What Channel Partners Need to Know Before Diving Into Vertical Markets

By David Weeks

Vertical specializations often translate into rainmakers for channel companies. Focusing on distinct markets in which you have expertise comes with significant benefits, including the potential for consistent business growth. In fact, many providers find their success in a vertical will translate into broader gains as related opportunities tend to open up. For example, work with a hospital client could lead to business with medical clinics and medical supply companies impacted by similar requirements and regulations.

However, success in any industry — from banking to retail or telecom — requires a well-defined strategy along with plenty of up-front work to ensure that your firm is equipped with the specialized services the vertical niche will demand. Equally important is the ability to scale and mitigate any potential roadblocks to growth.

Here are five things you need to know if a vertical market specialization is on your wish list for 2016:

1. Choose Wisely: When selecting a vertical market to focus on, most channel companies use existing clients as a guide. If you’ve done a good deal of work with merchants in the retail vertical, then clearly, the retail segment represents a viable starting point. So look at your client roster and your track record to assess the problems you frequently solve, the pain points your customers commonly face and your role in helping them overcome them. Then, make use of this insight to attract new customers as well as to drive repeat business from those clients in the vertical niche you already serve.

2. Understand the Pain Points: Channel partners who have earned success in vertical markets know that Job 1 is understanding the pain points associated with the market in question. In healthcare, for example, exchanging clinical and administrative data across a wide range of software applications and between hospital departments, such as oncology, radiology and billing, is an ongoing issue. And in retail, network and data security relating to the Payment Card Industry Data Security Standard (PCI DSS), along with the persistent threat of data breaches, are always top of mind.

Without knowing where customers’ vertically focused pain points occur and the critical business services their industries demand — and then demonstrating an understanding of each one as efforts are made to cultivate a relationship with a new prospect — channel partners will not be able to penetrate that market.

3.  Know the Language: Possessing an understanding of industry terms also ranks high as a must-have if you want to break into a vertical market. For example, hospital IT leaders will steer clear of contracting with you for backup and disaster recovery (BDR) services or for procuring an electronic medical records (EMR) system if you have no clue about HL7 and PACS (picture archiving and communication systems). In case you’re wondering, HL7 — or Health Level-7 — refers to the international standards for transferring data between healthcare software applications: Hospitals require an HL7 interface that allows images to move seamlessly between PACS and EMR. PACS provide cost-effective storage and easy access to patient images from various types of imaging equipment. You don’t need to be an industry expert but you do need to have an understanding of their requirements and speak to them in an educated manner.

4. Keep Up on Industry-Specific Requirements: Change is a constant in any vertical. For channel partners, it is imperative to stay on top of industry requirements in your vertical market of choice, especially requirements that may impact the services and solutions you offer. For example, in healthcare, understanding all the issues related to compliance with HIPAA standards is key, and in the retail market, it is essential to monitor PCI DSS.

In the retail and hospitality sectors, big changes are taking place right now with regard to point of sale (PoS) hardware that accommodates in-store (card-present) transactions completed with microprocessor chip-embedded credit and debit cards (already mandatory in many markets, including Canada and Europe). The transition to these new cards is occurring in response to the Europay/MasterCard/Visa liability shift that began on October 1, 2015, requiring merchants to take ownership of financial responsibility for fraudulent card-present transactions unless their PoS equipment can accommodate chip-enabled cards.

The best way to stay abreast of industry changes like this is to get involved in associations and networking groups, as well as reading industry publications.

5. Adapt Horizontal Services to Your Vertical Market: Lastly, from BC/DR to cloud, security, virtualization and VoIP, promote your horizontal services with an industry-specific focus. For example, an accounting firm may buy into cloud services built around Microsoft Office 365, but only if these services have been structured to reflect the business processes of an accounting practice — not a medical, law or any other practice. Generic services that do not fit the market will not gain traction.

As you weigh your options for specialization, I can’t stressed enough the importance of starting with a plan. Using segmentation exercises, make a careful review of your client roster and the markets where you’ve had the most success. A specialization may already be a small part of your business, and a market may emerge that you can tap into to build a roadmap to future growth.

As channel sales manager for SolarWinds N-able, David Weeks works closely with the company’s top tier partners and major accounts worldwide to understand their needs, provide insight into current market conditions and offer strategic sales and marketing recommendations. A regular presenter at the company’s global and regional summits, David is passionate about ensuring the success of SolarWinds N-able’s partner base.