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The Importance of Vertical-Specific Marketing for MSPs
April 2008
Contributed Article by Erick Simpson, MCP, SBSC
Senior Vice President/CIO MSP University
Let’s discuss the importance of, and process whereby we identify our verticals in preparation to market our services as a Managed Services Provider. At some point we’re going to need to implement vertical-specific marketing, in order to leverage the knowledge we’ve gained from servicing a specific client vertical. If we are continually referred to new and different verticals, we never have the opportunity to recoup the lost labor hours we’ve spent learning how to address the last vertical client’s pain, workflow, processes and software, and leverage this knowledge with new clients in the same vertical.
A smarter play would be to take the knowledge we’ve amassed from serving several clients in a specific vertical, create a compelling marketing message and collateral which evokes an emotional response about that vertical’s clients’ pain points and how we’ve resolved them, and deliver this message to a clean and verified vertical-specific mailing list.
So how do we determine our top verticals to market to? Sometimes it may not be a good strategy to simply take all of our existing clients, break them down into their individual verticals, count how many there are in each, and go with our top two or three. Well, why not? This sounds like a perfectly acceptable way to choose our top verticals, doesn’t it? And isn’t this similar to the process we describe in our first book “The Guide to a Successful Managed Services Practice” (albeit in reverse); when developing our Client Solution Roadmap, to determine what solutions to deliver to our clients? The answer to both of these questions is….yes.
But…
We might have a bunch of clients in a poor vertical – now. Take for example the Mortgage vertical. A couple of years ago this was a hot vertical. I mean, Mortgage and Refinance companies were smoking then – remember when every other advertisement in just about any medium on the planet was selling Refi’s? And everybody was refinancing their homes two or three times? Those were good times….! But we all know what happened to that white-hot vertical, right? Many of those companies aren’t even around anymore, and the ones that are have taken a significant downturn in business, with some trying their best just to stay out of bankruptcy.
What about the Manufacturing vertical? The manufacturing industry has some of the largest head counts of many verticals, so what could possibly make us think twice before attacking it? Well, for one thing, just because a vertical has a large head count of people doesn’t mean there are an equal number of PCs or servers to support them. In fact, many manufacturing operations I’ve seen have the exact opposite in terms of users to PCs– many more users than PCs. This is exactly the type of environment that the “Device Cal” for Microsoft Windows Small Business Server was created to serve.
So it’s important for us to choose the type of vertical market we will market to from a couple of perspectives, including the vertical’s ability to pay for our services, as well as the suitability of the vertical’s environment for our services. But there are other factors we should consider when determining our target verticals as well. One of these is geography – how many prospects in our target vertical are within our desired service area? This is important from the perspective of resources and dollars spent to market to our vertical, in addition to servicing it.
Other factors to consider when choosing our verticals include gross revenue and number of desktops. All of this aggregate information will weigh heavily on the choice of verticals we will market to, in addition to our familiarity with the verticals, and our ability to deliver our marketing message to them at an equitable cost.
What do I mean by “equitable cost”? Well, this is simply the marketing costs we determine to represent a good return on our investment. For instance, we might consider it a good return on our vertical marketing investment of a couple of thousand dollars, when that investment covers the cost of purchasing a good list of a thousand names in our target vertical, the labor to create and mail a compelling series of introductory postcards to it, and the phone call follow-up to set an appointment – if we could set ten appointments from this effort. Now because we are expert sales people trained in the ways of the Force, we know that all we need is to be put in front of a prospect, and we’ll sell them something, right? Just channel Obi-Wan, and use the old Jedi mind-trick: “These are the services you’re looking for…” works every time!
But seriously, if we can sit down in front of ten prospects, and happen to only sell one Managed Service Agreement, or Solution (hey – even a blind squirrel can find a nut every once in a while, right?), the return on our marketing investment would look pretty good, especially considering that our Managed Service Agreements average a couple of thousand dollars a month.
So if the previous example is a no-brainer when it comes to illustrating an equitable return on our vertical marketing investment, what would constitute the opposite – a non-equitable return on a vertical marketing investment? Well, pretty much any marketing activity where the cost to implement it does not meet our requirements for ROI. For example, we work with Partners who had determined in the past that a great way to market to their chosen vertical would be through a Trade Show. Sounds like a great opportunity, doesn’t it? Instead of direct marketing to thousands of prospects with boring, “old school” techniques - marketing list procurement and cleaning, mailing and call-downs, how cool would it be to travel to an exciting city and become a vendor in a Trade Show geared to our target vertical market, where all of our prospects come to us? I mean, that’s how the big boys do it, isn’t it? It certainly is….
Are you waiting for the shoe to drop? Okay, here it is. The Partners we worked with in this particular scenario didn’t quite receive the ROI they needed in the time they expected it – for several reasons. Remember that term “equitable”? Well, maybe we should re-label that expectation “equitable and timely.” I think that would better illustrate the point here. The bottom line is that it’s a very expensive proposition to participate in Trade Shows. Don’t get me wrong - Trade Shows can be an excellent source of leads – this is, after all, one of the primary reasons the “big boys” do it. But the “big boys” also have big budgets. And big cash flow. And big airline miles. And big expense accounts. And someone to set up their travel and lodging. And, and, and all the things we, as SMB IT Service Providers….don’t.
Sorry, but I can’t help but think of a poker analogy. We’ve all played blackjack and poker, whether at a party, friend’s house, Vegas, etc., right? But how many of us have played in the World Series of Poker? Not many, I would guess. Well, supporting trade shows and events is kind of like poker and blackjack – the more we play, the better some of us get, and we’ll even win big once in a while. But in order to sit at the table and last through the tournament, we’ve got to have a big bankroll to bet…
So when choosing our verticals, the bottom line is we’re going to want to pick two or three that meet the following criteria:
- We are familiar with it
- It contains numerous prospects within our service area
- It has sufficient desktop and server counts
- It can afford our services
- We can create compelling enough messaging to establish an appointment
- We can use strong existing client testimonials in our marketing efforts
- We can afford to maintain a long-term marketing effort to
- We receive an equitable and timely return on our marketing investment from
So sit down and choose your verticals wisely – this is an important early step in maximizing your marketing return and service profits as an MSP.
Erick Simpson is Senior Vice President and CIO of Intelligent Enterprise, a Gold Certified Microsoft Partner, and MSP University, and is a recognized IT and Managed Services Author, Speaker and Trainer, and contributor to numerous industry publications and events. Author of "The Guide to a Successful Managed Services Practice - What Every SMB IT Service Provider Should Know...", the definitive book on Managed Services, and the follow-up in MSP University’s Managed Services Series “The Best I.T. Sales & Marketing BOOK EVER!, Erick has also co-authored the HTG publication “Peer Power – Powerful Ideas for Partners from Peers”. MSP University (www.mspu.us) has helped numerous Vendor Channels, their Partners, and thousands of independent IT Solution Providers worldwide educate themselves in transitioning their I.T. Service Businesses to successful, profitable Managed Services Practices.
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