Dear SaaStr: We Can Sell to a New Vertical. Should We?
Getting ahead of expanding into new verticals can be a huge win. You really want to get there, and to a second product, before you exhaust your TAM in your existing markets and product.
But of course it’s not without risk.
The first key question is: do you have the resources and bandwidth to execute this without taking your eye off your core market?
Assuming you do, here’s what I’d ask before diving in:
#1. Is the new vertical truly adjacent?
If it’s a natural extension of your current market, it’s easier to execute. But if it’s a completely different buyer persona or sales motion, it’s going to be even harder. Sometimes it’s still worth it, but bear in mind, it will be even harder if it’s not adjacent.
#2. Do you already have some traction there? At least a little?
If you’ve had inbound interest or closed a few deals in the new vertical, that’s a good sign. It’s much harder to start from scratch.
#3 Can your product deliver value to a new vertical without major changes?
Some are OK, but ideally, not more than a few months of work to start. If you need to heavily customize your product or build new features, it might not be worth it yet.
#4. Can You Staff It? Do You Really Have The Team to Support It?
Expanding into a new vertical often requires dedicated sales, marketing, and customer success resources. If you’re already stretched thin, it’s better to focus on doubling down in your core market.
#5. Can It Be At Least 10% of Your Revenue?
If not, it’s probably too small to be worth it.
If you’re confident you can execute without losing focus, test it. Start small—maybe with one salesperson or a pilot campaign—and see if you can get traction. But don’t bet the company on it until you’ve proven it works, at least a bit.
A related deep dive with Samsara co-founder and CPO here:
