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Posted: November 09, 2009

Maximum wood behind the arrow

Increasing sales through vertical marketing

Larry Turner

The straighter you shoot your arrow, the deeper penetration you get. That is the same philosophy behind increasing sales through vertical marketing.

If you provide the exact product/service that your target market wants and needs, in a way they want it, you will get deeper penetration in that market, resulting in increased sales and margins.

Sounds simple enough, but in reality few companies succeed in really serving their customers' needs. Most companies find themselves with a set of products or services that they take to market and focus on a wide range of markets, which results in a fragmented approach and less than optimum results.

A vertical marketing approach allows you to take your current products and services to a set of similar businesses in a way that allows you to "customize" the solution for that target market. You need to step into the shoes of your prospects in the target market and understand what problems they have and design a solution around solving their issues.

It does not need to be an entirely new product design, but rather looking at the problem and understanding it from the client's point of view, and addressing all areas needed to solve the problem.


Examples of Vertical Markets: A vertical market is more than just a group of businesses from the same SIC code (Standard Industry Classification), but that is a good place to start. SIC codes will allow you to identify your target market through the leasing of lists to be used in your marketing and sales activities.

In one business that I ran, we focused our growth efforts on the United States Department of Defense (DoD). While that is a fairly narrow market classification in the federal government, it did not provide enough segmentation to be successful.

We further segmented the market to the individual branches in the DoD (for example: Air Force, Air National Guard, Army, and Defense Logistics Agency), because they each had a uniqueness in how they operated and how they purchased. Our solution was focused on each branch of the military with minor changes that supported these unique needs.

Taking this approach we grew the business over 100 percent year over year during the time we were running these programs. Focus your efforts on a narrow vertical market, learn all you can about their needs and deliver the product/service in a way they want to buy.

Learning the Needs: It takes research, time and effort. Secondary research, information already published, will allow you to learn the basics about your target market.

This information can provide background on some historical facts of the market, structure of the industry, identification of key industry players, competition, and some overriding issues. It will not provide you with the information you need to thoroughly understand the needs of individual company's and the best go-to-market strategy.

Primary research, unpublished information, is necessary to learn the dynamics for your go-to-market strategy, which includes the definition of the whole product solution. A low-cost way to obtain primary research is to pull together some key personnel in your business and assign tasks to speak with owners/executives at companies in the industry you are researching to learn about their businesses and understand what keeps them awake at night.

This gives you and your team firsthand knowledge of the pain in the industry, and will help you understand key issues in the industry. Once you understand the buying dynamics of your target market along with key industry information, you are now ready to start developing the solutions.

The Solution: A whole product solution approach looks at all aspects of your target markets' needs, which could include your standard product set. The key is to understand the need and design a solution around it. Look at all areas of your business when developing the solution, not just the product itself:

Training and support - Are there special needs that this target market has that could position you favorably against your competition?

Consulting Services - You are the expert in your field, and have knowledge that is valuable. Can you pull develop a consulting or outsource service that provides extra value to your target market?

Interfaces - Are there special requirements in this market that you could add into your product or service?

Billing cycles - Can you change your terms or billing processes to better meet the needs of your target market? Customization comes in more forms than just the product or service.

Getting Started: If you look at this as a huge project, you may never get started. Spending the time to define your current customer base is a great starting point.

 Segment your customer base by major SIC and start profiling. This will give you a better understanding of the buying triggers of your current customer base and allows you to understand how to go through the process on another market. Once you have finished profiling your current customers, move onto a targeted vertical market.

It does take time, but a diligent approach will help the success of your program.

 To learn more about increasing sales in the current economy, visit www.roundhouseadvisors.com/prepare.htm

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Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations.  Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits.  Larry is a consultant, public speaker, and the author of “Owner Exit Planning: Leave On Your Own Terms." For additional information visit www.RoundhouseAdvisors.com

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