It might not seem obvious but many entrepreneurs build a product to scratch their own itch without regard to a specific industry vertical. Of course, doing generic pay-per-click (PPC) advertising on Google for keywords (e.g. project management) will generate leads from a variety of industries. This works well to start talking to prospects and understanding their domain-specific needs.
The challenge occurs when the PPC value dries up and, inevitably, it always does. What do I mean that it dries up? Well, PPC works as an auction so you can’t spend more money and get more clicks in a linear fashion. The cost for additional clicks goes up exponentially as you have to bid more to get to the next position higher, causing the cost for all your clicks to go up.
We ran into this issue with our mid-market web content management product. PPC ads were cheap at the time (back in 2004 – 2005) and we started buying as many clicks as we could afford. As sales went up, we could afford more, and our bill kept rising. We peaked at a spend of more than $10,000 per month on clicks. Now, we spend a couple thousand per year on PPC. It just doesn’t have a return on investment for us anymore.
What did work was looking at the customers we’d signed up from the PPC campaigns. After a year we identified higher education as our most successful industry so we slowly started to focus in on that industry vertical. We’d cold call campus web masters, sponsor conferences, and do whatever we could to stay top-of-mine with our target colleges and universities. We’ve been a leader in the market ever since.
My recommendation is to start broad, do whatever you can to get customers from several different industries, listen carefully, and then double-down on the vertical that you think will be the most successful for your product. It isn’t easy, but it works.
What else? What are your thoughts on finding successful industries for a product?