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Focusing on MSP Verticals for Sustainable Growth

If you’re a growing MSP, you might be considering verticalization. By the popular definitions, such as one provided by Gartner, there are “pure-play MSPs that focus on one vendor or technology. This focus is what we call a vertical.” Verticalization has been proving valuable for many MSPs, but is it the right strategy for you?

The situation is that every industry has adopted a “cloud-first” approach to some extent. Employees are demanding made-to-fit digital infrastructure, software, network, and security – and the offices want to provide these solutions rapidly to ensure business continuity. For a customer, it seems reasonable to hire a specialist, which is a huge selling point for verticalized MSPs.

Technically, all MSPs start with one industry vertical. So, the other way of looking at this question is whether you should further diversify. It all revolves around the distribution of your resources. Can you create more value by acquiring specialized resources and training, or do you have the adequate resources to explore other verticals without compromising your core MSP verticals?

If growth is your priority, both verticalization and diversification are options worth considering. Let us try to understand the contributing factors further.

Pros and Cons of Verticalization

Several factors make verticalization lucrative. At the same time, it also seems like a risk as opposed to diversification, which may look like a reliable model because of its extensive use traditionally. While both strategies are valuable to any MSP, let’s look at some of the possible benefits and disadvantages of verticalization.

Verticalization

Pros

Verticalization to Boost Profits

When you offer specialization, you can charge a premium on your managed services as you provide expertise through consulting and have an industry-specific catalog of vendors and products.

Competitive Advantage

When talking strictly about the chosen vertical, MSPs with expertise have a competitive advantage over diversified MSPs. You can better empathize with your customer’s problems and make the right tools and solutions available to them if you have a grassroots-level understanding of their industry.

Ease of Operation

MSPs with clients from the same vertical, having solved a problem for one client, can solve the same problem for other clients just by duplicating the solution. This saves both time and money and allows MSPs to better leverage existing resources.

Cons

At the same time, verticalizing poses its challenges. Some of these come in the form of:

Human Resources

To have expertise in your MSP vertical, you need to hire the right talent –  which could be challenging compared to hiring for a diversified MSP. Specialized applicants will also come with a higher expense.

How to Choose a Market Focus

If you’re trying to find the right vertical – for either verticalizing or for diversifying – you need to set a market focus. In order to do so, there are several factors to consider.

Unique Opportunity

If you can identify a unique opportunity within the vertical of your choice, such as an unsolved problem or an unaddressed issue, you can provide a solution and bank on it.

Choosing the Vertical

Verticals aren’t limited to particular industries. You could identify unique business opportunities in different geographies or tech offerings, among others.

Use Your Existing Portfolio

To find the right vertical to specialize in, you need not look beyond your client portfolio. These are entities you already have a relationship with and can help you figure out a niche that worked out well for you.

Vertical Market Strategies

Once you’ve identified the vertical you want to enter, you need to take additional steps to ensure you meet your client’s expectations.

Thought Leadership

One of the ways you can show how deeply invested you are in a particular market segment is to turn your organization into a thought leader in that space. To do this, your team needs to have collective expertise in the subject. You can do this by hiring, training, and corresponding with your clients about their needs and grievances.

Tools

You might already be providing several service integrations for your customers. However, verticalization means that you also need to find the perfect options tailored to your client that offer long-term support and work without any hiccups. These might include:

  • A powerful UCaaS solution that gives them the ability to communicate from anywhere and on any device.
  • An omnichannel contact center solution that would empower your client with advanced ways to improve the experience of their end customers.
  • SD-WAN, which would streamline WAN management and support a globally dispersed workforce for your end customer while reducing overall CAPEX and OPEX.
  • Direct Route to Microsoft Teams, which allows your customers to seamlessly make, receive, and transfer calls to and from landlines and mobile phones from within the Teams app.

Tackling MSP Verticals Requires the Right Vendor

Expanding your portfolio will give you the choice of clients from the MSP verticals you serve. Anyone looking to enter a vertical – be it healthcare, finance, or education – can benefit from specialization. Even diversified companies can benefit from some of the vertical marketing strategies that specialized MSPs are using.

No matter what your market strategy is, UniVoIP guarantees 100% customer satisfaction. Sign up to become a UniVoIP Channel Partner today!

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