By J. David Siembieda
CrossCheck Inc.
If you truly want to dominate a market, try vertical market saturation. A vertical market, also known as a niche market, consists of similar businesses in a specific industry with a well-defined set of needs.
One of the main reasons for selling to a vertical market is that it gives you an opportunity to specialize and become successful in a particular segment, rather than splintering your business into multiple sectors without realizing your full potential in any single area.
The POS terminals many of you sell to merchants are a good example of this. A variety of models and programming options are available to meet industry-specific needs. Food industry businesses such as restaurants are turning to hand-held devices for processing transactions right at the table. POS setup for traditional brick-and-mortar retailers generally requires less portability.
However, it can be quite diversified in terms of business requirements as well as service and equipment needs.
The health care industry is another highly specialized vertical market. Medical offices frequently handle mailed-in payments from patients and insurance companies. This opens the door to a burgeoning market for back-office conversion.
With the promise of fewer trips to the bank and instant payment processing, more medical offices today are using back-office conversion technology to minimize costs and focus valuable human resources on the business of medicine.
How do you determine which vertical market is right for you? First, look at your existing merchant base, and ask for referrals from the most profitable businesses in your group.
Offer them something in exchange for their referrals, such as a personalized business gift or a gift card. Referral business is one of the most effective channels for building your merchant base and expanding further into a niche market.
There are several factors to consider when selecting a new vertical market:
Another way to determine which vertical markets to approach is to perform an online search of industry trade associations. Look for those with a large enough membership to support your effort. Search for organizations with at least 200 to 300 members.
Obviously, some industries will have greater sales potential than others. In industries wherein significant consolidation has occurred, you may have just one or two primary prospects, which is fine for the short-term.
But you will want to focus most of your energy on industries with a larger field of prospects.
Once you narrow the search to a short list of top associations, inquire about becoming a member. However, before you introduce yourself to the membership of any trade association, particularly in an industry that is unfamiliar to you, learn as much as possible about the industry.
Read about the market online and in trade publications. Call trade associations and ask questions. The objective here is to gain an understanding of how these businesses operate.
You'll also want to familiarize yourself with the everyday terms and expressions used by professionals in the field. The more knowledge you have going in, the better prepared you will be to communicate and sell effectively.
The next step is to meet with prospects at tradeshows or at their places of business, if possible. After you manage to close a few accounts in a new industry, move on to larger accounts in the same vertical market.
Again, use referrals as much as possible, until you've gained the accounts and knowledge necessary to sell to larger, more complex businesses.
In order to accomplish your vertical market sales goals, it's important to develop a strategic plan that will help you stay on track. First, determine what percentage of the market you'd like to tackle.
For example, if you set 10% as your initial target, and there are 200 businesses in an industry association, you'll need to close 20 accounts. When dealing with a new industry, allow time to become educated in the field. Add an extra cushion for the initial sales phase, too.
Base your projected sales on a number lower than your current average. If you currently sell an average of 10 accounts per month, aim for half of that. When you hit your target, increase the number, or move on to another group of businesses in the same or a similar sector.
At some point, you will reach critical market saturation. Others in the field will recognize you as an expert and seek your advice on such matters as how to streamline transaction processing for their businesses.
By gradually phasing in new businesses to overlap with your current merchant base, you will establish yourself as a niche market specialist.
J. David Siembieda has been the President and Chief Executive Officer of CrossCheck Inc., a national check approval and guarantee provider, for over six years. He has more than 16 years of experience in the check services field. He serves on the board of directors for the Electronic Transactions Association and the Wells Fargo Center for the Arts. He is also Chairman of the Board for the Heritage School in Petaluma, Calif. He is Chairman of the ETA's Membership Committee and is also a member of NACHA's Electronic Check Council. Dave was recently chosen by the North Bay Business Journal as one of the 40 under 40, a list recognizing exceptional young professionals. CrossCheck, Inc. has been at the forefront of check authorization services and technology since its inception in 1983. For more information on marketing check services and CrossCheck, please call 800-654-2365 or e-mail dave@cross-check.com.
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