Vertical Market Software

Vertical Market Software Overview

By nature, the technology industry is rapidly changing, especially in the successful SaaS sector.

Everyone knows how to use the tools SaaS produces or has had some experience with them. Almost every company is using some type of SaaS software.

Today, the company’s business models are being expanded to reflect additional priorities, such as the formation of horizontal and vertical industry SaaS.

What exactly does all of this mean? Read on to find out.

Horizontal and Vertical SaaS

The next couple of paragraphs will discuss how horizontal and vertical SaaS are constructed and what makes one different from the other.

Horizontal SaaS

The horizontal SaaS model has been around the longest – for over a decade to be exact. Horizontal SaaS focuses on software categories tailored to a specific business need. Examples include HubSpot for marketing, Salesforce CRM, and QuickBooks for accounting. Horizontal SaaS provides a variety of services that cover a large scope of the market throughout different businesses. There are several kinds of businesses that utilize the Horizontal SaaS model.

The horizontal SaaS model reaches lots of industries, which is why sales and marketing strategies require a significant amount of available resources. They try to target individual industries differently by running numerous parallel advertising campaigns.

One example of this is Slack. This company runs paid advertising campaigns meant to appeal to an assortment of businesses. Their “customer stories” page highlights stories of different nonprofits, agencies, and businesses that utilize their software. Gathering various stories from other clients is essential to ensuring that prospective customers are able to find something that relates to their business.

Vertical SaaS

The vertical SaaS model focuses on software that’s targeted to particular industries. This trend has become more recent in vertical market software, which makes it less mature than the horizontal market. More recently, several critics have felt that there might be additional opportunities for new vertical SaaS due to their increased popularity.

There are several examples of vertical SaaS, including:

1. MY PT Hub

– A software suite designed specifically for personal trainers and the fitness industry.

• SingleOps

– End-to-end software for the green industry (forestry and arborists).

• Donarius

– Church management software for ministries and nonprofits.

Vertical market SaaS models don’t strive to be all things to everyone or cover an extensive product category; they narrowly focus on industry verticals instead, as their solutions are built specifically for industry niches. By doing this, the potential market size is narrowed.

It’s been the case more often than not that people with experience in a certain industry have developed their own vertical market software. For instance, a dental practice developed the Health Assurance Plan for use in all of their practices. Once they realized how well it was working, they made it available for other practices to use. This example solved a specific industry problem regarding offering dental plans to patients who either don’t have that option available to them, or can’t afford insurance.

A vertical SaaS takes a narrower approach to marketing than a horizontal SaaS, which requires fewer resources.

There are also industry-neutral or targeted software that can integrate with multiple or existing solutions (for example, Zapier that works with Slack, HubSpot, Zoho, Salesforce, Xero, etc.)

The strength of these kinds of SaaS harness the existing amount of power of other large SaaS platforms, which opens the door to opportunities and co-marketing solutions within verticals. For instance, the pharmaceutical industry was able to achieve this with Veeva.

More brands, including HubSpot and Salesforce, are creating proprietary ecosystems known as PaaS (Platform as a Service). Other SaaS companies can get in on this opportunity to go vertical knowing that a robust brand will take them under their wing.

Additional Thoughts on Horizontal vs. Vertical SaaS

As previously mentioned, horizontal SaaS, from a market standpoint, is at more of a mature stage and has overcome the challenges that are associated with educating potential customers, as well as creating awareness.

These customers already realize the benefits that good SaaS tools have to offer, which is why the “customer success” concept has become a primary focus. This gives customers the ability to achieve their product’s desired results. Customer success, in turn, should lead to increased SaaS retention rates. Customers have numerous options they can choose from. For one thing, there are many project solutions being offered through multiple SaaS. In order for them to survive, they will need to retain and attract plenty of their own people.

The bigger players are dominating their specific market in a horizontal SaaS model. Salesforce, for example, is essentially its own platform. Any new players in the project management sector might find it challenging to come up with their own spot next to Zoho Projects, Trello, Basecamp, and Asana (Even though it may be difficult, it isn’t impossible. Disruption is always a possibility if new technologies or approaches are developed in the future).

A horizontal market software solution, on the other hand, can target a wider market, which means that there’s room for other SaaS compared to SaaS that target a narrower vertical. The horizontal market will take longer to become entirely saturated.

When businesses observe how a vertical market software operates, one of the most obvious challenges is that most of them are still targeting verticals that take a more traditional approach to business operations. Their work is cut out for them as far as educating construction, banking, insurance, or healthcare companies is concerned, which is why they must change and adapt instead of maintaining the status quo.

From that perspective, vertical market software has matured and has reached the point where horizontal SaaS was around 6-8 years ago.

Vertical market SaaS platforms have the opportunity to go far. They can offer solutions with a variety of features that will specifically answer the problems individual verticals currently face. At this point, a company would be hard-pressed to describe any vertical model as “dominant” because they’re in a market that’s relatively new.