Selling to the Government

What It Takes to Compete and Win in the World's Largest Market

Mark Amtower

• Publisher: Wiley
• Year: 2010
• Print ISBN: 9780470881330
• eBook ISBN: 9780470933862
• Edition: 1
• Topic: Commerce
• Subtopic: Ventes

Learn the crucial ins and outs of the world's largest market The U.S government market represents the largest single market—anywhere. Government contract tracking firm Onvia estimates that government business—federal, state, local, and education—represents better than 40 percent of the nation's GDP. While anyone can play in this market, only those with the right preparation can win. Selling to the Government offers real-world advice for successful entry into the biggest market anywhere. Get proven approaches, strategies, tactics, and tools to make your business stand out, build relationships, understand procedures, and win high-stakes contracts. • Every year thousands of companies enter the massive U.S. Government (BtoG) marketplace, and by the end of the first year, most are gone and less than 10 percent make it to year two
• Author has advised hundreds of companies, including Apple, Dell, CDW, Northrop Grumman, General Dynamics, IT, GTSI, and many small firms, on all aspects of marketing and selling to the government From the go/no-go decision, through company infrastructure requirements, marketing, sales, business development, and more, this book offers the best advice from the most recognized authority in the market.

CHAPTER 1

What It Takes to Play

Tips and Caveats for Chief Executive Officers, Boards, and Others Looking for Shortcuts

A TALE OF TWO COMPANIES

By all appearances, it was the best of times. The late 1990s was a time of loose money, grandiose business plans, and the fervent belief that things were only going to get better—forever. Start-ups were being funded on what seemed to be whims. In the words of Alan Greenspan, it was a time of “irrational exuberance.” Nowhere did this seem more apparent than in the staid business-to-government (B2G) arena.

Out of the literally hundreds of B2G start-ups from that time, two stand out in my mind: eFederal and PlanetGov.

PlanetGov had a business plan that apparently ran on for hundreds of pages, but the gist was to be all things possible to the feds, including a one-stop shop for all products and services. They wanted to provide information for federal employees on retirement, promotions, investments (the government 401(k) program), and other jobs, and oh, by the way, products and services, too—absolutely everything under one roof; no need to look elsewhere. They even hired top government reporter Mike Causey from the Washington Post, hired editors and reporters from trade journals, and set out to build the biggest Web site with the most bells and whistles imaginable.

Ambitious, to say the least.

On the other hand, eFederal wanted to be the first completely virtual store for the federal market, initially targeting the SmartPay (the federal credit card) market for micropurchases (at that time, anything under $2,500), then migrating up to higher-end products.

Then came the dot-bomb crash, and eFederal was among the early casualties. They and their venture capital (VC) backers assumed the feds would line up for the convenience of an online shopping experience. However, the government is not known as an early adopter, and the reticence of government credit card holders to buy off Web sites (at that time) was still high.

The assumption of eFederal was a fatal flaw in their business plan. Shopping online with a government credit card was not a given, and there were many valid restrictions in place, among them the security of the shopping experience. Fads, even trends, outside the government market should not be used as building blocks for penetrating the government market. Even if they are adopted, it will be on “government time”: glacial.

PlanetGov represents a different outcome. The core plan was to pursue government business in the traditional way, bidding on contracts that fit the skills of the company. The bells and whistles were jettisoned, the company had some significant layoffs (18 of the 20 reporters and editors were let go in December 2000), and PlanetGov regrouped and focused on the real business of government.

PlanetGov’s core business allowed it to emerge as a significant player in the government market, rapidly becoming a top-50 contractor according to Washington Technology. In July 2004, PlanetGov changed its name to Apptis, adopted from the company’s slogan, “Applying Technologies, Inspiring Solutions.” For the 2010 fiscal year (FY), Apptis was ranked number 35 among Washington Technology’s top 100 contractors.

PlanetGov/Apptis jettisoned the dot-com–era flash and got down to the core business, pursuing government contracts and building deep relationships with key customers and partners.

In good times or bad, one must grasp how the government operates before making a play to enter the market. If you predicate your growth on unrealistic assumptions, things that have occurred elsewhere, or things that are predicted to occur, you are doomed from the outset.

BASICS

This book is a “basics” book—the things you need to know if you are new to the market or to be reminded of occasionally, even if you are a veteran. I wrote this book for companies entering the government market, but government market veterans can and will relearn from it as well. This is an introduction for chief-level (C-level) executives in companies of any size, from home-based mom-and-pop operations to multibillion-dollar-plus enterprises. It is designed to deliver much of the pertinent information you need to understand how to successfully enter the government marketplace. I would like to say it delivers all of the information you need, but that is a claim beyond my capabilities. However, I draw upon the expertise of many of my advisors and colleagues throughout this book, people who are masters of many of the knowledge niches we’ll discuss.

For over 12 years, I have offered a research program on successfully entering the federal market that is designed to help companies make the go-no-go decision and lay out their initial market penetration plan. It is a multistep process, where I provide research on the market potential for your product or service, including the following:

• The General Services Administration (GSA) spending for the specific product or service for the last three years. I use the GSA Schedule as a market barometer.
• A list of your top competitors and what they make. This provides a “food chain” view of the market.
• The visibility your company has in the government market, as measured by the Google government search tool (which searches only government Web sites) and by searching other pertinent Web sites or industry publications. Being known in your niche is important, and occasionally measuring your visibility is a good thing to benchmark.
• An analysis of the “government friendliness” of your Web site, making certain your Web site, a primary information portal, is designed to attract government visitors.
• A glossary of the right “gov-speak” phrases to attract government buyers. The government uses its own language, which you will see as we proceed. If you don’t speak it, you will have a much harder time entering the market.
• Who the buyers are for your products and services. Once I see what you sell, I can make a determination—an educated guess—on who the audience is for those products or services. This allows you to target your message to a much tighter community.
• Recommendations on how to sell, which contracts would work best for you, and why.
• The type of personnel required to pursue government business. Your current staff may be excellent for the markets you pursue but may not be a great fit for the government market.
• A realistic assessment of your chances of growing a successful government business if you dedicate the right resources.

This book will show you how I do this research and more. I will be more than happy to accept payment from you to perform this research on your behalf, but I’d be happier to have you call me in 6, 12, or 18 months and say, “Hey, Mark, I used that book and we have some great new government customers.”

However, do not expect immediate results from the government market. You have to give yourself a window of 12 to 24 months in order to gain any traction here. That is your first big lesson.

The scope of what you need to know varies somewhat from niche to niche and can depend on the size and ownership of your company. But the B2G market entry knowledge base required is basically the same, regardless of your product or niche. There are many things you must understand and accept before attempting to enter this market, and these will be outlined in some detail here.

The U.S. government market represents the largest single market in the world. It is truly Global One. Government contract tracking firm Onvia estimates that government business—federal, state, local, and education—represents over 45 percent of the gross domestic product (GDP). Read that last part again: over 45 percent of the GDP. If you exchanged “revenue” for “sales,” many states, counties, and municipalities would replace more than half of the Fortune 1,000 list. Federal agencies would dominate the top 25.

The government market is a huge market, and anyone can play in it. But not everyone will, and of those who do, most will not succeed.

Why?

Most companies come in with unrealistic expectations predicated on second- and thirdhand knowledge, bad advice, and little or no adult supervision. They fail quickly and blame it on anything but their own ignorance.

It is not that you have to know all this stuff, but you need the right resources available to tell you which parts are germane to your success. And you have to be able to adapt your organization to the way business is done in the B2G arena. It will not adapt to you.

The importance of being adaptable for a manufacturer entering the government market is the focus of our first vignette from a market veteran, shared by Dendy Young, former chief executive officer (CEO) of GTSI. Dendy is a long-time friend, former CEO of two government resellers, market veteran and expert, and the first CEO to meet with me, going back to 1991.

DOING BUSINESS WITH THE GOVERNMENT REQUIRES A LOT OF LISTENING

When Panasonic Corporation wanted to enter the personal computer (PC) marketplace in the early 1990s, they knew they could not just walk in and compete with Dell, HP, Compaq, IBM, and the rest.

So, they differentiated: They created a PC laptop that was more rugged and reliable than anything else out there. They called it the CF-22, and they gave it a rugged magnesium case.

I was at GTSI Corp at the time when they asked us to carry the product. They realized that we had the contracts and the customer relationships and the sales force and that we needed something to sell. They had the CF-22, a product that should be well suited to military use.

So, we worked with them to market and promote the product. We wanted them to brand their product: To give it a catchy name and spend time and money on promoting it. They came up with the name “ToughBook,” which seemed like a good fit. We added it to all our contracts, we invested heavily by training our sales force and our support organization, and we demonstrated it directly to customers and at every tabletop show and symposium.

We were constantly asking Panasonic for changes: Some of our customers wanted the product to be more rugged; some wanted it to be more elegant, but still rugged. Others wanted it to be smaller, and some wanted it to be lighter or less expensive. Panasonic was very attentive to our requests: They would bring engineers to Washington to listen for themselves, and they would let us show our customers prototypes to get feedback. Slowly, in time, they added new models that responded to our customers’ requests until, within seven or eight years, they had a broad and very responsive product line.

In time, as the revenues grew, Panasonic expanded their own support organization to include more channel support and business development. However, they never lost their commitment to the channel. Their revenues grew into the hundreds of millions of dollars in the government sector.

In all, it was a very successful partnership for both Panasonic and GTSI.

WE’RE TALKING COMPETITIVE

As of March 23, 2010, there were 591,988 active registrants in the central contractor registration program, available at www.ccr.gov, the official Web site where companies register to do business with the federal government. In good or bad economic times, hundreds of companies look to enter the government market every week. In bad times, this activity picks up, as the government market seems to represent a safe haven—the only recession-proof market segment.

Let’s simply start with the scope of the market we are addressing, the U.S. government market: federal, state, local, and education, or for those semiconversant in gov-speak, Fed and SLED.

Go to www.ccr.gov for the latest number of active registrants.

MARKET STATS AND FACTS

According to the government contract tracking firm Onvia, the U.S. government market represents nearly 50 percent of the GDP and is comprised of nearly 90,000 separate governmental entities:

• 3,034 counties
• 19,429 municipalities
• 16,504 townships
• 35,052 special district governments
• 13,506 school districts
• 512 Native American nations
• 50 states
• 1 District of Columbia
• 6 U.S. territories
• 1 U.S. federal government

Total: 88,095

Many of these governmental units would qualify for the Fortune 100 list. There are states, cities, and counties that spend more than some major corporations.

Buildings and facilities: On the federal side alone, there are over 37,000 occupied office sites (buildings and individual offices) in the continental United States (CONUS in gov-speak). This does not include any military or U.S. postal facilities.

Doing research on a presentation for the Modular Building Institute in 2008, I discovered the building activity at federal, state, and local levels is virtually nonstop. With the military Base Realignment and Closure (BRAC) program in full swing, the activity in and around the bases being eliminated and the bases gaining activity will be with us for several years to come.

Fleet: Government fleet activity is huge. Don’t think simply ships for “fleet,” which includes any vehicle that runs on land, air, or sea. When I spoke to the Nat...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Dedication
• Foreword
• Preface
• Acknowledgments
• Chapter 1: What It Takes to Play
• Chapter 2: How the Government Buys
• Chapter 3: Determining Where You Fit
• Chapter 4: Infrastructure Issues
• Chapter 5: Aligning Marketing, Sales, and Business Development
• Chapter 6: The Power of Relationships
• Chapter 7: The Myth of the Level Playing Field
• Chapter 8: Differentiation Is the Key
• Chapter 9: Execution
• Chapter 10: Building Momentum
• Chapter 11: The Missing Link
• Chapter 12: Final Thoughts on Staying on Top of the Game and Becoming a Government Market Master
• Appendix 1: Glossary of Common Government Terms
• Appendix 2: Resources
• Appendix 3: Advice from Industry Experts
• About the Author
• Index