In a recent blog post, we shared how nearly any professional service provider — from insurance carriers and accountants/CPAs, to financial advisors, business processing organizations (BPOs), and even business consultants — can benefit from developing an industry-targeting sales strategy. We discussed how this approach allows you to build up your personal and institutional expertise around those specific industries, apply your knowledge to other organizations within that niche, and increase referrals. We also explained how this approach creates scalability and replicability, which can shorten sales cycles and boost close rates, retention, and profitability.
With literally thousands of options to choose from, how do you know which specific industries would be good targets for you and your organization’s products or services? There is some art as well as a good bit of science that should go into your selections.
Criteria to consider when selecting target industries
By reviewing the challenges/risks, trends, forecasts, and benchmark data found within the Vertical IQ Industry Profile, you’ll uncover the data points that should be considered as you select the niches you plan to target. Such facts and figures are particularly important for financial institutions, which might extend credit to businesses, but they can also be insightful gauges for insurance companies, accounting firms, BPOs, and others choosing target industries.
Specifically, you will want to take into account:
Business exit rates: The national average for business exits in all industries is 9%, so knowing if an industry has a higher or a lower exit rate than the national average can be useful.
Cyclical sensitivity of the industry: When the economy does well, companies within most industries tend to do well too. But by examining how an industry fared during the 2007-2009 recession, for instance, we can get an idea of how it might perform in future economic downturns.
Barriers to entry: Looking at the number of competitors, capital requirements, regulations, and educational/technical requirements of an industry, we can analyze how tough — or easy — it is to get established, which has implications for future competition.
External risks: If an industry has numerous inherent external risks, which are predominantly outside the control of the business owner, it impacts the overall risk of operating a business within that niche.
Industry outlook: Is the industry growing or shrinking? It is helpful to compare an industry’s forecast to other industries within the U.S. economy. (Note: Vertical IQ’s Industry Profiles also have an entire chapter dedicated to the Industry Forecast.)
Financial summary: Financial benchmarks compare an industry’s operating margins, liquidity, and leverage to those of other industries within the economy. They are the closest we can come to comparing apples to oranges in terms of different industries’ financials.
BONUS TIP: Be sure to use Vertical IQ’s handy Sort & Target feature to sort all Industry Profiles based on the criteria that are most important to you.
The local angle to selecting industries
There’s another factor that must be considered when choosing the industries you want to target: your unique local economic landscape. Vertical IQ can be extremely valuable on this front.
The Local Economies section of Vertical IQ provides data on more than 300 metropolitan statistical areas (MSAs), plus more than 3,100 counties across the U.S. Each Local Economy Profile includes an Overview section, as well as chapters focused on Population & Income, Employment, Residential Real Estate, Home & Rent Price Forecast, Local Business Dynamics and Web Links.
Our new Localized Industry Data, found under each Industry Profile, gives you even more in-depth local market data on each industry — down to the metropolitan statistical area (MSA) and county level — all in one place.
Using highly reliable third-party data from sources like the U.S. Census Bureau, Bureau of Labor Statistics, Small Business Administration, and Local Market Monitor, our Localized Industry Data will show you the industry’s number of establishments, spending patterns, incomes, population growth, and wages in a specific geographical area — with the ability to see the 10-year trends in each of these areas.
Targeted industries mean added value
Ultimately, any company within any industry should be judged on its own merits, and your sales approach should consider their unique, individual business needs. But if you’re looking at a broader industry targeting strategy, it is worth choosing niches where the vast majority of the companies are likely to meet your organization’s prospecting criteria.
Targeting select industries yields more focused, thoughtful execution that can add value in the eyes of your clients and prospects, setting you up to win, grow, and retain more business. By using Industry Intelligence to inform your niche selections, including insights on your local economic landscape, you can feel assured that you have made well-informed choices.
Ready to develop a targeted sales strategy that focuses on highly desirable industries? Download our free ebook, Choosing the Right Path: Targeting Industries in Your Local Market, to learn how to create a streamlined sales strategy that will boost sales.