Why Define a Vertical for Your VAR or MSP Business?

For many emerging service providers, their first instinct is to accept all business, regardless of the client type or industry. While a successful approach for some, it makes specializing difficult. After all, how can you provide the same complexities to both healthcare and real estate businesses when they have markedly different needs and expectations.

Without choosing a vertical—a defined market segment—you are just another provider. Your services are only services, whereas your services become solutions when you target a specific vertical. The customer trusts in your expertise as a provider and as an agent of that vertical, making the partnership richer and more useful.

How to Pick a Vertical to Lean into

If your business has catered to all market segments in the past, then choosing a vertical will feel counter-intuitive and restrictive. But narrowing your businesses scope allows you to delve deeply into an industry and assemble full-service solutions other providers cannot match. That said, your success hinges on your ability to select the right vertical.

Does the chosen market segment continue to evolve or do businesses in the space stagnate?

If businesses in your vertical do not react to new technologies, you may find your potential dampened. A large source of revenue for most VARs and MSPs comes from referral and repeat business. A sector that resists change not only threatens a poor long-term forecast, but you may find it difficult to win over customers currently subscribed to competing service providers.

How many other VARs and MSPs target this vertical?

You want to avoid saturation because it creates a marketplace where everyone races to the bottom—the fastest turnarounds, the lowest cost, etc. By identifying with a vertical, you escape saturation because you define a unique selling proposition. Your knowledge and experience render other general providers inadequate. However, if too many businesses target the same vertical, it becomes another arena with dozens of brands with little differentiation.

Are you interested in the chosen vertical?

Ideally, the vertical you choose should stem from your own interests. You need to know more about the industry than just its products and technologies—you should remain up-to-date on market trends, opportunities and other happenings that affect your customers. The more relevant you make yourself within the vertical, the more value you can provide.