Three of the top MSPs in the nation sat down to talk with Stuart Crawford about their experiences working within a vertical market. But before we get to their stories, let’s touch on what exactly a vertical market is.
What Is a Vertical Market?
In terms of managed service providers, a vertical market is one in which an MSP offers services that are specific to one industry or profession only. An example would be an MSP who services only dentists or one that services only the medical industry. The opposite of a vertical market is a horizontal market, where companies provide services to a broad range of clients.
Now that we’ve covered the definition of a vertical market, let’s hear what three highly experienced and successful MSP founders have to say about their managed services specializing In vertical markets.
Mike is the Chief Revenue Officer for Reliable IT. Founded in 1994, Reliable IT Healthcare specializes in healthcare and banking. Here’s what he’s learned in his vertical market over the years:
- Don’t try to be everything to everybody. Back in 2013, Mike and his company decided to narrow their focus and develop their services to be an MSP for orthopedic groups only because he was tired of having such a broad range of services for seemingly every industry. In the end, attempting to service too many industries stretches you too thin.
- Know where the money is. Mike and his company quickly learned that not all areas of the healthcare industry were lucrative. Over the years, they narrowed their focus to large orthopedic groups because there was a big market there, and the money was there.
- If possible, find a market where you can essentially duplicate your services. Mike was able to see that ReliableIT could basically copy the same services they provided to orthopedic groups and apply them to the small community banking industry.
- Don’t market to other niches, with one caveat … While you should eventually narrow your niche down and only aim to get clients in this new vertical market, if a client who isn’t in your market comes to you, by all means, don’t turn them down.
- Fill your niche market in novel ways. Mike and his company recently held a huge event in Colorado showing their laser-focused concentration on their orthopedic group target market to prospective customers. The event was two days long, featuring numerous industry experts, and it focused on assisting the pain points of their industry. The purpose was to share mutual concerns with their current and potential clients and ultimately to share with their clients what they would need to purchase over the following year. Just remember that events like these need to be worth it for both you and your audience.
- Make your company memorable. You’ll need to make your company known in the industry, so get involved! Be industry experts. Be everywhere. Get to know everyone who’s important in the industry. Build a name for yourself.
- Stay in touch — even with businesses who aren’t clients. Mike regularly sends out update emails about events, changes in the industry, and more, but he doesn’t just send them to his current clients; he also sends them to CEOS who aren’t clients. What happens? He actually gets responses from those CEOs. Why? Because he’s established his MSP as a leader in the industry.
Chris is the Founder and President of Parkway Tech of North Carolina. Founded in 2008, Parkway Tech specializes in helping small to mid-sized law firms with their IT and cyber security needs. For the last ten years, here’s what he’s learned about the vertical market:
- Realize when it’s time to narrow your market. Sometimes, narrowing your niche isn’t necessary or even possible, so you’ve got to know the signs that it’s time to go vertical. Start by taking a look at your competition.Is the market overcrowded with other companies who do the same things as you? Now look at how your MSP’s been able to keep up. Are you having trouble staying updated with all the latest technologies? Finally, how are the inner workings of your company? Are you having to bring in new staff, rent new space, or buy new equipment? Expansion isn’t always good; it depends on your unique company goals and, naturally, how your revenue compares to your expenditures.
- When deciding on a new niche market, start by considering which clients you enjoy working with. Of course, you’ll be choosing a niche where there’s money and room to grow, but it’s also okay to choose an industry you simply enjoy working in. For Chris, that was law. Also consider the market’s ability to pay!
- Better your knowledge in the industry and build new relationships whenever possible. Get involved in the industry — especially at first. You want to become leading experts, so you’ve got to start somewhere. Chris recently attended an industry-related conference for the first time. For him, it was an educational opportunity and a chance to put in face time with other vendors and leaders in the legal field. This will help you find new prospects, but it will also help strengthen current relationships.
- Don’t only concern yourself with technology. Chris tries to learn everything he can about the legal industry and doesn’t worry if what he’s learning isn’t only concerned with tech. For example, he learned that legal clients want more face time with their lawyers; this was a main concern of theirs. By knowing this information, Chris could then relay it to his clients, and together they could turn this into process improvements for their law firms.
John Gambill Jr.
John started GO Concepts in 1997 as an ISP providing Internet services, web design services, and consulting. GO Concepts transitioned several times over the years, quickly refocusing to ultimately provide consulting and managed services within a single vertical market. Here’s the advice he has:
- You have to be the best in your industry. John was committed to becoming the #1, nationally-recognized information technology services provider for the developmentally disabilities space in 88 counties in Ohio. Their target market is only a few hundred customers, but that’s okay; they’re the best at what they do.
- It can be scary to make the transition. It’s essential to sit down with every decision maker in your company and weigh the pros and cons before deciding to go vertical. John mentions worrying about several drawbacks to the transition at the very beginning — and some very real fears about slimming down their target market. But in the end, the pros outweighed the cons, and it was a big step forward for their company.
- Talk to your other clients outside of your new niche market.Before you transition, you’ll likely have clients who are outside of the new niche market you hope to target. That’s okay, but you’ll want to remember that they may have questions and concerns as you change your marketing scheme. Let them know you’ll be sticking with them, continuing to provide them with the same great services you always have.
- Speaking of marketing… Once you decide to switch niches and go vertical, you’ve got to say so! In other words, it’s time to switch your marketing scheme in a major way. Commit to the change and speak to your marketing team about this new change in your company. You’ll want to get laser focused from here on out.
- Change what you need to right away. Aside from marketing, other systems within your company may need to shift and become more focused. This includes employee training, software and other internal systems, associations with related organizations, best practices, and more.
- Talk the talk and walk the walk.Let your niche clients know you’re a streamlined MSP for their industry and you’re the best in the business. Don’t be shy about explaining that you know exactly what their needs and pain points are.
When it comes to marketing as an MSP, remember that if you’re spread too thin and aim to please too many industries, potential clients won’t know what it is you really do. A dentist wants an MSP who focuses on dental practices. A lawyer wants an MSP who focuses on legal practices. All clients want to know they’re working with the best in their industry.
Going Vertical In Your Managed Service Business
So, narrow your focus into a vertical market. Make yourself the expert in that market. And create a marketing scheme that targets your new niche. The rest is planning, a positive attitude, and hard work!