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Where Do You Stand? Vertical or Horizontal?

 

If you’re reading this, you most likely own a SaaS company and you’re trying to figure out where your company stands in its field. On the other hand, you’re probably just some random person thinking about starting a SaaS company and just want to educate yourself on the different marketing positioning strategies.

 

Either way, one of the things you need to know is that it’s not 2010 anymore. Really, it isn’t. Why am I saying this? It’s because you need to start adding more of an ‘edge’ to your company. It might’ve been ‘cool’, ‘unique’ and ‘trendy’ to have a SaaS company back in the late 2000s, but you’re in 2018 now! A SaaS company is what it is; a SaaS company. There are probably 20 other SaaS companies out there that are almost the same as yours.

 

Alright, now that you had your small slap back into reality, it’s time for you to focus on what’s really important; your positioning strategy. You need to be able to show your prospects, that what you offer is something that those other 20 companies (or more) can’t offer. Not only do you have to convince them why they should invest in your product but you also have to convince them why would they stay with you. So let’s take a look at the two main types of positioning.

 

Vertical Positioning

 

In this strategy, your target customer is someone who works within the same industry that you’re marketing to. This could mean healthcare companies, car manufacturers or even something as specific as laundromat businesses.

 

The nice thing about this kind of strategy is that it’s easier to find prospects who fit under the industry you’re selling your product to. All you have to do is search for a list of car manufacturers, architects, healthcare providers etc.; and market your product to them through industry-specific magazines or publications. You can even show up in certain conventions for that particular industry.

 

Another advantage is that you can develop certain expertise in the specific industry you’re marketing to. This will give you a better understanding of what they want or need and add or change things in your product to fit those demands and needs. In addition to that, it will encourage your clients to stick with you in the long-run, because they know that you’ll provide them with what they exactly need.

 

There are drawbacks to this option though, one of themis that by limiting yourself to a specific industry, you’re therefore limiting your target audience. Another thing to watch out for is that when the industry you’re marketing to starts going down the drain or goes into an economic crisis, you will sink with them too. This could put you at a difficult position where you have to start all over again and look for another industry to target.

 

Horizontal Positioning

 

While vertical positioning is more industry-specific, this strategy focuses on a number of different aspects, meaning not just one industry but multiple. So maybe you’d like to target a large company, which could be one that sells beverages, dishwashers or maybe even some sort of design company.

 

The first most obvious pro here is variety. Unlike vertical positioning, which focuses on one category, in horizontal positioning you’ll be working with multiple different industries. So other than the fact that you’ll be able to gain different types of prospects, it’ll also make work a lot more fun.

 

A drawback of vertical positioning is also that your client may not approve the idea of you selling your product to his or her competitor, which is why you have to be more careful. But in this strategy, you won’t have to worry about that at all; why would a car manufacturer even care whether you sell your product to a laundromat business or a healthcare provider? This will also protect you from going down the same economic spiral as the industry we mentioned in vertical positioning.

 

One drawback of horizontal positioning is that people would rather pay more money for a SaaS that is more industry-specific than one that targets a more general audience. With that said, word-of-mouth tends to travel faster when you’re working with a specific industry than when you’re targeting multiple industries that have nothing to do with each other.

 

What Do I Choose Then?

 

Well, that highly depends on towards which direction your company’s heading. Do you want your company to be more industry-specific? Or would you rather deal with different types of clients and businesses which would make your work a little more interesting? Marketing is a complex process, but an important thing to keep in mind is that a successful company focuses on what works for it depending on its financial or economic situation.

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