Select Target Verticals with Care
Return on investment will depend on two factors: the size of the opportunity, and your company’s ability to pursue it
Specialization implies prioritization and the decisions of whether and how much to invest in each target vertical market. The return on investment will depend on two factors: the size of the opportunity, and your company’s ability to pursue it successfully. The opportunity and execution factors listed in rule 4 apply here as well.
To find the greatest opportunities, look at industries in which you have significant traction due to historically high demand and those that are likely to grow in the future. Symantec Corp., a leading vendor of information security and storage products, created industry marketing teams for financial services, communications, and government—all historically strong sectors for the company. In addition, Symantec selected the healthcare industry because forecasts showed enormous future growth there. Healthcare companies were going paperless just as privacy regulations were enacted and data theft skyrocketed—the perfect storm for data management and security demand. By looking outside its traditional strongholds, Symantec was able to benefit from the rapid growth in a new market.
The framework in figure 8 summarizes strategies for different types of industries and the subsequent step (described in rule 21) of prioritizing use cases.
Figure 8: Selecting Target Industries and Use Cases
Ignore (small opportunity, low ability to execute): Ignore vertical markets with low expenditures on the types of products or services you offer. If companies in this industry are on your managed account list, consider replacing them with ones in more promising verticals. Move these off to the channel or to inside sales.
Opportunistic (small opportunity, strong ability to execute): These industries spend little compared to other markets and are not demonstrating promise of future growth. For historical reasons, you have a dominant position and expertise. Keep investment down to maintenance levels. Do not add any industry-specific resources, but allow sales reps with productive accounts to continue to pursue. Look for changes that may suggest increasing investment or, conversely, redeploying sales resources to more promising accounts.
Partner (big opportunity, limited ability to execute): Where the opportunity is significant, but you lack a reference base, appropriate feature set, domain expertise, or other key capabilities, identify partners interested in orchestrating a solution; and position yourself as a key completer, or at least as a valuable complementor. Over time, you may gain the capabilities and critical mass to pursue these industries more aggressively.
Target (big opportunity, strong ability to execute): Industries with high spend and/or growth, and in which you are positioned to execute, should be the primary targets for investment. Hire additional expertise, invest in press and analyst relations, and promote past successes. Within target industries, evaluate individual use cases or solution areas to determine the extent and direction of sales, marketing, alliance, and engineering specialization. (See rule 21 for more on use cases.)