Why Multi-Vertical SaaS Companies are Difficult to Execute

Almost all B2B SaaS companies are either horizontally or vertically focused. They either sell to all industries OR just one industry. There’s another model in between that can be tricky to pull off but very powerful and defensible.

MULTI-VERTICAL is being a specialist leader in more than one industry.

Horizontal software companies sell across industries and go after big markets. Microsoft, Salesforce, Google, Intuit, and other big software companies sell you the same product regardless of your industry.

Their DNA is to make flexible software that works across most industries, regardless of their marketing or sales “solutions” pitches.

Vertical software companies sell only to one industry and don’t sell to others. They are JUST for non-profits, educators, manufacturers, healthcare, accountants, or others.

They use industry-specific language, workflows, integrations, features, data, benchmarks, pricing, and services—a “full-stack” solution for that specific industry customer. They also have specialist sales, marketing, and support.

Vertical software companies tend to be smaller, but there are MORE vertical software companies than horizontal ones. There are a few horizontal CRM companies, but thousands of vertical CRMs exist for every industry across every region, for example.

It’s very difficult for a big horizontal software company to try to focus on one vertical. They can’t change everything in their business to serve them as well as a vertical specialist does. Vertical superpower!

Vertical software specialists that succeed in one vertical, like chiropractors, often find a similar vertical, like physical therapists, and try to sell their solution “sideways” to expand into that market.

Those adjacent expansion markets may be enticingly similar, but they are usually different markets with different approaches. Most PTs don’t want chiro-focused software, and vice versa. Many vertical SaaS founders learn this the hard way.

This is where multi-vertical companies show up, slowly and deliberately.

Multi-vertical software founders deliberately choose a second vertical and take the time to build a complete enough solution for that underserved vertical.

They say things like, “In the next two years, we are going to build and sell the full solution for this specific second vertical.”

Multi-vertical software companies treat each specific vertical more like a division or business unit than a marketing campaign, with specialist teams doing specialist things for each market. It’s always more complex than it appears.

Sometimes, multi-vertical initiatives become new companies with new brands, pricing, sales teams, and services, even though the core product is 80% the same.

It’s harder than it looks to be specialist enough to win in another industry, but a successful multi-vertical SaaS company can be very profitable and defensible.

Have you tried the multi-vertical in your software business? How’d it go?


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