If one thing about the startup scene can be said for certainty, it is that it is unstable. In an era where technology changes on a seemingly daily basis, startups looking to stay relevant often need more than an innovative product. It’s important for startups to consider new verticals and look into expanding into new directions, ones which wouldn’t have been considered before.
Before embarking on the path of vertical expansion, it is important to consider why you are looking at additional verticals in the first place to ensure you’re doing so for the right reasons. While
it may be tempting to think ‘the product exists, just a few tweaks are needed to enter a new market, so why not do it,’ often this thinking couldn’t be further from the truth.
Essentially, vertical expansion requires a completely new business model to be adopted by the company because a new thinking and positioning must be put in place when targeting a new audience. Therefore, if your product does not already exist in the market you are considering, you may have the daunting task of market education to take on.
So why should you still consider going vertical? Growth potential, of course! If entering a new vertical will enable you to tap into a larger client base and scale your product to reach end users more quickly, expansion could be the right move for you. If you are currently operating in a saturated field but think your new vertical is lacking the solution you offer, you could make the vertical shift and establish yourself as a market leader in a new space and enjoy first-mover advantage – a definite reason to explore shifting your business model to meet new audience requests.
Whatever the reason, the first step to vertical expansion involves understanding the reason behind it and owning it.
Testing the Market
After deciding to expand into a new vertical, it is important to first test your product in that vertical before fully diving in. Of course we’re advocates of the PoC (not just because of our awesome platform that simplifies the PoC process) but because of a PoCs ability to test the scalability and viability of a product in an entirely new vertical and ecosystem. Even better, is that it requires little additional effort and offers huge potential return. Even if your product was successfully proven in a different industry, testing it once again as a PoC with an entirely different company and with an entirely different set of needs could help you understand the true market in need of your solution.#PoCs allow you to test the scalability and viability of your product in an entirely new vertical Click To Tweet
If your product can fit another industry but the market isn’t ready for it yet in terms of supporting technology or other infrastructural needs, perhaps the market is not yet ready – an important factor to be aware of when considering a shift in your expansion strategy. Beyond understanding scalability and need, testing your product before completely shifting your strategy is a great way to get more in-depth knowledge of the market, specifically the size and client habits.
Planning the Shift
Thinking about entering a new vertical is one thing and completing a successful PoC in that vertical is another, but actually shifting your business model and making the move is a completely new ball game. Successfully shifting your marketing plan will rely significantly on your ability to not only test the environment and your product’s suitability, but also creation of a solid go-to-market strategy that will take your company to the next level.
Do not assume your current strategy will do – once you decide you want to enter a new market, reevaluate your value proposition and benefit you offer your customers, solidify your brand strengths and values and establish a plan that will enable you to leverage your existing credibility into your new industry.
Vertical expansion could be the exact shift your startup needs.