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    8 tips to adopt vertical marketing and drive SaaS growth

    8 tips to adopt vertical marketing and drive SaaS growth

    As companies prioritize “efficient growth,” vertical software has gained prominence due to its lower customer acquisition costs, higher expansion sales and stronger gross retention than its horizontal counterparts.

    Here’s why you should consider adapting your horizontal software to attract vertical buyers, plus essential tips to help you go vertical.

    Software market growth: Taking a horizontal vs. vertical focus

    A vertical software company offers solutions tailored to specific markets, such as plumbers, auto dealerships or food distributors. Examples include ProCore, which sells software for construction management and AppFolio, which sells software for apartment management. 

    Horizontal software, on the other hand, can generally be sold to any company, often focusing on either B2C or B2B markets. Salesforce, Atlassian and HubSpot are examples of horizontal software companies.

    In 2021-2022, software companies could easily raise vast amounts of money and win vast numbers of customers. During this period, there was little difference between the growth performances of horizontal and vertical-focused software companies. 

    In 2024, under the banner of “efficient growth,” vertical software is gaining prominence. Comparing public SaaS company financial reports from 2023, vertical SaaS grew by 17%, while horizontal SaaS grew by 18% — virtually the same. However, vertical SaaS spent only 22% of its revenue on sales and marketing, compared to horizontal SaaS, which spent 41%. 

    Vertical SaaS companies spent $1.76 for every new dollar of annual recurring revenue (ARR), while horizontal companies spent $2.40. Vertical software companies have lower acquisition costs, higher expansion sales and stronger gross retention. Their highly specific solutions are designed for immediate use in the customer’s daily context. 

    Their marketing is also highly specific, using industry-specific language, terms, regulations and use cases. The pricing is tailored to how vertical customers gain value, and these companies are prominent at industry-specific trade shows and media. Buyers often feel they are missing out because their competitors might be using the software.

    Horizontal software marketing is inherently less industry-specific. Homepages typically feature general value statements, customer quotes from various industries and broad value propositions. Most websites have a menu option like “Industries We Serve,” listing sectors such as retail, software, financial services, consulting, agencies and higher education. These sections include industry-specific case studies and language but lack the depth of vertical marketers.

    Dig deeper: SaaS buyers: The process is frustrating

    How to adapt your horizontal software for vertical markets

    Horizontal products can succeed in a vertical-focused market by genuinely becoming intensely vertical. Vertical buyers are still active and it’s crucial to take them seriously. 

    While you can continue using horizontal go-to-market strategies, you risk burning out your team without a clear plan. Here’s how to attract vertical buyers to your horizontal software and succeed.

    1. Pick one vertical

    Choose a category you are committed to dominating, where you have a cohort of existing customers, case studies, strong logos and a good product-market fit. Ideally, your competition is weak in this category.

    2. Segment your customers and prospects

    Build an intensely focused database of all the ideal customer profiles (ICPs) and buyers in this vertical and keep it updated.

    3. Research

    Engage with your customers and prospects in this vertical to build a robust ICP and buyer persona. Understand their daily workflows and contrast them with those of your other customers to avoid assumptions.

    4. Evaluate product fit

    Use buyer research to assess your product from their perspective. Identify nuances that may not fit well with your product, particularly regarding regulations and integrations. 

    Determine what you are replacing in this vertical and what success looks like. Adjust your product as needed without overhauling your entire roadmap. Review your pricing and packaging to ensure the ‘units’ you charge for make sense for this customer set. 

    Often, vertical software requires more services because they are more deeply embedded in the stack, so consider your service offerings as well.

    5. Content, digital experience and ads

    Tailor your brand with elements of the vertical. If you are targeting pharmaceuticals, ensure your content, ads and branding visually and textually reflect the industry. 

    Stay updated on the latest topics and trends and share your insights in vertical communities or broader business media.

    6. Live thought leadership

    Participate in trade shows, communities and events relevant to the vertical. Influence the influencers and secure speaking engagements where your customers can discuss the vertical fit. Regularly host virtual events on current topics in the vertical.

    7. Dedicated sales and customer success task force

    Select a small team of sales reps, sales engineers and customer success members trained extensively in the vertical. They should fluently speak the customer’s language, offer consultative value and have quick access to customer stories. Solicit feedback to identify any new pain points or opportunities.

    8. Track and celebrate wins and losses

    Every interaction with a buyer is valuable, even if the deal is lost. Analyze losses to optimize strategies and celebrate wins to boost team morale. Each win brings you closer to achieving vertical efficiencies.

    Pivoting from horizontal to vertical SaaS success

    Executing this strategy is challenging, and many attempts fail due to a lack of conviction and premature abandonment, leading to increased customer acquisition costs. However, persistence will drive a word-of-mouth machine, attracting high-quality, fast-moving buyers to your inbound marketing flow.

    Dig deeper: Did martech break B2B marketing?

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    The post 8 tips to adopt vertical marketing and drive SaaS growth appeared first on MarTech.

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