May 2021 - Delving Into Vertical Markets: Tips & Tricks for Being Successful
Updated: Nov 11, 2021
As you are determining whether or not to focus on a vertical market, there are many things you should consider, but today I want to hone in on my top 3 considerations when deciding whether or not to and which vertical market you should pursue
In a time of uncertainty in the commercial market, many manufacturers, dealers, and reps will be contemplating whether they should consider switching a focus or focusing on a new vertical market(s). When you read that, you probably had a strong reaction either way.
A reaction of “YES! I am all in”, “NO WAY that just seems like a lot of work for an unknown payoff!” or a reaction of plain uncertainty due to the unknown of what that looks like. This article is for those who fell in the category of uncertainty and possibly the ever-enthusiastic YES personality if you are not familiar with vertical markets.
As you are determining whether or not to focus on a vertical market, there are many things you should consider, but today I want to hone in on my top 3 considerations when deciding whether or not to and which vertical market you should pursue.
Wikipedia defines a vertical market as “a market in which vendors offer goods and services specific to an industry, trade, profession, or another group of customers with specialized needs.” With this definition, almost any non-commercial entity or focus could be considered a vertical market. However, for the purpose of our discussion, let’s agree vertical markets are Federal, State, Local, Education, or Healthcare.
Market Analysis Start with an analysis of your geographic market. Does your location and/or customer access gravitate towards a particular vertical? While it is arguable that every market has some degree of every vertical market, not every market has a heavy concentration of every vertical. For example, are you in an area with numerous military bases such as Southern California or near a very large installation like Redstone Arsenal surrounded by prime contractors such as Huntsville, Alabama? Or are you in a city that has a lot of hospitals like Boston or Los Angeles? Or is there a college on every corner in your city like New York City, which has over 200 colleges and 1million students in a 25-mile radius?
After you have identified which verticals are abundant in your area, follow the money. With COVID, many of the verticals we are discussing have an influx of extra money.
Find out who received the money (this is all public information) and if they have already made plans to spend it. This money may need to be spent on specific COVID relief products, including quite a few products in our industry, such as anything that divides space, air purification, signage, and on and on. When it comes to State and Local, make sure to see if they have money to spend (or are they in a shortfall this year), and they will be spending it on FF&E- again, a lot of this is public information if you take the time to do the research. Partner/Sales Team Analysis Once you have determined which verticals are potential targets for you based on your location and following the money, you’ll want to look at your manufacturer/rep/dealer partners as well as your sales team. Do you have manufacturer partners that have products that meet the needs of the specific vertical you are considering? Do your reps and/or dealers have the knowledge and potential relationships in this vertical? Do your salespeople understand the vertical, find opportunities, research, and develop sales strategies for specific verticals? Or are they willing to invest the time and energy needed to learn enough to be dangerous and partner with those who do know to be successful?
Contract Analysis Although not always, the verticals we are discussing typically tend to use a contract vehicle of some sort, whether that is a GSA contract, State/Local/Education contract, Cooperative Purchasing Agreement, or Group Purchasing Organization (GPO) Contract. Lack of access to contract vehicles may not automatically disqualify you from selling to the vertical markets. Still, it is a lot easier to get in the door and close the sale if you have access to and a basic understanding of contracts. An additional benefit of understanding contracting vehicles and knowing how to position them is keeping opportunities from going to bid and reducing the amount of competition you must face. Many of these contracts are manufacturer-held, but some can be dealer-held. Determine if you have the proper manufacturer partners/dealer partners with contracts to sell into the vertical(s) you are considering. If you do, put together what that offering would look like and who your partners could be. If you do not, put that on your road map of things you need to develop as you create your vertical market sales plan.
Go/No Go and Develop Your Plan Once you have done your market analysis, partner/sales team analysis, and your contract analysis, you are ready to make an informed decision as to whether or not you want to pursue vertical markets and which ones make the most sense for you. Then, if you choose to move forward, create a plan to focus on. Remember, like with all things that are worth it, this is a marathon, not a sprint. You may find some immediate success early on, but the bigger payoff will be down the road as you develop into someone who is known as a specialist in your particular vertical market.
About Michelle Warren
Michelle Warren is President of Catalyst Consulting Group, a firm specializing in providing strategic solutions to the commercial furniture industry to enhance companies' sales and positioning within their industry and distribution. Michelle has been in the commercial furniture industry for over 25 years with experience on both the dealer and manufacturer side of the industry. She has experience at the EVP, VP and National Sales Manager level for large and small manufacturers.
PUBLISHED IN: DELVE | MAY 2021 V.14