The B2B Vertical Marketing Playbook
Artful marketers don’t just chuck paint at the wall and hope people notice, they come with a full set of brushes and an eye for detail. It’s this focus that can lead to some really effective, targeted marketing campaigns, and in this episode, we’ll be exploring the medium called “Vertical Marketing.”
There’s a lot to sift through when it comes to building a robust B2B vertical marketing program, but Ian Howells of Sage Intacct, Lynne Capozzi of Acquia, and Mika Yamamoto of F5 are great guides. Tune in to hear how they apply vertical marketing in the real world, where they’ve noticed mistakes, and why vertical marketing is here to stay.
What You’ll Learn in This Episode
- How to build a successful vertical marketing program
- Common vertical marketing mistakes
- How to measure a vertical marketing program
Renegade Thinkers Unite, Episode 238 on YouTube
- Gin Tasting with Far North Spirits’ Solveig Gin
- RTU Episode 119: How to Stand Out in Multiple Markets
- The Business of Expertise by David C. Baker
- RTU Episode 160: When’s the Right Time to Rebrand?
- RTU Episode 184: Why CMOs Should Be CXOs Too
- CMO Huddles
- [0:00] Cold Open — This is Renegade Thinkers Live
- [1:14] How Sage Intacct Approaches Vertical Marketing
- [9:26] How Acquia Approaches Vertical Marketing
- [13:58] How F5 Approaches Vertical Marketing
- [20:51] On CMO Huddles
- [23:31] Where to Start When Building a Vertical Marketing Program
- [30:22] Common Vertical Marketing Mistakes
- [32:58] Replacing Trade Shows with Virtual Vertical Marketing
- [40:06] Vertical Marketing Metrics
- [48:31] The Future of Vertical Marketing
Transcript Highlights: Drew Neisser in conversation with Ian Howells, Lynne Capozzi, and Mika Yamamoto
[0:00] Cold Open — This is Renegade Thinkers Live
Hey, it’s Drew, and today’s podcast episode is from our 7th recording of Renegade Thinkers Live. That’s the show that we live stream every other Thursday. This show was all about vertical marketing, which we all know isn’t going away anytime soon.
It starred three of the best in the biz—Ian Howells of Sage Intacct, Lynne Capozzi of Acquia, and Mika Yamamoto of F5—and they covered vertical marketing best practices, common mistakes, how to get started, and how to do it virtually. This episode can set you up with a great foundation for launching or optimizing your own vertical marketing program. And with that, it’s time to get started. I hope you enjoy the show.
[1:14] How Sage Intacct Approaches Vertical Marketing“The secret sauce is being really good at interviewing customers.” —@drianhowells @SageIntacct Click To Tweet
Drew Neisser: Hello, Renegade Thinkers! Several years ago, I had the good fortune to work on the Panasonic Toughbook, a product that my agency, Renegade, both named and launched.
In the early days of that brand, long before ABM was named ABM, we worked with the client’s relatively small budget and their sales team on a vertical marketing strategy, starting first with law enforcement and then moving on to the military. We figured that there could be no greater need for an industrial-strength product—[shows Toughbook] this literally is the first Toughbook that was ever made.
The challenge was, once we got to the police and the military, would it survive, would it hold up? Well, sure enough, we had one of these in a police car installed, and a bullet went through the screen and it kept on working, which was an amazing torture test. Sure enough, that target—police, military—grew dramatically. We added telecom and oil and gas. In about 5 years, through a vertical marketing strategy, we grew that business to over $500 million. It was a vertical marketing success story I’ll never forget.
Fast forward to 2021, and vertical marketing is as relevant as it ever was, which is why I’m so excited to introduce you to some amazing CMOs. First, please welcome is Ian Howells, Head of Marketing at Sage Intacct & star of Episode 119 of Renegade Thinkers Unite, and he’s really turned vertical marketing into an art form, creating what he calls micro-verticals. Hello, Ian.
Ian Howells: Great to be here, Drew.
Drew Neisser: Where do you start when it’s time, when you decide—how do you even pick a vertical market?
Ian Howells: So one of the things I first started doing is a documentary with Geoffrey Moore who wrote about this and invented it when he was crossing the chasm and saw the tornado. We learned a lot around vertical marketing then, and that evolved over the next couple of decades.
There’s a big difference between a startup and a big company. The analogy I like to have with a big company when you’re doing vertical marketing is Darwin versus TAM. When you explain what that really means, a lot of people are tempted by the biggest target opportunity. They look at the biggest opportunity, they look at the market size, they look at the SIC code, and bigger is better.
My analogy is, it’s like saying, “I want to be a basketball player because Michael Jordan’s really rich.” If you’re 5’6″, probably not a good idea, but people do that, so it’s kind of death by SIC code.
The Darwin approach, particularly at big companies, you’re not short of customers like a startup. You have an abundance of great customers and, in reality, probably market to them in a horizontal way.
There are certain places you’re just naturally very successful and your core product is really, really good, you just don’t know it yet. What you’re really looking at in your core horizontal are these patterns of customers doing a very similar thing that really socializes with each other. They may not be connected by SIC code, for example. They’re like a secret society and you’re really looking for patterns and you go to their websites to see how they describe themselves and they all use subtly different terms.
I’ve watched some great big data AI guys and they say you’ve got to get your hands dirty to really understand the data. AI is going to help, so the key thing is, when you discover it, it’s a society of people that socialize what you do, they discuss you, maybe have their own associations, and then you break them down into what we call verticals and micro-verticals.
So, for example, a way to say, “I focus on manufacturing.” In reality, if somebody says that, what they’re really saying is, “Planes, trains, cars, and pharmaceutical companies are all the same,” which is insane. Our approach is really saying we focus on not-for-profits because we’re naturally really good there, but then we go down to faith-based organizations and even Catholic dioceses. You get more and more specialized and [inaudible] dramatically. Our approach is really Darwin versus TAM and we choose Darwin.
Drew Neisser: So, this micro-vertical—and I love the non-profits getting to faith-based, even then getting into dioceses, you really start to see, well, gee, faith-based, if you had to develop marketing against that, that’s one thing. But that’s a lot of ground. But if you get down to archdiocese level…
How do you make sure, though, when you’re getting down to these micro-verticals, that you really end up getting to understand them and aren’t doing what a lot of times what passes for vertical marketing? “Oh, let’s show a picture of what it is they’re making.” For targeting manufacturers of cars, “Let’s show a car. See, we get it!”
Ian Howells: You probably appreciate this more than anybody, but the secret sauce is being really good at interviewing customers. People don’t do enough. Most people are horrible at interviewing customers. They either have very short interviews or they open the conversation by saying, “Hello, stranger. What’s your pain?” which is not a great way to start a conversation with a stranger.
We really focused upon really being best in class at interviewing customers and we really have 45-minute conversations that are interesting with open-ended questions. What we’re really looking for is what Geoffrey Moore used to call “discontinuities.” Has something fundamentally changed within your micro-verticals so that everybody has the same pain? And what will change as a market rather than as an individual customer?
What’s interesting is we work with partners and once you find that, that is your message. We consistently saw people find the discontinuity and not use it in the messages. Like, you found the gold, so once you when you find the gold, you want to really understand it.
If there is no discontinuity, what you’re really doing is using the interview to see, “What’s the pattern of buying?” And you really have to understand what Geoffrey Moore called the compelling reason to buy. How do I reduce the time you take? How do I reduce your costs? How do I reduce your risk? And how do I make you grow more quickly?
And then really understand that and really articulate that as a customer story. One of the things we say over and over again is if you already understand your customers and somebody says, “What does your product do?” you describe it through a customer story. When they ask you, “What does your company do?” you describe it to a customer story, and that’s the way you get people to understand what you do.
Moore always talked about, when you summarize maybe 50 interviews, if you do it correctly, you can write a 10-point plan in an afternoon because you know your market, your target customer, your compelling reason to buy, your whole product or the partner products, your partner’s distribution, the pricing model, the competition, and positioning. Once you know those 10 things, you understand how to approach the market. Then you attack it and you dominate it.
When we think about what we’re really looking for, it’s very similar people in very similar markets with the same problems. It’s perfect for ABM. We do ABM at a massive scale because we don’t own one-to-one. We do it to the micro-vertical approach and you can really approach the market and dominate it very quickly. Typically about 12 months. That’s really our secret sauce.
Drew Neisser: I love that. And it reminds me of a couple of things. For the folks that own smaller businesses or services business, I highly recommend you read David C. Baker’s The Business of Expertise. He has a phrase called “Drop and Give Me 20.” And that 20, if you know a market so well that you can name 10 things to that customer that they may not even have known about their category—
I remember at one point years ago we were working with IBM and they were targeting software developers. We did a lot of homework and we created a sort of developer Olympics for them. One of the things that we allowed them to do was shoot down with a dart gun a photo of Jar Jar Binks. You needed to know that this was the most hated character among a beloved group, so that was a kind of insight that I think if you know your market well, you can find and have fun with.
[9:26] How Acquia Approaches Vertical Marketing“I will never do a vertical without having a similar sales playbook to accompany it.” —@lcapozzi @acquia Click To Tweet
Drew Neisser: Now, let’s bring in Lynne Capozzi, the CMO of Acquia. Lynne was the star of Episode 160. Welcome.
Lynne Capozzi: Thank you. Nice to see you, Drew.
Drew Neisser: Nice to see you. Let’s talk about your vertical approach and how that applies to your business.
Lynne Capozzi: Sure. I love Ian’s suggestions, by the way. We also do interviewing. We probably don’t do it to the extent and formalize it, so I’ll take a few tips from around that. But what we do is we really look at where we’ve had success in particular industries and make sure that we can find the right connection between what our product does and if it’s solving a solution for that particular industry.
We spend time figuring out what those industries are and started with financial services. What does that mean? Does it mean banking? Does it mean insurance? It means different things.
The one thing that I’ve learned over the years is that in order to attack the verticals, you really have to have a cohesive plan. I will never do a vertical without having a similar sales playbook to accompany it. I have to have a collection of assets. I have to make sure we know what that message is that’s right for that industry. I really have to make sure that our solution is right for that industry. Sometimes particular industries will have regulations and maybe your product isn’t good at those regulations. Don’t spend time there. Spend time where your product is a good fit for the industry.
So I make sure that, one, it’s a great product fit. Two, I’ve got the right messaging. And I do that by making sure that we take advantage of all of our existing customers in that industry and figure out our best campaign points, and what we’re helping them with.
Then I make sure I have a collection of assets that I develop. Everything from a pitch deck to case studies to e-books to landing pages. I surround that with a great digital campaign and a lot of ABM, and then I monitor it as it goes along.
One of the things, for instance, that we saw this year is a vertical strategy that we had in the beginning of 2019 that didn’t work this year because we had to turn up certain industries and turn the dial down on certain industries. In the past, in 2019 for instance, I was targeting travel and transportation. Well, it’s probably the last place that you want to be in 2020. Hopefully, we’ll get there in ’21.
I think it’s always looking at—I think of them as dials. What industries are we turning up, what industries are we turning down? Sometimes those industries are not totally expected. I’ll give you one example. I mean, there are some industries now that we’re totally doubling up on.
Higher education, it makes sense. They log on online. They need our solution. Government, retail. Every retail establishment has gone online, so those are good examples of ones that are turning up. Another one which was kind of unexpected for us is insurance. So apparently, during the whole pandemic, the world has grown much more attentive to their future, if you will, so insurance companies are going crazy. They’re booming because so many people want to buy insurance now and life insurance.
Drew Neisser: That’s so interesting. I hadn’t heard that, but it makes sense. I guess it’s sort of if you have a gloom and doom mindset and you’re seeing what’s happening in the world, I guess you go, “Yeah, we better insure ourselves because who the heck knows what’s going to happen?”
Lynne Capozzi: I know. I think all of us had a little doom and gloom at some point this year, so it does make sense. I think it’s really important that you’re monitoring it in real-time in terms of what’s happening in your space, you know?
Drew Neisser: It’s interesting about travel and transportation, although I did hear that a number of travel companies—those that obviously had a lot of cash in the bank or were lucky enough to—did start to work on their infrastructure because that was something that they could do. But I’m wondering if, during 2020, there’s a vertical that really heated up—you mentioned insurance—but that you had particular success with.
Lynne Capozzi: Food delivery, food delivery services. Products, CPG. That was huge. And retail. Retail is another big one because whether or not retail establishments were open or not, they all had to go online and they all had to make a switch. If they didn’t have an infrastructure yet digitally, they needed it quickly. And the ones that did have it wanted to increase it.
[13:58] How F5 Approaches Vertical Marketing“We can't serve every need of every vertical that we're in, but we can be very specific about the needs that you can focus on within a given vertical.” —@mikayamamoto11 @F5 Click To Tweet
Drew Neisser: Mika, welcome. And by the way, Mika was on episode 184 of Renegade Thinkers Unite. How are you?
Mika Yamamoto: I’m great. How are you?
Drew Neisser: Good. It’s nice to see you. You’ve been listening to all of this conversation. How important is vertical in your marketing mix?
Mika Yamamoto: It’s extremely important. I appreciate hearing Ian’s thoughts as well as Lynne’s thoughts. Death by SIC code is certainly something that you can be subject to, so focus. And I think Lynne had thematically the same element as well in terms of needing to focus. For us, it’s important, number one, because some of our offerings are more relevant to some verticals in different ways than others.
We were able to, for example, sell into the airline industry last year to help remove some friction for customers and maximize, of those customers that were flying, for some of our airline customers, remove some of the frictions on their customers’ behalf. They were able to capture as many customers as possible because there are so few that were out there.
And that’s different than looking at, for example, some of our banking customers who are looking for securing transactions and driving—a lot of countries are now accelerating their digital transformation due to COVID and realizing they may be behind. The Japanese banking industry, for example, is really looking to accelerate their digital transformation in banking, so that’s a very different set of transactions in terms of open banking.
We use different words. We use different use cases that are relevant to that industry compared to the federal government. Federal governments worldwide are a unique opportunity for F5 in terms of securing access to federal information.
In those cases, there was a lot of thematic conversation with Lynne and Ian about talking about ABM. Federal agencies don’t really like companies to use targeted digital ads because it makes it seem like—you know, some people don’t realize that those digital ads aren’t viewable by everybody. Most dealings that we have with federal agencies require a certain security clearance. They don’t want you to be public or out there with talking about the types of solutions you may have for them, so that’s a very different approach.
Each one of those instances, whether it’s financial services or federal governments or the hospitality industry, has different routes to market, has different use cases, and different ways that they use what we have to offer. Going the vertical route certainly helps us be more relevant.
I think Ian and Lynne both talked about finding out where that Venn diagram is on where you can uniquely serve versus saying, “Hey, we can be all things to all people.” We can’t serve every need of every vertical that we’re in, but we can be very specific about the needs that you can focus on within a given vertical.
Drew Neisser: As I’m listening to you and all of you talk about this—a couple of questions. Which comes first—a customer opens your eyes to a vertical? Or you guys say, “You know what? We need a new vertical. Let’s see if we can figure it out and analyze it.” I mean, it’s a chicken or an egg thing. But I’m curious, have any of you opened up a new vertical from scratch in the last 12 months?
Mika Yamamoto: We have. We have traditionally focused on federal government service providers, so telecom providers and financial services companies, but we took a step back and looked at our data and said, “OK, we look at the growth of our business and we look at all the opportunities that are coming. Are they coming from where we’ve traditionally played or are they coming from other industries?” And we actually realized by looking at that data that we were getting traction in markets outside of those areas, which were hospitality and travel as well as retail.
This provides us a different view in terms of opportunities for growth and opportunities to be a lot more targeted and focused on a different area, which means that we are using different language, different use cases in order to target those markets, which was untapped potential for us because we weren’t being as intentional as I think we are now in those new areas.
Drew Neisser: A lot of times in vertical marketing, what I have found, they can tell if you’re a pretender. They can sense that you really aren’t among in their milieu, so to speak. You’re kind of a foreigner coming up. You’re a Yankee coming down into the South kind of a thing.
I’m curious if you have found in your experience with verticals, if, in fact, there is this, “Yeah, well, let me know when you’ve worked with 10 police force.” We found that. In this way, not only were we doing vertical, but we did geographically vertical, too, so we could get some density in that area and say, “OK, these three police force in this county are now using the Toughbook.” Curious if that mirrors any of your experiences.
Ian Howells: Part of the experience when you think about people, you have a choice to hire somebody from the industry or somebody who’s a marketing person that can learn new industries very quickly.
I remember one thing that stuck in my mind—I used to do [inaudible] contracts Wall Street. We hired somebody from Merrill Lynch who took me to Lehman Brothers and they just rejected him because they said, ” He doesn’t know anything about Lehman Brothers, so he’s useless.”
So really what you want to have is a marketing person who’s got a lot of curiosity because even if someone’s been doing healthcare for 20 years, they may not have done dental practices or they may not have done elderly care. So from that perspective, we hire intellectually curious people who have a background and want to learn more and then marketing people rather than people from the industry.
Drew Neisser: Interesting. That makes so much sense because if you think you know it and you’re not willing to ask the questions, you’re not going to get beyond the surface. That’s really interesting.
[20:51] On CMO Huddles“We can learn from each other's exploration.” —@mikayamamoto @F5 Click To Tweet
Drew Neisser: I would love to just plug for a moment CMO Huddles, and I’m just going to spend a second on it. This is something that we launched in 2020. It’s an invitation-only subscription service that brings together an elite group of CMOs to share, care, and dare each other to greatness. One CMO described a huddle as a cross between an expert workshop and a therapy session. Ian, Lynne, Mika, does that sound about right?
Ian Howells: I’d like to say how useful we found them. When we were doing the virtual user group, it was awesome just to listen to the experiences that other people were doing and we use so much of what we discussed amongst the group to actually make a really successful online user group. We’re all doing it for the first time so it’s phenomenally useful.
Mika Yamamoto: I think there’s such a great idea exchange just because we come from, the common element is marketing, but I think we can learn from different industries speaking of verticals. And so many of us come from different industries. I’m in the tech industry, but there are many from other industries that we can learn from who set a different bar and who do things differently. But we can take those best practices and apply them to where we are.
I think over the last year it’s been very helpful just because a lot of the things that we’re doing are relatively new, right? I mean, we’re like, holy crap, we all have to go online to everything, so we’re all switching online. Now we’re dealing with Zoom fatigue. We’re dealing with so many different challenges that are, again, relatively new, so figuring out how we’re all reaching and discovering and trying things out has definitely been invaluable in terms of just sharing new ideas, seeing what works, and maybe what doesn’t, because some people may have tried things and seen around corners that we haven’t done yet. We can learn from each other’s exploration.
Lynne Capozzi: You know, Drew, the other thing that I think has been very helpful for me is that you have a level of flexibility with how you run the huddles. Sometimes you come in and you say, “Here’s the topic that we’re gonna talk about,” but often you’ll say, “What’s on people’s minds? What are you struggling with this week? What is it that you want to know?”
And you see people immediately jump in to say, “Oh my gosh, this is something that I’m facing this week” or “How do I present this to the board?” or whatever the topic is. I like the flexibility that you provide to help us with real-time issues.
Drew Neisser: You know, you’re reminding me that I forgot to ask that question today’s huddle. That’s hilarious. Well, anyway, if you’re listening and you’re curious about CMO Huddles, visit CMOHuddles.com.
[23:31] Where to Start When Building a Vertical Marketing Program“When you ask somebody to describe this market, they should be able to articulate it in two minutes.” —@drianhowells @SageIntacct Click To Tweet
Drew Neisser: One of the things that was so interesting about that as we move back to vertical is, you know, you really have to dive in. I guess what vertical really comes down to is just targets and knowing your target. But I want to ask—I have a special advisor here—hey, Google, what is vertical marketing?
Google: According to Wikipedia, a vertical market is a market in which vendors offer goods and services specific to an industry, trade, profession, or other group of customers with specialized needs. An example could be software that manages services in hotels amenities solutions.
Drew Neisser: OK, Google. Thanks.
Google: No problem.
Drew Neisser: [Laughter] Hey, Google, stop.
Drew Neisser: He wants to be on the show every time. All right. Before we get to the gin, let’s try to lay out the steps for a successful vertical program. If we were to break it down from the beginning, we’re starting fresh. What’s step number one?
Ian Howells: It starts with data analytics. Analyze your customer base and look for recurring patterns around what they’re using and then really going through and looking at how they describe themselves through the common terminology. You almost create a dictionary of words they use to describe the secret society of like-minded people. We do that. Then we go through the interview process and summarize it in a 10-point plan and discuss.
Then the other critical thing is—we’ve all been there where you see this 60-page document describing how to get to a market. One of the things we discuss about a 10-point plan it’s 10 slides. If it’s 60, it’s wrong. When you ask somebody to describe this market, they should be able to articulate it in two minutes.
Drew Neisser: Two minutes or less. Wow.
Ian Howells: When you get it, then you industrialize it, you package it up with external material. You view it, go through the demand gen, you look at the associations and the events and the analysts. But you’ve got to be able to articulate it. That’s the test—that people really understand.
The one thing I’ve learned in the last three years that was different before… We always learned that you have three buyers: the technical, the economic, and the end-user buyer. Those three personas. If you really understand the market and it’s a true shift, there’s one thing that’s common to all three. We don’t do three personas anymore. We do this one common agreed pain and then when the three key people agree on that, then you can go to market very, very quickly.
Drew Neisser: That’s such an interesting thing. I’m on a rant about personas and have been for over a year because I just keep seeing them splinter messaging, then you hear about the buying committee coming together and they are looking at the same brand with eight different perspectives. And the result is they can’t come to a commonality. So
Lynne, Mika, I was curious where the data comes from, but what’s your experience with the things that Ian lined up? When we’re just starting from scratch, what do you look at?
Lynne Capozzi: I agree with Ian. Looking at the data is the most important thing around where have you had success in that market? I think that’s where I always look to say, “Why did they buy a product? What solution are we providing to them that solves their problem?” I agree with all of what Ian said in terms of the process.
The only thing I would add is there has to be—and it doesn’t have to be huge—but I don’t ever want to do vertical marketing without a sales component. If we’ve got vertical marketing going, I need a sales playbook, even if it’s short and sweet, but I need to have the salespeople aligned with that same message. It’s got to be a combination, I think, of marketing material and marketing tactics as well as sales.
Drew Neisser: Mika, go for it.
Mika Yamamoto: I was going to say I agree with Ian and with what Lynne had said. Lynne, your most recent comment in terms of having one go-to-market versus having this is what sales does and then this is what marketing does, I think definitely is a lot more efficient and better for the customer, frankly.
Ian, I completely agree in terms of having the reason why this vertical should consider what you have to offer and have that be one common element for the company overall and then possibly have a variation for each of the personas.
The other thing I’d add is a perspective on why you may lose, so why you’ve won deals but also why you’ve lost deals within verticals and why we win. Not every single vertical customer is actually the right customer for what you have to offer, so sometimes you lose deals and that’s not such a bad thing because that customer may churn ultimately anyway because they’re not a great fit. But sometimes you lose them because your competitive positioning wasn’t as strong and understanding the difference, I think, is key.
The other one I’d add is why you lose and why you win and making sure that you’re solid in terms of your messaging on the compete message. So, who’s going to compete with you? And then, how can you strengthen your messaging just to make sure that you can objection handle as competitive buyers?
Drew Neisser: I love that comment, and so often we just focus on the win. But really understanding why you lost is such a great thing. I also want to do a shout-out to Julie Kaplan, who left a comment on LinkedIn about information sharing between sales and marketing being key. Thanks for that comment, Julie.
[30:22] Common Vertical Marketing Mistakes“You don't want to have marketing saying one thing, salespeople saying another thing, the website saying another thing.” —@drianhowells @SageIntacct Click To Tweet
Drew Neisser: In vertical marketing—you started this conversation, Mika. You said, “It’s important to know when you don’t win.” So, when vertical marketing doesn’t work, what is usually the reason?
Mika Yamamoto: I think you just didn’t hit the mark in terms of meeting a business need or striking a chord to try to meet a business need. It’s either, you know, improving top line, improving the bottom line. Ian, you’re saying you’re a non-profit, so it’s making sure that the non-profits that you’re servicing can actually service their constituents better.
I would say usually when we look back, it’s that we just didn’t hit the mark in terms of being able to communicate our value better than either doing nothing or better than a competitor. It’s really honing in on our message on how we do deliver that value.
Lynne Capozzi: I’ll add to that as well. I think some of the times when I feel like I have not been successful in the past around some verticals is not sticking with it long enough. In typical fashion of, oh, we put together an integrated program, we ran it for three months. We didn’t get much from it and then we ditched it. Like anything else, I think you need to stick with it for a while to see what works.
Drew Neisser: That’s such a good point and one that you could forget—this is a snowball effect. When you get in a vertical market and you get one and you get two and then they start talking to each other, the goal is not to just get to it and move on. The goal is to get a sizable share of these markets, right?
Ian Howells: I think the original goal, which is a bit strange, is to interview enough people in enough depth that you really understand the market better than the people you’re interviewing. That sounds strange, but if you think about it in our market—we sell to financial services and software and NFP—a CFO probably confides in two or three people about the market.
If you interview 50 and you do it really well, you truly have a better understanding of the market and the individual you’ve spoken to. That makes them really interested in talking to you because you have that kind of view.
So I think that’s the first thing—when I’ve seen things not go well, people try to jump to conclusions too soon after interviewing three people.
And the second thing, even if you’ve done a phenomenal job and you’ve interviewed 50 people, you think about the message going out—it’s got to be consistent from beginning to end. You don’t want to have marketing saying one thing, salespeople saying another thing, the website saying another thing. And that happens a lot.
[32:58] Replacing Trade Shows with Virtual Vertical Marketing“Bringing them together to help create a huddle of like-minded people has really been beneficial because it's not just selling them, it's actually helping them help each other.” —@mikayamamoto @F5 Click To Tweet
Drew Neisser: Obviously the pandemic changed a lot of things, and one of the ways that used to be a great way to engage vertical markets was to go to the trade shows. One of the definitions of a vertical market is that they have trade shows and they have trade associations and all these things. How did you make up for that in 2020 and in this year moving forward? Weren’t trade shows a big part of this.
Mika Yamamoto: They were. What we’ve done is bring a virtual forum of like-minded individuals of a similar vertical together to have a conversation, and less a conversation about what we offer, but more of a conversation about what they’re seeing in their markets based on what’s happening in the world today.
Not dissimilar to the CMO forums that you have, Drew, in terms of the Huddles, we look at chief security officers within companies, for example, and we bring together chief security officers of financial institutions who face very different challenges now versus before. State and local governments face new challenges now because, for the most part, they have to be able to service their constituents remotely and people are trying to figure it out as we go along.
Bringing them together to help create a huddle of like-minded people has really been beneficial because it’s not just selling them, it’s actually helping them help each other with the challenges they face today. And it ends up being a great focus group to hear what they’re facing. That has actually provided us a ton of traction.
Drew Neisser: I think it was you who said the more you helped these folks, the more you ended up selling. I’m pretty sure that came out early on during the pandemic. I seem to recall that.
It’s interesting. What you’re essentially saying is, because we can’t go where they are, we need to bring them together and we have to do it in a way that is actually helpful and of value to them. You’re suddenly in the business of—we won’t call them trade shows because it’s not—it’s a different kind of experience. But you’re the aggregator. You’re the one who’s bringing them together.
Lynne, have you had a similar approach to make up for the lack of trade shows and the leads that used to come from those for verticals?
Lynne Capozzi: I have yes. We’re doing a lot of virtual events, similar kind of thing. Smaller events. We either grouped them together by—it could be job function, so chief digital officers, for instance. Sometimes it’s different companies from a vertical, so retail, for instance. We’ve done those. Or we also do it by geography, which I find is very helpful.
We have a virtual event, for instance, in the Bay Area—you’re inviting people from the Bay Area—and they may actually already know each other, or at least they know the environment, they know the companies. And I find that if they have some familiarity with each other, then clearly talk more. But we don’t sell on them. I don’t do a sales pitch about who we are or what we offer. It is really to bring them together and maybe talk about what’s happening in their industry or in their area.
Drew Neisser: Yeah, Ian, anything different in that world for you as you spin this?
Ian Howells: A couple of things we do like Lynne was saying about the social aspect, bringing people together. The other thing we did was we used to go on this show, for example, for the SaaS software market. That got canceled, so we’ve run our own virtual event, a big full-scale event, and that was really successful as well. I think it’s two things—doing the big events and doing the pure social events as well as is really important.
Drew Neisser: I have been hearing a lot among CMOs and people about Zoom fatigue and video fatigue. I’m wondering if—as we move into February now of 2021, do we have to just keep raising the bar in terms of the quality of these events, in terms of the food that you’re providing for the food tasting or the celebrity guests that you’re bringing? I mean, is it harder to get people to attend these events?
Mika Yamamoto: I think we’re still seeing a lot of engagement. It’s just, I think the ones that see the best success are the ones where there is engagement versus selling at or talking at individuals. It’s where people feel like they are learning from each other and they’re able to take away something that will help them run their business better from a set of peers versus feeling like a vendor is talking about them. So that’s something that that I think has been key in our events.
It certainly is fun to have an introduction of a cooking class or a spirit tasting or having a happy hour or a lunch. Right before this, I came from a women’s lunch where we sent everybody an Uber Eats coupon and they can order whatever they wanted. Part of the dialogue was sharing what you ordered, and then talking about some core issues that folks are facing right now. So I think having a dialogue and helping us all deal with the environment that we’re in today has definitely been a good grounding force.
And in some cases, that is related to our technology. In some cases, it’s how do you deal with the mental health issues that you’re finding in your staff and in your community. That ties us all together and actually helps us be better professionals when we go back.
Drew Neisser: Interesting. Gabi Zijderfeld, asking about these virtual events. Thanks for your question, Gabi. The question is, do you invite your sales teams to these client virtual events? I don’t even know if we’d call them client virtual events. I would call customer/prospect events. Do you?
Mika Yamamoto: We do them with them. It’s not a marketing event; it’s actually not a sales event. I think we see them as just a customer event where we divide and conquer. We host them with our sellers, so I don’t think it’s seen as necessarily something that marketing does. I think it’s seen as something that we do together.
Lynne Capozzi: We do it similarly. We do invite some of the sales folks. I make sure that we have the right quantity of people so we don’t outnumber anyone, but I do a prep session ahead of time.
I’m very careful about this. I do a prep session. “This is what we’re going to talk about. I’m going to ask you these following questions, can you please chime in here to talk about what you’re seeing in the market and things like that?” It is pretty structured and I’m careful of that to make sure that we set the expectations with sales that it can’t be too salesy.
Drew Neisser: Thanks for that question, Gabi.
[40:06] Vertical Marketing Metrics“It's not just ‘Lower the price tag.’ It's, ‘What are you going to do to help us be successful with your product?’” —@lcapozzi @acquia Click To Tweet
Drew Neisser: Because of where we are in the show right now, it’s time to ask, what would Ben Franklin say when thinking about vertical marketing? He actually has a perfect quote for that. “Don’t think, to hunt two hares with one dog.” All right. You got that? It’s not too complicated. If you’re trying to reach two vertical markets, don’t try the same program. Thank you, Ben. You’re dead on there.
Speaking of two hairs, one dog, how should we be thinking about measuring the success of a vertical program? I know we could just talk about revenue gain, but do we think about how we have to get a certain penetration in a particular vertical before? I mean, when you look at the metrics for that, do you think about vertical a little bit differently?
Ian Howells: For us, Moore always talked about bowling alleys. If you think about each market as a pin, the head bowling pin is the first market you penetrate. One of the critical things is not just penetrating it, but what does it lead on to? Does it make it easier to knock the second and third pin and then the fourth, fifth, and sixth pin? Actually going through an alley is way easier than creating a new alley. I think when you think about a market and success it’s being small fish in a big pond, but then it’s got to lead to other places to go to as well.
Drew Neisser: So interesting. So you see it as—we’re doing well and we can just sort of extend that. I’m curious, Mika and Lynne, when you look at going into a vertical market, do you think about the metrics? And Lynne, you already mentioned the notion of leaving a market too early, so obviously, that speaks to penetration. But from a metric standpoint, do we always circle back to, “Well, we got this amount of revenue delivered or pipeline and that’s what we’re responsible for”?
Lynne Capozzi: Well, I think for us sometimes, we’re always coming up with new products, too. And sometimes it’s about just getting some early adopters. It doesn’t necessarily mean, “Oh, I have to get”—whatever, pick your favorite number—”50 customers.” Sometimes you’re after just a couple of customers to help be your early adopters and then to leverage those. Sometimes that could be a success.
Drew Neisser: Your beachhead. Mika, what about you?
Mika Yamamoto: Similar to what Lynne had just said, to get to 1,000, you have to get to your first 10. It’s really thinking about which marquee 10 would we get that would actually enable the next turn of the flywheel to get the next 50 with the same effort. It’s really looking at, if we could take our pick and we can cherry-pick our favorite customers that we would say we’re on our list in X amount of time, what would they be? And it’s really being focused on making sure that we’re spending our effort on those customers and then obviously looking more broadly at the new contacts that we’re building and new conversations we’re enabling within that vertical and specific personas within that vertical.
So it’s, you know, the end in mind in terms of who are our first 10. And if we could pick the first 10, what would they be? Let’s go after them and then let’s make sure, more broadly, we’re looking at the key personas and looking at how many conversations we’re enabling with those key personas to enable the next 50.
Drew Neisser: When we’re picking our 10—because I love that—it’s similar to the bowling pin analogy, which I’m somewhat obsessed with as a bowler. But when we’re picking the 10, are we picking them based on their marquee value? Because sometimes a big brand is less likely to be a good testimonial, for example, whereas sometimes a fast growing but smaller brand might be more than welcome to be the one that will talk to your future customers. How do you find and pick that first 10?
Mika Yamamoto: We do it by fit. Early on, Ian had talked about looking at a set of criteria and outlining the core customers that you’re going after from Geoffrey Moore’s outline of how do you really identify your market and describe your market. And Lynne I think went into product-market fit.
I think it’s really looking at product-market fit as well as, frankly, we do look for the brand and it might be an up-and-coming brand in a specific vertical or it might be an established brand. But that branding opportunity that then is a great reference is something that we do look at. But it doesn’t always have to be the biggest customer. It can be the most interesting customer that still might be relatively small. Product-market fit is the biggest one.
Drew Neisser: Interesting. Lynne, when you’re looking at this—and again, we have to give it enough time, right? We’re identifying the 10 that Mika suggested. We’ve got to give it time. Part of the way that I’ve seen this happen is you sometimes give the product away or some sweetheart deals to get in the market. Am I making that up? Or, in order to get a foothold in a market, do we bend our pricing rules a little bit?
Lynne Capozzi: Absolutely. It depends what the customer is most interested in. Maybe what they want is exposure. Maybe they want exposure, maybe they want to reduce the price. Typically, they probably want more services than anything else is my experience. It’s not just “Lower the price tag.” It’s, “What are you going to do to help us be successful with your product? Are you going to stick with us? Are going to offer support? Are going to give us training?”
Those types of things, I think, are even more important and more valuable to customers than just a drop in price. They want to be successful. Everyone wants to be successful. Usually their own personal reputations are on the line, so they want to be as successful as possible. My experience is, surround them with services that can help make them successful and be those what we call digital heroes.
Mika Yamamoto: We do more proof of concept. We put something in line and part of our business is selling security products and anti-fraud products. We’ll say, “OK, Bank X, we’ll put our product behind the product you’re currently using and show you how much fraudulent traffic is actually making it into your environment.
We’ve done a similar thing with one of the top three social media companies on the planet during the election to actually show them that actually a vast majority, 90 percent-plus of their traffic was actually bot traffic that’s trying to skew public perception.
We’re saying, “OK, we’ll put a proof of concept in there for you. We’ll show you what’s happening and we’re happy to take it out.” Most banks are not willing to take it out once they realize how much fraudulent traffic is actually coming in and skimming balances off of other people or, for retailers, a big cybercrime is actually going and taking gift card balances and skimming off gift card balances from customers. That’s tens of millions of dollars for a lot of companies, so we put in proof of concept to show the value we offer. We’re happy to take it out if they don’t love it, but it’s hard to take it out once you realize the benefit.
Drew Neisser: Interesting. Go ahead, Ian.
Ian Howells: One thing that Lynne said, a little nuance around the time element. If you were to research a market, one of the critical questions is, is that market really heavily defended by a good competitor? If it is, you should walk from it. But if it’s defended by a legacy product, you should go after it. The time element—you can always dominate a market in a year. You can grow very, very strong very quickly. So for me, it’s about, before you actually enter the market, just have some diligence around is that a very good competitor there or not. Then time is very rarely an issue.
[48:31] The Future of Vertical Marketing“We increase our conversion rates, we increase our deal sizes, and we're far more efficient just because we're focusing on customers that are most likely to buy.” —@mikayamato @F5 Click To Tweet
Drew Neisser: We’ve talked about several things in this path to being successful in a vertical. Obviously, you’ve got to know the target because by definition a vertical is a target audience. It is well defined with common things. And if you really get in there, you know it inside and out. As Ian would say, you’d know more about their category than they do.
Then you’ve got to make sure that you’re aligned with your sales team and you’re going at it. Then you’ve got to get a beachhead and prove that you can be successful in this thing and you’ve got to stick with it. Part of the digital analysis upfront that Ian talked about which I think is really interesting is, is there a competitor that’s been there a long time that you can just beat the crap out of?
If we had said three years ago—GoToMeeting was such a dominant, dominant player in the category that Zoom could come along and just rip them out, you would all laugh. “No way. GoToMeeting is dominant. Why would you waste your time?” So, yeah, there’s opportunities, not that they were necessarily vertical. So my question in all of this is, let’s look ahead. Where’s this going? Are we going to be spending more dollars on vertical? Is it going to get harder? Is it going to get easier? What’s going to change here? We’re in 2021—if you were ahead of the curve with vertical, what would you be doing?
Lynne Capozzi: I’ll jump in. I think we should see more and all of us should be thinking more about vertical because, you know, our expectations as consumers are rising. We all want to be known more. We want almost every experience that we have with a brand to be valuable and to know something about us. Look at how aggravated we get when you’re talking and communicating with a brand and they don’t know anything about you. We all get aggravated whether it’s the cable company or whatever company it is.
I think the more we know about them as individuals and as their jobs and as the industries, the more we’re going to be able to communicate with them and relate to them. And that, I think, just equates to better marketing. In terms of dialing up or dialing down, I’d say it’s the year probably to figure out how to dial-up.
Ian Howells: We’d be dialing up. The core thing for us is you have a horizontal market and you bubble new verticals out of that so you grow in the next year. The other thing is you kind of go deeper into the market as well, like from faith-based to Catholic dioceses for example, when you invest in it. You go deeper and you bubble out into two core things. And the reason you do that is because, for every dollar you spend, it’s just way, way more efficient.
Drew Neisser: I would think. I mean, that’s part of the reason why we’re having this conversation. If we’re doing vertical marketing right, and we’re marketing the Toughbook to a police force, we know there’s a real good chance that there’s an alignment because there’s a need and there’s a target and we should be able to figure out how to communicate to them effectively, which is what we marketers do.
I would think some of this also may be enabled by AI because we’ve been talking a lot about how we know customers. It feels like there’s a lot of data out there that we could probably be processing. And whether that applies to the message that we share with the vertical or whether it applies to how the BDRs are communicating and following up, I would think that there would be some tech that’s going to play, that’s really going to be able to accelerate the impact of vertical. What do you think?
Ian Howells: Absolutely. I approach a market myself, let’s just say financial services. We’d look at family offices. I literally went to every single website in our database for that whole segment to all the different words they use to describe themselves. It’s just a massive amount of work. With AI, you can say, “Find me similar ones to these.” It doesn’t do 100 percent of what you do, but it dramatically changes how quickly you understand the segment to research. It’s just night and day.
Drew Neisser: Wow. So the speed of research is going to change. Anything else as we approach the close? Any other forward-thinking thoughts? Mika, Lynne?
Mika Yamamoto: Well, along the lines of AI, what we’ve done is we’ve taken our data and then married that with third-party data to drive predictive modeling against, of a customer segment, which ones actually have the greatest propensity to buy. When we talk about the first 10 and then the next 50, we stack rank all of our customers based on predictive modeling to see which ones are most likely to buy, which helps us focus. Therefore, we increase our conversion rates, we increase our deal sizes, and we’re far more efficient just because we’re focusing on customers that are most likely to buy. In that case, AI has helped us a ton.
Drew Neisser: Amazing. Lynne, last word.
Lynne Capozzi: I agree on the AI front for sure, this is definitely the year for that.
Drew Neisser: Very cool. Thank you, Lynne, Mika, Ian, you’re all good sports. Thank you, Far North Spirits, for this fantastic Solveig gin. And thank you audience for staying with us.
Renegade Thinkers Live is produced by Melissa Caffrey. For show notes and past episodes, please visit renegade.com, home of quite possibly the savviest B2B marketing agency in New York City. I’m your host Drew Neisser, and until next time, keep those Renegade Thinking Caps on and strong.