draw from their subject matter expertise.
Step 8 Create a positioning statement: Craft a statement of how you’re positioned toward your industry vertical, what makes you unique in the space, related practices your firm provides that support the main thrust of your work, and questions for potential clients to determine fit.
Step 9 Identify initial sales targets: Start with a list of roughly 150 prospects and break it down by geographic area and your client profile. From there, build out a database of contacts at these firms.
Step 10 Learn to partner: Look for potential partners; those firms selling non-competitive, related products in your vertical market. Define metrics and goals around these partnerships.
To learn more about entering new vertical markets and to access a variety of business tools and resources, visit www.comptia.org where CompTIA members can download the full CompTIA Quick Start Guide to Entering a Vertical Market.