The MSP Guide to Vertical Market Success

Erik Preisser 14 Aug 2018

New Avast Business white paper breaks down the benefits and initial steps of specializing in vertical markets.

For managed service providers (MSPs), it’s more difficult than ever to differentiate services and build a viable business. Declining prices, increasing commoditization, and intensifying competition all contribute to this new reality. For some MSPs, building a sustainable business in the face of these trends means taking on any new client whether or not they understand their business or have the skill set to deliver the services they need. This horizontal approach can quickly backfire. Without a deep understanding of a client’s business environment, it can be difficult to add unique value, which leads to service commoditization.

One remedy is to specialize in vertical markets. This approach helps you distinguish your business by becoming subject-matter experts, which creates stronger customer relationships, increased revenue, and a more successful managed services business.

We explore the advantages of focusing on vertical markets in our new white paper, The MSP Guide to Vertical Market Success. In many businesses, specialization equals differentiation, which equals competitive advantage. The IT services business is no different. By specializing in one or a select number of verticals, MSPs become experts and specialists rather than generalists. Generalists must either sell one-size-fits-all services or create new service packages for every customer, which isn’t scalable.

Research conducted by ChannelE2E revealed interesting trends among their top 100 MSPs who have adopted a vertical market focus:

  • Honorees generated a combined $277.3 million in vertical market annual recurring revenue (ARR) for 2017, up from $247.6 million in 2016.

  • Honorees are managing a combined 574 million users.

  • The most successful vertical market MSPs are zeroing in on healthcare and financial services, while manufacturing and legal sector activities are accelerating. [Source: Thrive]

Check out our white paper to learn more, including the six essential factors you must consider before choosing a vertical to enter. There are numerous markets available to you, including education, automotive, finance, healthcare, construction, legal, and many others. The key is determining the one(s) that work best for your business, experience, and areas of interest. We want to see you succeed.

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