The Vertical Advantage: How Focused Targeting Boosts Agency Opportunities

One of the most important part of both your short term and long term business planning is determining who you want to target. By picking the right targeting you will improve reduce your cost per acquisition, increase retention and improve margins. One of the most important things you can do though is make sure you have a solid vertical strategy.? Most agencies are initially scared to go all-in on a vertical.? They are scared that by doing so they are shutting themselves out from all of the other companies.? My experience is that once you go all in on targeting one or two verticals that your phone will ring the same amount if not more.? The benefit is that it becomes much easier to target your prospects and ensure that your services is a good fit for them.? This helps reduce waste in your marketing spend and give your whole business focus.? In order to do this properly though, here are some of the things you should think about:

Your Budget

?If you have a small budget, do not try to boil the ocean. You want your growth strategy to be impactful so start with a narrow segment.? In the short run you will want to continue to narrow your audience and the region you go after.? For example, if you are targeting B2C law firms and have a small budget, you might initially target Chicago and only personal injury attorneys.? As your company grows you can increase your budget which will allow you to expand to a greater region and more verticals.?

Size of Client Engagement

Your sales & marketing and service offering will differ based on the average order value you target. You should decide if you want to target “mice” which are clients that are spending hundreds of dollars per month, elephants that are spending millions of dollars per year or more or somewhere in between.? At Rise, our goal was to have 50 great customers and for them to get larger and larger every year.? So we were mainly elephant hunting.? Other organizations focus on winning tens of thousands of smaller customers.? Most agencies are somewhere in between and focus on winning hundreds of medium sized businesses.

Size of Company

Once you have decided if you want to win lots of small engagements or a few large engagements you should also determine what size companies are you looking to manage.? Are you looking for companies with revenue over $1 billion?? Or companies between $100 million and a $1 billion or truly small businesses.? This will help you determine what companies are a good prospect as you look to build a list of businesses you go after.

Size of Industry

You want to make sure that you select an audience that is large both in terms of money spent on marketing and number of companies to go after.? I recommend that the vertical has at least 10k companies for you to target.

Growth of Industry

You cannot fight the wind. So pick an industry where the wind is at your back.? This is probably one of the most important areas for you to focus on.? If your clients are growing, you will grow with them.? If they are shrinking then you will have lots of conversations about reducing fees and cutting spend.

Right to Win

You need to make sure that you have the right to win in this vertical.? This means that you have solid case studies within your vertical and that your service offering is a great match for the vertical.

Decision Makers/Influencers

Once you have properly identified the type of businesses you are going to go after you then need to determine who at the organization you plan on targeting.? Understanding who makes the decisions in general at the organization and the key influencers will ensure you channel your time to targeting the right people.

Focused Innovation

Once you have your target audience well defined you then want to make sure that your service offering and innovation roadmap is aligned towards this target audience.? Every year you want to make sure that your service offering has improved relative to this target audience so that you can build true differentiation.

Conclusion

By focusing on a narrow target audience you will be able to allocate your sales & marketing dollars more effectively which will ultimately lower your cost per acquisition.? Additionally, your innovation and service offering will continually be focused on this audience so your retention rate and lifetime value of customer will increase.??