ChannelTrends: Five Vertical Markets Tech Firms Should Be Targeting

TargetIt's that age-old question: should tech companies cast a wide net when prospecting for new clients or hone in on specific audiences? Experts suggest the latter is the only real answer, at least from a financial perspective. Vertical specializations allow providers to create more impactful solutions and greater process efficiencies.  

From both a financial and operational perspective, that focus makes sense. When the needs of businesses or organizations are similar, it simplifies the development, marketing, and sales processes. Providers can immerse themselves in the language and concerns of that industry ‒ and often receive a premium for that knowledge and expertise.

Tech services firms without a vertical approach end up recreating the wheel on a frequent basis. Whether that involves tailoring their portfolio to meet a unique compliance concern or broadening their marketing and sales activities to catch the attention of their diverse prospect base, each will require more of their limited time and resources.

Providers sometimes have little or no choice of which route to pursue when starting out. Location, business demographics, and personnel limitations force many rural tech firms to start out with a general tech services portfolio, supporting virtually any organization who needs their support.

Over time, some end up acquiring similar clients. Managed and cloud services allow providers to push their geographic boundaries, with peer recommendations and testimonials helping them gain traction in more lucrative markets. A satisfied customer's participation in case studies and promotional activities is invaluable. Those endorsements validate a provider's expertise and, when leveraged effectively, may bring invitations to industry associations and other market-related communities. From there, the sky's the limit.

Realistic Options 
One of the most commonly asked questions in the channel is "what vertical markets are best?" The answer depends on a variety of factors, including company location, business demographics, and budget potential. Believe it or not, the latter point often gets little consideration in the specialization conversation.

Channel firms often build from their core. Providers with a strong base of local government and non-profits may develop an affinity for working with those organizations, but their budget constraints and excruciatingly slow sales processes can severely limit profit potential.

Those attempting to break into healthcare run into similar concerns. Tech projects may be larger with bigger budgets, but competition can be fierce and lengthy decision-making processes can significantly increase customer acquisition costs. In other words, the opportunities in this vertical are solid ‒ but the prospects are strongest for channel firms already well-established in this space. 

For a comprehensive discussion and list of channel business development options, download the CompTIA Quick Start Guide to Entering a New Vertical Market

So where should a newly expanding tech company focus? The easy answer is to look for businesses that rely on technology, value their time, and have large enough budgets to make a relationship worthwhile for the provider. The five largest vertical markets fitting that description include:      

  1. Financial services/banking: What town doesn't have a small bank, credit union, lending firm or financial advisor? Each facing a myriad of government regulations with cybercriminals just waiting for them to leave an opening. Backup and disaster recovery/ business continuity and security are must-haves, as are surveillance, access controls, and general business technologies. This market does have its risks (consult IT insurance and legal experts), but the ROI makes it a worthy specialization consideration.  

  2. Manufacturing: This vertical relies on a variety of technologies, from HR and CAD (computer-aided design) solutions to logistics management applications, these companies require the support of a highly diverse skilled tech. Owners are more than willing to discuss automation options to reduce labor costs and remain competitive, and demand for solutions that enhance sales, marketing, and customer service continues to grow.

  3. Retail/hospitality: It takes focus to thrive in this vertical. Profits in many segments of retail and hospitality are slim, leading to sometimes lengthy and laborious procurement discussions. Labor-saving automation sells, as do online sales and marketing platforms, and the support required to keep them up and operational 24/7. Some providers are targeting high-end hotels and restaurants, businesses that embrace technology and see it as a differentiator. Prospects and profits in that space look promising.    

  4. Legal: In its 2016 survey, the American Bar Association identified 1,315,561 attorneys that were practicing in the United States, with an annual growth rate of between one and two percent. While not all were in private practice, the legal community loves and appreciates what technology can do for their firms. That creates a substantial target audience for the channel.   

  5. Education: This vertical is the exception to the government sector argument ‒ potentially lengthy procurement processes, occasionally excruciating oversight and budget challenges ‒ but the opportunities are plentiful. Educational institutions are becoming digital organizations. The breadth and scope of projects at local schools and colleges are endless, from communications systems and campus security solutions to smart classroom technologies. Budgets are increasing, and many boards are bringing in CIOs to plan and manage future tech investments.

As members of the community, some providers' involvement is part philanthropic, giving back in some fashion to the people and institutions that support their businesses and families. But the intangibles may make up for potentially lower margins, including increased PR and community service visibility, steady payment streams, and the ability to experiment with innovative technologies that could be rolled out to other clients.

Which vertical is best for your technology firm? Only you and your prospective clients will know for sure, so cast a wider net and research the options. The payoff may be big.        

Brian Sherman is president of Tech Success Communications, a channel-related content and social media development firm. He served previously as the chief editor at Business Solutions magazine and senior director of industry alliances with Autotask. Contact Brian at

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