How to Select a Niche to Grow Your MSP Business

Without a specialization, a key area of focus such as a vertical or industry, you’ll be competing on price alone when marketing your solutions. MSPs see success when they focus on a niche to dominate. Competition in the market is fierce as more MSPs buy RMM software, spin up a website, and begin to court your customers.

With a concentrated focus on developing strong ties within a market segment (region, vertical, vendor) established MSP firms will begin to see differentiation take effect, creating a more compelling case for potential customers to sign on with your brand.

Why Niche Marketing Works

When buyers see their specific needs addressed in the products, services, and overall marketing of your company, they tend to trust your firm more. Buying is really about justification. How can a buyer justify their purchase of your product or service? If they can say you have experience in serving others like them, it’s a fast and easy way for the buyer to justify the purchase (first to themselves and then to their stakeholders).

We know IT solutions buying includes a team of stakeholders with one person making the final decision. If the team can point to your experience serving others in their industry, region, or area of expertise, you’re giving them leverage and protection in the event projects don’t move forward in the way they should/in the way one discussed.

Types of Focus Areas for MSPs and VARs

IT solutions providers have a few potential areas of focus for profitable niches (verticals, regions, and capabilities).  Some MSPs run into challenges when they search to hone in on one of these three areas. Here’s a closer look at the three areas of focus:

• An industry/vertical: Many firms look into growth industries such as health care, manufacturing, finance, and retail to focus their efforts. It’s a solid play for MSPs and VARs that want to create IP (intellectual property) to solve a challenge the industry faces.

Sales opportunity: Some MSPs focus on micro verticals such as resorts (hospitality), hedge funds (finance), and veterinary services (healthcare). The smaller the niche, the greater the opportunity to provide value, develop customized services, and to design solutions that address important pain points.

• A region: Some companies want to work with IT solutions providers in their geographic area. It’s a market advantage to say your firm is “right in the backyard” of your target audience. This is attractive to firms because it helps with credibility and stability, proving that your firm will be available when clients need assistance with an on-site issue.

Growth opportunity: A regional focus makes marketing your MSP business more effective. A regional focus gives you an advantage with developing ads targeted to businesses in your community.

• A vendor or capability: Some MSPs have found value in promoting certifications with one major vendor around a certain capability such as Microsoft Azure and hybrid cloud or Cisco and software-defined networking solutions.

Marketing opportunity: With a focus on your firm’s capabilities through a particular vendor, you position your firm for a greater chance of capturing market development funds (MDF). These funds can fuel the marketing efforts you need to bring in targeted leads that can turn into quality business for your firm.

One objection we often hear is that firms don’t want to limit the potential business coming their way. Some believe if they focus solely on healthcare, all of their leads and customers in the financial industry will somehow fall away. There are ways to make smart, strategic moves to choose the right niche while preserving your existing (and potential) client base.

How to Manage a Niche Focus for MSPs

Focusing on a specific niche opens doors for streamlining your MSP business and building out a practice that’s attractive to vendors with solid MDF programs. The challenge is in knowing how to integrate a niche focus into your existing business without jeopardizing what you already have. The solution is to research, test, and partner your way to success with a niche focus for your MSP or VAR business. Here’s how to get started:

1. Research potential niches by evaluating your existing client base. As you look at the best clients you’ve served over the past five years, do any patterns come to the surface? If not, drill down deeper by segmenting your client list based on region, industry, vendor, and solution.
   Next, have a discussion with your sales and engineering teams. Ask questions about what it was like to work with these clients. Did the engagements drain internal resources? Also ask if they see a glaring need or any unaddressed pain points from any one segment of your customer base. You may have an understanding of the current needs, but when you take a look back with your sales and engineering teams, you may get more insight and a gap in the market, that only your firm can fill, could emerge.
2. Develop a test solution to address the pain point of a potential niche. Once you’ve identified a pattern and an unmet need within a market segment, consider developing a solution tailored to that particular niche. For example: If your research reveals physicians in pediatric medicine often run into HIPAA compliance challenges when managing medical records of their clients, you can develop an app that makes managing compliance easier for this group.
3. Partner with (or leverage the resources of) a vendor with access to your ideal niche. Vendors like Microsoft and AWS give IT solutions providers access to potential customers through their marketplaces. If you happen to develop an app or a packaged solution that solves a pain point for a particular niche, placing it on one of these marketplaces can be a fast way to gain traction. Note: Take a look at Microsoft’s Azure Marketplace as it features a section for consulting services as well as apps.

Once you’ve completed your research and testing, the critical step of partnership doesn’t have to be limited simply to vendors and their marketplaces. Attending vertical industry events, connecting with others in the IT industry, and developing a robust network of contacts among the niche’s core base of influencers can yield potential partnerships as well.

The final step in the process is to market solutions to your chosen segment. Coming up with a unique brand around the solutions for this niche can help propel your idea to success. Let’s discuss ways you can move forward with leveraging digital marketing to propel your MSP or VAR business forward.