Profit From Deeper Vertical Market Dives In Small Business
Do you respect your family doctor’s opinion as much as a neurologist or orthopedists? On the surface, specialists are seen as a step above a general practitioner when it comes to knowledge and patient care. That’s more of a perception than fact. While their education and training is focused on a particular part of the body (or mind), it doesn’t mean these physicians should rank higher than the typical family physician. But when someone is seriously ill and needs an experienced specialist, their services are invaluable. The same is true for MSPs and VARs that have well-developed vertical market practices. Here’s why.
Channel partners that have a well-developed vertical market practice typically face less local competition and have the ability to generate higher profits. But jJust declaring your company a specialist in a certain market doesn’t make it so…
Start With a Single Focus
In order to build successful specialty practices, solution providers must provide outstanding support in one or two areas. That requires a deep focus on a particular vertical, including complete solutions and services required by a specific set of customers. A complete package is a necessity with specialty sales, but that doesn’t mean you have to do it all yourself. Collaboration with other solution providers and vendors is an option, though a vertical professional should manage the account, including communications and scheduling.
After mastering one specialty, explore opportunities in other markets. Typically, the best way to keep costs low and sales potential high is to assess the needs of local businesses, then determine which have the most revenue/profit potential for your organization. The best prospects are typically those with similar technology and compliance needs as your current clients, since the learning curve and investment needs will likely be lower.
It’s also prudent to quantify the businesses in each specialty within your current service area, at least as a factor to help determine the viability of the market. If there are only a few healthcare organizations in your region, but the headquarters for more than a dozen energy companies, the potential for the latter may be higher. Of course, several factors may reverse the prospect value of these markets, including the number of existing competitors and the costs of hiring and/or training technical and sales professionals.
What are some of the other steps that should be included in a market assessment?
- Determine “technology gaps” that exist within the verticals in your area
- Evaluate the legal compliance and industry standards needs for each
- Research the local associations or groups that these businesses belong to (can you leverage them to promote your services?)
- Investigate the vendors that could support each vertical—and what they will do to help you be successful
A few industries appear to be recession-proof, driven more by the urgent need of their services than price. Healthcare and legal markets top that list, but the IT opportunity goes beyond the amount of revenue each commands. Efficiency and compliance are key drivers of technology sales. For example, despite federal incentives to implement EMR solutions, the factors that motivate physicians to upgrade their systems typically relate to improving their operations.
Compliance and privacy concerns also create opportunities in the legal market. According to CompTIA research, 65% of law firms indicate they are “concerned” or “very concerned” about information security. And 27% of respondents are considering the outsourcing of their IT department, creating a “perfect storm” of opportunities for qualified solution providers. The demand for legal services is expected to continue growing over the next few years, regardless of economic issues (perhaps growing even faster when times are tough). Even if legal revenue remains flat (though highly unlikely), lawyers are typically early adopters of technology and their willingness to innovate will drive demand for advanced network and mobility support. These services are a perfect “foot in the door” for solution providers, leading to a number of other opportunities.
From practice and transcript management software to billing systems, these offices require a variety of legal specific solutions—and they can benefit from sophisticated integration skills to make it all work seamlessly. Of course, having an online backup and data recovery offering that addresses the unique needs of the each vertical market (such as Intronis) is a true benefit to success. For example, the healthcare industry has data compliance standards which can be met through Intronis’ data archiving and revision rules.
Law practices that expected their IT budgets to increase were more likely to consider outsourcing (35%), so cost cutting doesn’t seem to be a major selling point. Two-thirds of these legal professionals cite a need for more IT expertise, while others seek better service, cost savings or additional capabilities. Either way you look at the numbers, the case for creating specialty practices continues to build, with law offices among the strongest opportunities for VARs and MSPs.
Among the law practices that primarily manage the IT function internally. Law practices expecting IT budgets to increase in 2010 are even more likely to consider outsourcing (35%), so it’s not just those looking to cut costs. Two-thirds of these legal professionals cite a need for more IT expertise, while others seek better service, cost savings or additional capabilities. That begs the question, what model of outsourcing will law practices embrace?
Ted Roller is VP of channel development Intronis, the cloud backup specialist. Monthly guest blogs such as this one are part of The VAR Guy’s annual sponsorship program. Read the archived Intronis guest blogs here.