Vertical vs Horizontal Markets
When you consider different business types, one way to classify them is vertically and horizontally.
A vertical market is one in which a business will offer services to people in a specific industry. For example, if you are coaching insurance agents on how to be great agents, you are selling into a vertical market.
Since you are an expert in all things insurance, you provide pre-built campaigns, you have great emails written for them, and you give them time-tested scripts. Your expertise is vertically oriented, meaning you provide great value when working in the insurance world. However, your insurance systems and strategies wouldn’t be as valuable to a dentist or a handyman.
Vertical Market Examples:
- Real Estate
- Small Retail
- Home Services
- Automobile Repair
- Fitness Centers
A horizontal market on the other hand, is one where a business will offer services that fit into many different business types and industries. For example, if you sell accounting services, you can offer your services to insurance agents AND dentists AND carpet cleaners – basically, anyone who owns a small business.
Horizontal Market Examples:
- Digital Marketing Agencies
- Human Resources
- Payroll Services
- Office Supplies
All businesses, regardless of what specific industry they serve, require horizontal services.
What Is the Best Market to Sell Into: Vertical or Horizontal?
It’s not a matter of one market being better than the other, your unique expertise will determine which market you will sell into. Let’s say you are a digital marketing expert and you design logos, you build websites, you know social media marketing and can help with web-based advertising.
These are valuable services that all businesses need, regardless of industry. An insurance agent needs a logo and a website just as much as a chiropractor does. And since you are an awesome digital marketer, you can help both. So you will sell horizontally.
Now let’s use our insurance agent coach example from above. Our coach has specific expertise in helping insurance agents with their marketing needs. However, the ideas, systems and strategies she teaches, will probably not be as effective in other industries.
So in this case, selling vertically makes more sense.
Advantages of Focusing on a Vertical Market
When looking at all the possible customers you could sell to, you might think selling horizontally is better than selling vertically. After all, there are more prospective buyers in the horizontal universe than in the vertical one.
When you limit yourself to just one vertical market, it puts you in a box and you have to stay there. So wouldn’t it be better to sell to everyone?
The answer to that is NO, and here is why:
Most people would rather work with an expert rather than a generalist.
Consider this example:
Let’s say you are a real estate agent who wants more listings and more buyers to work with – so you start looking for marketing help to ignite your real estate business.
Your search brings you to two excellent business coaches and you need to choose the one you want to work with.
Business Coach #1:
“Come to me for all of your marketing needs. I work with all kinds of businesses large and small. I can help you with advertising, lead generation, and all things marketing. I have customers in every industry, and I would love to work with you.”
Business Coach #2:
“I was a successful real estate agent for 25 years. I have proven Real Estate systems and strategies, that have worked for me and I know will work for you. I have specific real estate campaigns that will help you get more listings and find more buyers. I only coach real estate agents.”
Who would you want to work with? Naturally, since you are a real estate agent yourself, you would pick the coach who specializes in helping real estate agents (Coach #2). This coach already knows your pain points and knows exactly what you need, where you want to go, and how to help you get there. There will be no learning curve as you won’t need to teach them how a real estate office runs. Put simply, you will be speaking the same language from day one.
People will always choose the expert in a specific area over the generalist. If you have a choice whether to sell vertically or horizontally, sell into a specific market – sell vertically.