This catch phrase seems to be getting a lot of play lately by business types. It implies that a company is unfocused in its market and customer strategy – in essence going after everyone. It sounds to me like they’re promoting a vertical market focus – something I call the “Vertical Virus”.
So here’s my take on this --
Not all market segments need to be based on verticals (verticals meaning industries like medical, transportation, insurance, banking, etc.) They can in fact be horizontal across verticals, but focused on a specific sub-set found across these verticals.
Here’s an example of what I mean – let’s take IT asset management software – customers who care most about this type of product would be organizations who are of a certain “seat” size (i.e. # Of PCs in the organization) that want to automate their asset inventory and management. It has very little to do with the industry vertical.
Another example would be testing and instrumentation equipment sold to research labs. What’s most important here is who the buyer will see as a reference, if he/she sees other labs that use the product in a similar way regardless of industry sector, then chances are you have a horizontal application for your product.
Take a good look at your own customer focus – are you truly a vertical player or more of a horizontal? What’s the common thread that ties your customers needs together?
Sidebar - When I was a Business School Professor, I never introduced the concept of a “vertical” until after I had students’ skilled at segmenting horizontally. It takes knowledge of markets and customers to segment horizontally.
Verticals, in my opinion, can be a “lazy” way to define customer segments. Always be sure you’ve brainstormed all the possible choices (see my fishbone post under “Who Cares”) before you decide on a vertical focus.
There’s a lot more to say on this, but I’ll save it for future posts.
Weigh in and post a comment – I’d love to listen and learn from each of you!
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