Since the early 90’s, when Geoffrey Moore’s classic “Crossing the Chasm” was first published, the benefits of targeting a specific vertical segment as a market entry strategy are well understood. It enables a level of focus for all the resources across the company that can increase impact. At the same time, the approach can be tough to get people to buy into, particularly when the product or service in inherently horizontal, with no obvious benefits tied specifically to a vertical.
At Gartner, we advise clients to create an Enterprise Persona-a richly detailed ideal customer profile that looks at companies from a variety of dimensions. It’s not just firmographics like size, location, and, yes, industry. We push clients to go deeper to think about additional attributes like technographics (the technology the customer uses), resources, business situation and even psychographics (how the organizations think about technology). Rich profiles enable clients to focus in the same way the industry idea from Crossing the Chasm worked.
For the industry model, you are first looking for early adopter customers and then learning and filling out your whole product capabilities are you pursue the bigger opportunity with more mainstream customers—all within the same industry. When thinking about this an obvious fact emerges. Not every company in an industry is created equal. Going beyond the basics is important.
This is all pretty obvious, but an interesting trend seems to be emerging as companies work through the implications of the pandemic. In studies we conducted during mid to late 2020, we asked buyers to rate criteria that was most important to them. We’d done it before and wanted to see if the results changed. Some issues were quite similar–customers care about compatibility, customization, and collaboration. And price and time to value continue to be of secondary importance.
But there was one element that rose to the top for nearly every single way of looking at the data. As the pandemic forced organizations to explore new business models and new ways of working, many were exploring technologies for the first time. This is scary for the bulk of the market. Forced transformation, particularly in orgs that fight against it, is hard.
So what was really, really important to them. They want to work with vendors that bring “leading edge innovations from other industries to solutions for my industry.” Basically, they wanted to discover things that have been successful before that could help them and maybe, given then an advantage in their industry. Risk mitigated innovation—a pretty cool idea.
This has big implications for vendors. Look for industries where you have had success in getting traction for your innovations. Then identify other industries where the value could be realized. Finally, create ideal customer profiles for these new industry targets—looking at the attributes of your best customers where you are today and looking for customers like that tomorrow. Create stories around the idea of mitigating risk due to your past successes–but also start those stories with the customer characteristics so your new prospects see themselves in your past successes.
Is this type of industry hopping your next growth strategy? It could be.