Vertical Market Product vs Multiple Market Product
This post explores the difference between Vertical Market Products and Multiple Market Products and what it means for your startup and team.
We do not choose the problem we are passionate about solving but understanding and determining the impact you will make on the set of customers you are solving for is very important.
To start with, single vertical-focused products are products that focus on a particular industry or particular type of customer. E.g Edves focuses on schools, Catlog/Bumpa focuses on Sellers, Gumroad focuses on creators, etc.
On the other hand, multiple vertical-focused products as it suggests are products that involve building for more than one industry or type of customer. I can call them industry-agnostic products E.g Payment processing platforms like Paystack, Flutterwave, and Stripe; focus on any business from industries like Education, Fintech, Betting, Real Estate, and so on. Another example is Notion is for a website designer to create websites, for a content writer to create a blog, for designers to create portfolios, etc.
Customer relationship management solutions and Vendor marketplace solutions fall in this category including Oracle fits into this place.
Single vertical focused product: One product, One Market
Multiple vertical-focused products: One product, multiple markets / more than one product, multiple markets
It can be tricky at times to classify some businesses under these categories but when you see that servicing a type of customer of your product is totally different from the others you will know.
While I cannot decide which type of product you should build, I will highlight and explain key things you need to know in case you choose any of the product types.
Product: While building your minimum viable product (MVP), one crucial thing is time to value for the customer. You want the customer in a few clicks to derive value from your product. This is not a luxury you might be able to afford with a product that involves multiple verticals. For example: if I am building a product for merchants to sell their product, a simple MVP will be a web app or mobile app that allows them to list products and share the links with their customers.
Another thing to note is how broad or streamlined your product roadmap is going to be. You don’t want to spend so much time building existing features that your competitors already have before you start innovating.
Single vertical products give you a more streamlined product roadmap than multiple vertical products. For instance, it will take my team a lot more time to build a payment processing infrastructure before I start innovating as opposed to building a payment app that allows you to receive money and send money.
In summary, you want to consider the time to value for a customer and the product roadmap to innovation for the business.
Market: The market is one of the things you consider when starting a business and many times we are tempted to show an extremely huge market but you need to know that the more the market, the more the marketing spend.
There is no doubt that you get a bigger addressable market (TAM) or serviceable obtainable market (SOM) or serviceable addressable market (SAM) but requires more marketing strategies and spending before finding what works. Finally, apart from defining your general customer personae, you still have to look into specific customer personae.
Growth Strategies: Coming up with growth strategies and executing them is very tasking. The more focused the market of your product is the easier and faster it is to come up with strategies, test and double down on them.
In summary, More focused growth strategies are a lot easier than trying to grow your customer base taking into consideration different industries, and different customer types. For example, developing growth strategies for a developer-focused product or merchant-focused product is a lot easier than developing growth strategies for a vendor marketplace product like Handy or TaskRabbit, or BookingsAfrica.
Regulations: For multiple vertical products, you are likely to have to understand the regulations around each vertical. For example, a payment processing company like Flutterwave will have to understand your business industry and determine which compliance details to require, and tailor their product for that use case.
Another thing is that many times regulations change and you have to consider that. Imagine doing that for 5+ industries as a new startup with fewer resources.
Competition: It is difficult to compete in a space where your competitor already services different verticals of customers with 2-4 years of their roadmap in production.
You might have a chance when you focus on one vertical than having multiple verticals you are servicing. However, there are exceptions to this. One is you might be servicing a market in a different geographical location but it is important to see how well you can have a very huge competitive edge.
Pricing models: For multiple vertical products, your pricing model might vary depending on the kind of customer onboarded on your platform. Pricing is determined by understanding your market and the type of customers so you will have to build pricing models that fit all or build models for the different customer types. This is why you see some products will hardly offer self-serve because they don’t want you to drop off from viewing the pricing on their websites.
As I wrap up this article, I want you to know or note that you can move from a single vertical product to multiple vertical products. A good example is Moniepoint. They started by providing a financial services platform for agents then after years of success with it and they wanted to expand their market they moved into providing business banking & payment platform for other types of businesses.
Finally, I am happy to learn what you think about these 2 types of products and why you would choose a product that focuses on a market than one that focuses on multiple markets/customer types.