Choosing a Vertical Market.
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[00:00:00] Your agency is likely growing slower than it should, not because your team lacks talent, but because you haven't specialized enough. After helping scale the agency's scorpion from 20 million to 200 million and helping hundreds of founders to niche down, I've learned that the. Fastest way to grow is to own one vertical market.
Today I'm gonna walk you through my three step process for choosing the perfect vertical market. This is the exact process I wrote about in my bestselling book, anyone, not everyone, and my clients use to grow 93% faster than generalist agencies win more inbound referrals. And charge premium prices without competing on costs.
The biggest shift most agency owners need to make is overcoming your resistance to niching down. Avoiding niching down is typically due to the fear of missing out on other industries. But staying safe as a generalist keeps your revenue flat, and generalists can't build mastery [00:01:00] or brand authority in one space.
A stat from Promethean Research says that specialized agencies grow 93% faster than generalists. Plus today, agencies that wanna sell their company will get more just by being specialized. That means more cash in your pocket if you decide to sell. So it's clear that the riches are in the niches. But you need a framework to pick the right one.
This framework I'm about to show you makes choosing a vertical feel obvious. And safe, actually, I've created a focus finder worksheet that you can use to follow along and find your perfect vertical. If you want a copy of that, just put the word focus in the comments and I'll send it over to you. Okay.
Here's my three step focus finder system. Step number one. Gather the wisdom already in your business. Let's start with the numbers in your agency group, all current and past clients by vertical. Then compare the average revenue per client retention rates, profit margins, and referral
[00:02:00] volume. And then let's look at what's qualitative.
Ask your sales teams. Which industries or vertical markets are the easiest to sell to? Ask your account managers, which clients are happiest and easiest to work with? All of this will help you to narrow down your options. At Scorpion, we decided to specialize in home services because of our client data.
Things like revenue, retention, and margin for our home service clients made it the obvious choice. Step two, do you give a damn? If you wanna be successful, you should plan to be in this market. Over the long term. So you need to choose a vertical you actually care about. If you don't care about their problems, you'll burn out in three to six months.
Easy. Plus, having empathy and genuine interest in a market will separate you from your transactional competitors. An example is Chris Yano from Rhino Strategic. So. He chose home services because he grew up in a blue collar environment. He recently told me, those are my people. Another
[00:03:00] agency client chose digital health because the founders led healthy lifestyles and they wanted to work with companies that align with that.
Personally, I chose to specialize in working with digital agencies because the founders are strategic thinkers. They're open to bold ideas and receptive to direct and honest coaching. All of which align with my love of teaching high impact strategies to entrepreneurs. So ask yourself, how personally connected do you feel to this vertical?
How well do you understand their day-to-day challenges beyond profit? Are you passionate about helping them succeed and making a difference? How excited are you to immerse yourself in this verticals world and can you see yourself serving this vertical for the next three to five years? Step number three, run the numbers to find the best fit opportunity.
What I want you to do is to find the total businesses in your potential vertical. Multiply this number by 20. This is the 80 20 Pareto principle. Doing so
[00:04:00] creates a more realistic addressable market. Multiply that number by 3%. This represents the realistic number of clients. You'll land in the vertical in three years or less.
Then multiply that number by your average revenue per client. The goal is to end up with a three year revenue potential for that vertical that actually excites you. Here's an example. We could look at the plumbing industry. Where there are 132,000 businesses in the us, 20% of that would be about 26,400 businesses.
3% of that is 792 potential clients. At a modest $10,000 per year per client, you're looking at a $7.9 million earning potential. For your agency, the thing that makes it even better is that by serving one client over and over again, you build in automation, you build in processes and a lot of leverage. So this $7.9 million will actually be very profitable.
[00:05:00] But here's the thing, when you're clear on the revenue potential in a vertical market, your confidence and certainty for success goes way up versus having to guess about serving everybody. Now, if you're ready to find your vertical. I've created a free focus finder worksheet that you can use to find your perfect fit vertical.
Drop the word focus in the comments, and I'll send it to you. The next important step after choosing your vertical market is to understand how to make more sales. If you wanna sell new clients easier, click the video on the screen now to get my framework on it.
