The North American Industry Classification System (NAICS) was developed as the standard for use by the U.S. federal government’s statistical agencies, replacing the Standard Industrial Classification (SIC) system in 1997. Industry-specific NAICS codes are assigned to each business in the country, classifying them for the collection and analysis of data about the nation’s economy. The stats derived from NAICS data are available at www.census.gov/econ/.
As of 2017, there were 1,057 different types of industries in the U.S. designated by a unique NAICS code. So, if you are a professional services provider who calls on small- to mid-sized businesses (SMBs), how do you decide which of these 1,000+ industry niches you might want to target with your prospecting efforts?
The benefits of choosing your niche
SMB owners are naturally going to prefer business partners who can exhibit knowledge about their unique industry. After all, they are looking for people who know and understand their company’s issues and opportunities. This is why it is wise for professionals who call on SMBs to select a few specific industries to learn about in order to provide prospects with more tailored guidance and solutions.
I know there is a tendency to want to cast as wide a net as possible when it comes to prospecting in hopes of pulling in new clients in whatever industry they happen to be in. But taking a more precise approach to your prospecting by familiarizing yourself with a handful of verticals offers both you and your clients a number of advantages.
- Knowledge is power.
Let’s face it: Most professional services providers are generalists who call on any and every possible prospect in order to build up their book of business. As a result, they simply don’t have the time to research and gain a comprehensive understanding of their clients’ industries. When you take the initiative to gain expertise on a handful of specific industries, however, you will able to provide your client with superior, customized guidance on how to help their business succeed. - You can beat your competition in saturated markets.
In many professional services industries, the competition is tight. As a result, you must somehow differentiate yourself from the competitors who are calling on your SMB clients. Industry-specific knowledge makes you an indispensable resource to your client—a partner who can’t be replaced just because someone else calls and has a lower rate. It will help you capture a prospect’s attention, gain the upper-hand on the competition, and retain your client’s business as long as you continue to add value with your industry expertise. - Niche clients can recommend you to their peers.
It’s a small world in many industries, and business owners often know the other people within their sector. In most towns, all of the veterinarians know, or at least know of, the other vets, for example. Yes, some of these people will inevitably feel threatened by their competitors, but often times, colleagues within an industry share information and even make referrals to one another. These intra-industry relationships can be a fantastic referral source for you within your chosen niches. - You can still call on other industries.
Not to worry: Even though you take the initiative to gain an in-depth understanding about a few specific niches, you can still call on other sectors too. Almost everyone can and should have a diverse book of business when it comes to the industries they service. This approach can help you hedge against fluctuations in the market that might hit some industries more than others.
What’s your specialty?
Selecting a few industries to focus on will allow you to bring your A-game to your prospecting efforts. It will boost your confidence on prospect calls, enable you to have more targeted conversations with prospects and clients alike, and will incentivize your clients to remain with you, even when competitors come calling with lower pricing.
Vertical IQ provides you with access to comprehensive information on over 450 industries. You can even use the Sort & Target feature on the main Vertical IQ menu to help you rank industries based on their usage of various financial products, key financial benchmarks, or growth forecast. So, select your target industries and start building your expertise today!