Comments on: Selecting target verticals as a small business http://revenueorchard.com/2009/04/02/pickingtargetverticals/ Ideas & Musings on BtoB Revenue Growth Tue, 15 Jun 2010 23:36:24 -0500 http://wordpress.org/?v=2.9.2 hourly 1 By: lshirman http://revenueorchard.com/2009/04/02/pickingtargetverticals/comment-page-1/#comment-16 lshirman Fri, 03 Apr 2009 06:54:21 +0000 http://btobrevenue.wordpress.com/?p=107#comment-16 More great questions, and points, Robbie. These issues really depend on the nature of what's being sold - or more specifically, how customers buy it. If its a relatively simple, small purchase, then transaction costs are probably equal, or even lower with large companies, where mid-level managers have the autonomy to make "small" purchase decisions even more readily than their counterparts at small companies. On the other hand, if the buying process and product were complex, and the price point was high, then its a different story. If I had an offering that was equally critical to two industries, but one was very highly consolidated, like Telecom, and other was at the other end of the spectrum - say, Healthcare providers - I would go with the more fragmented target. At the risk of disagreeing with the likes of Peter Drucker, I think transaction costs are not comparable. Huge companies have longer sales cycles, more stakeholders involved in decisions, and, as you very accurately point out, can create undue demands on a small company. Re number of industries, the truth is, I'd be a bit opportunistic. Pick more than you think you can really focus on, and get started. Then see what sticks. I do wonder why they are thinking about targeting specifically based on verticals. ... which gives me the idea for another blog! Thanks! More great questions, and points, Robbie. These issues really depend on the nature of what’s being sold – or more specifically, how customers buy it. If its a relatively simple, small purchase, then transaction costs are probably equal, or even lower with large companies, where mid-level managers have the autonomy to make “small” purchase decisions even more readily than their counterparts at small companies.
On the other hand, if the buying process and product were complex, and the price point was high, then its a different story. If I had an offering that was equally critical to two industries, but one was very highly consolidated, like Telecom, and other was at the other end of the spectrum – say, Healthcare providers – I would go with the more fragmented target. At the risk of disagreeing with the likes of Peter Drucker, I think transaction costs are not comparable. Huge companies have longer sales cycles, more stakeholders involved in decisions, and, as you very accurately point out, can create undue demands on a small company.

Re number of industries, the truth is, I’d be a bit opportunistic. Pick more than you think you can really focus on, and get started. Then see what sticks. I do wonder why they are thinking about targeting specifically based on verticals. … which gives me the idea for another blog! Thanks!

]]> By: Robbie Kellman Baxter http://revenueorchard.com/2009/04/02/pickingtargetverticals/comment-page-1/#comment-15 Robbie Kellman Baxter Thu, 02 Apr 2009 23:07:00 +0000 http://btobrevenue.wordpress.com/?p=107#comment-15 Great article Lilia! You're fast! I agree with what you said. Another question i think about is how many verticals to focus on, and whether it's better to pick one with a few large prospects or one with lots of small ones...Peter Drucker would have said that transactions costs would be comparable so go for the consolidated one--on the other hand, big powerful partners can often drive small companies in the wrong direction... Great article Lilia! You’re fast! I agree with what you said. Another question i think about is how many verticals to focus on, and whether it’s better to pick one with a few large prospects or one with lots of small ones…Peter Drucker would have said that transactions costs would be comparable so go for the consolidated one–on the other hand, big powerful partners can often drive small companies in the wrong direction…

]]>