How to Break into New Verticals and Avoid Client Conflicts to Drive Growth

It’s a classic dilemma: agencies and martech companies win a client in a vertical market (like automotive) and develop expertise in that industry. As the firm’s reputation for notable work grows over time, other opportunities in the same sphere present themselves.

But, due to their relationship with the existing client in the same category, the company finds itself forced to pass to avoid a conflict of interest.

While many conflicts will be obvious and easy to identify — an ad agency working for Domino’s would likely have the sense not to take on Pizza Hut as a client — others might lean toward the more subtle or complex. For example, what if the Domino’s agency in our previous example took on a fast-food, non-pizza client (e.g., McDonald’s)? Would that still be a conflict? Or, consider hair products: would taking on a new hair dye manufacturer as a client conflict with your shampoo client? What about conditioner, hair spray, or pomade?

That’s why agencies and martech companies must look for ways to generate opportunities in new categories: having a specialty is great, but it can leave your firm vulnerable.

But how do you break into new verticals or categories in which your agency has little or potentially no direct experience?

Break into New Verticals

One path forward involves expanding your company vertically — in other words, taking one of your existing services into a new vertical market. This will not only overcome the client conflict challenge but also allow your company to grow revenue in other ways.

It’s why many companies have come to see the value of a targeted strategy over casting a “wide net” to find clients. While a B2B company can’t be everything to everyone everywhere, you could still be a superstar within several specialized vertical markets.

Here are a few pointers to consider before such an expansion for your company.

1. Start with “Why?”

While “avoiding client conflict” and “to grow revenue” are apparent answers, agencies would be well-advised to avoid breaking into a new vertical without some serious self-reflection and strategizing.

Why? A vertical expansion can be more difficult than starting a new business entirely. Established entities already have employees, a business model, and a vision for their company. Many companies make the mistake of overestimating how easy it would be, assuming minor adjustments to their new business efforts would be enough to become competitive in a new market.

But the fact is, in many ways, appealing to an entirely new audience will require an entirely new approach. It might be helpful to think of your company creating a new go-to-market strategy. Are you trying to grow revenue? Gain some competitive edge? Being clear about “why” you are pursuing vertical expansion will go a long way in ensuring your campaign is successful.

2. Identify Growth Opportunities

You can’t just break into a new vertical cold and expect success: not only do the prospects in your new vertical need a reason to believe you can help them, there are likely other experienced firms working in that vertical already. So, why would a client choose to work with you?

There are a few approaches. Ideally, you’ll identify “adjacent verticals” as prime candidates for expansion. If you have experience with pharmaceutical companies, explore other wellness or non-prescription health opportunities. Consider what you can offer clients in this space.

You can also tap into the experiences of your own team and leverage the professional background that brought them to your company. Perhaps you have two creative directors who worked in hospitality at a previous job who would be able to provide insights and experience should you choose to expand into that vertical.

Or, maybe you have experience with a particular overlapping audience. If you’ve marketed apparel to a Gen Z audience, you would arguably have insights on how to market other kinds of products to them, too.

3. Understand the Market

Once you’ve identified some candidates for vertical expansion, it’s time to do your homework.

It’s not enough to simply put a new section on your website. You need to understand the challenges facing that vertical, the major players, and what other agencies or martech companies you’ll be competing with. This almost always requires a data-driven market and customer analysis.

You’ll also want to understand the target prospects’ expectations, pain points, and how you’d segment and target them.

4. Test the Offer With Outbound Prospecting

Once you’ve identified an ideal target for expansion, it’s important to start testing your offers to prospective verticals before finally dipping your toes in them.

The best way to do this? Outbound prospecting.

This approach involves the proactive engagement of prospects through strategic cold calling, cold email, and social media to generate a predictable pipeline of opportunities with target companies. It allows you to introduce an idea, solution, or option your prospect might not find on their own. It’s also a great way to get more in-depth information about the market, its customers, and your competition.

While “outbound” might conjure up images of email spam or telemarketers calling right in the middle of dinner, to the contrary, the approach — done correctly — actually has several advantages over its inbound counterpart:

1. Prospect messages can be personalized and even provide value to a targeted audience.
2. In contrast to inbound, it is a proactive growth strategy that waits for prospects to contact the company first.
3. Provides actionable metrics, such as email opens, clicks, replies, and phone connections that can provide helpful insights as you tweak your approach.

Requiring a relatively affordable investment, this approach provides agencies with real-world feedback on their proposition in the marketplace. Rather than splurging on a new website, hiring new experts, investing in trade shows, etc., you can get empirical data addressing questions like these at a fraction of the cost.

Another excellent growth strategy involves targeting start-ups, or other fast-growing companies, to win a project in a new category, then leveraging that experience as a case study to win one of the bigger players in the category. Even offering pro bono services for a large client might be worth it for the valuable insights you’ll receive and as a foot in the door.

5. Make the Move

Once your testing is complete, it’s time for a final decision: is there an opportunity here? And if so, how much investment (time, money, opportunity cost) will be required to make it a viable expansion for your business? If you’ve done your homework, tested your offer, and see a path forward: make it so.

A winning go-to-market plan and a willingness to observe, listen, and adapt — will go a long way in ensuring your transition is successful. Now is the time to hire a subject matter expert, double down on content creation, or change your website to include the new vertical.

Once you finally make your move, creating a feedback process will allow for ongoing testing, learning, and improvements is crucial.

Vertical Market Expansion: A Challenge Worth Confronting

To review: Most agencies run into client conflict issues. That’s why it’s essential that agencies and martech companies have a strategic process to break into new verticals and drive growth in new categories.

With creative thinking, careful analysis, and the power of outbound prospecting, you’ll empower your business to break into new verticals. Remember our five steps:

1. Start with “why?”
2. Identify growth opportunities
3. Understand the market
4. Test the offer with outbound prospecting
5. Make the move

This approach will leave any agency well-positioned for success when exploring new frontiers. Good luck out there.

If you’re interested in learning how outbound prospecting can help break into new categories and predictably land 6- and 7-figure opportunities, check out our Free Agency Growth Keys Masterclass.