At companies with a long sales history, industry-specific activity tends to be focused on two types of markets: Where most revenue has come from in the past, and where there is greatest opportunity for growth in the future. By far the most common is the former. Surprisingly few regularly do the analysis to identify the latter.
For earlier stage firms, the first part of the equation is missing: They don’t have a past. There is no sales history, references, and channels to naturally leverage into an already-active vertical market. So they default into whichever market their first opportunistic sales landed in, or where their current VP of Sales has the most connections. As a result, I see many start-ups struggling to deliver repeatable sales or accelerate growth.
Even without a sales history, savvy start-ups can look for other clues.
Three considerations when aiming your sales arrows:
1. Value: What industry will value what you do most? Where will you impact mission-critical results?
2. Pressure: Over time, what group of customers are going to be needing you more and more (and feeling increasing pain you can solve) due to external pressures and trends in their industry?
3. Access: Where are you best able to access the financial decision-makers? (This is a combination of your company’s existing connections and lists, and the target industry’s propensity for doing business with small companies.)
It’s easier to find ways to reach financial decision-makers than to change the core value of what you do (another words, pivot) or convince an industry to focus on non-critical issues (that hyper-expensive and often fruitless attempt to “educate the market”). Unfortunately, many young companies start with #3 as the first, not last criteria for selecting target markets.