Selling to government agencies can be a reliable source of revenue for tech companies and small to mid-sized businesses. Unlike B2B and B2C sales, which can come and go based on the conditions of the market, government departments are here to stay.
State and local governments spend up to $97 billion each year on technology services, while the federal government alone spent $64.7 billion on IT contracts in 2018.
In fact, it’s best to think of the government as consisting of many industries, rather than as a single entity. From local school districts in need of an IT overhaul, to cybersecurity and cloud computing contracts, B2G sales cover a wide range of technologies.
Not only are government contracts usually longer than private sector contracts (5 to 10 years), but selling to the government can help you stay afloat during recessions due to its stable credit rating and access to funding.
In addition, most unclassified contracts are made publicly available, so you’ll be free to publicize your dealings with the government as you pursue private contracts.
Selling to the government has its own set of challenges.
Selling to the government isn’t always easy, though. If you don’t know how to go about it, says federal sales expert Gene Moran, “it can be a real circus.”
That’s because the structure of government departments can be complex, and you don’t always know where the funding is coming from or who you’re actually dealing with. Not only that, Moran says, but the government itself “often doesn’t know what it needs.”
Businesses that are successful at selling to the government take the bigger picture into account. They’re aware of how Congressional decisions shape an agency’s resources and priorities, and can help the agency find the right solution for its needs.
Still, selling to the government takes patience.
For sales teams that are used to dealing with fast-paced Silicon Valley companies, B2G sales can feel slow and bureaucratic by comparison.
Over 25% of federal employees are over the age of 55, making it less likely you’ll be dealing with a tech-savvy millennial who understands your technology.
From rewriting your sales demos to target a different demographic, to understanding the sales cycles of government contracts, B2G sales are a whole different ball game.
Do your research and know your history.
How can you increase your chances of landing a successful government contract? First, do your research and understand how contracts work in your sector.
Existing federal contracts are made available at USAspending.gov, so you can see how much money is available for services like yours, and from what sources.
You’ll also find a searchable database of contract opportunities for small businesses and startups at beta.sam.gov/search.
These opportunities include an RFP, or request for proposal, that outlines all of the data and documentation you’ll need to supply when making a bid.
While this process can seem complex at first -- particularly when trying to understand specific legislative requirements -- there are RFP consulting companies who can help you make sure that you’re getting it right.
Companies that are successful at getting a B2G contract invest as much as $112,000 to $137,000 on preparing and submitting their bid.
But remember, the inertia you face when getting your first contract can ultimately work out in your favor: since government agencies are slow to change, they’re likely to stick with you for the long term if you deliver on the product you promise.
Understand your buyer.
Next, take some time to understand your buyer. Unlike in the private sector, where a CEO might call all the shots, government employees are more fixed in their roles.
You might be dealing with an administrative buyer who manages the budget, not the actual customer who will be using your product -- and vice-versa.
Start by making a list of the individuals who might be involved in a purchasing decision, and create your own buyer personas for them. These can be semi-fictionalized profiles that describe the buyer’s work responsibilities, personal motivations, and more.
Your advantage here is that some of this data will be publicly available, and you won’t have to do as much sleuthing as you would to build a B2B persona. Many government workers are even on LinkedIn, providing you an additional source of information.
But don’t stop at just knowing who the individuals are. Try to get a sense of how they communicate and how purchasing power flows through the department.
If you’re reaching out to municipal governments, you’ll want to know whether they have a strong-mayor or weak-mayor system. This will help you understand how much power the mayor has relative to the council, and where to focus your negotiations.
You can also pitch your services to a Chief Innovation Officer or another city official who shows signs of being an early adopter.
By focusing on tech-friendly cities with an “innovation district” or a “smart city” initiative, you’ll increase the likelihood that they’ll be receptive to your ideas.
Finally, depending on what kind of technology you’re selling, you might encounter some pushback from the public or from your employees.
While modernizing the DMV is unlikely to be controversial, Amazon’s shareholders have criticized its decision to sell facial recognition software to law enforcement.
When selling services to the government, it’s important to tread carefully and be aware of the implications of your deals.
Get the right software.
Using the right software is a must when it comes to working with B2G clients. Because the sales process and contract cycles are longer than they are for B2B clients, you need a reliable way to manage those relationships over time.
Be prepared to spend 6-12 months or more developing your contract, from expression of interest to post-proposal presentations. You’ll need a CRM that’s robust enough to keep your team informed and engaged every step of the way.
Additionally, your software should reflect the unique terms and strategies used in B2G marketing -- for example, “capture management” rather than “sales”.
You’ll also need to be able to distinguish “end customers” from “procurement officers,” and use different mailing lists and outreach strategies for each persona.
Maintaining relationships over the course of your contract requires a different approach too. While you may be accustomed to sending thank-you gifts to your B2B clients, that’s not an option for government employees who are prohibited from accepting gifts.
Use your CRM to track what kinds of marketing communications are permitted for each type of contact, so you can stay in touch without running afoul of the law.
Finally, one of the tools you can use to land government contracts is one that your sales team will be familiar with: sales dialers.
Government employees are likely to be on the phone during business hours, which can make it easier to get in touch with them than other kinds of customers.
While you can’t expect to reach the head of a major federal department with a cold call, local municipal governments are more accessible, and pitching your new IT solution to the website manager or CIO can help you get your foot in the door.
Use a CRM with a built-in sales dialer, like OnCourse, to place and track your calls. You can schedule calls in advance, place calls from local phone numbers, and even leave a pre-recorded voicemail if no one picks up.
OnCourse’s comprehensive suite of tools makes it easy to track B2G customers in your CRM, using customization options to define unique data fields and account types.
With secure cloud-storage, and built-in integration with the tools you’re already using, OnCourse makes it easy to track your first government contract and win more.
Partner with other local firms.
Another strategy for landing your first government contract is to partner with another local firm. Some contracts are simply too big for a small business to handle, and the services you offer may only complete one piece of the puzzle.
By partnering with another local business, you’ll be able to offer the agency a more comprehensive proposal than you could have provided on your own.
This is also an option if you’re an unknown startup without much of a track record. By partnering with a company that has done work for the agency before, you’ll establish trust more quickly -- and have some help filling out those complex RFPs.
In fact, the U.S. Small Business Administration specifically encourages these kinds of partnerships with its All Small Mentor-Protégé program.
Other options include working with a Business Improvement District (BID), in which local businesses pool resources to fund projects, similar to an HOA. New York City alone has 76 BIDs, which invest $159 million per year.
Next City describes them as “quasi-public entities, established as nonprofits but funded by a city-sanctioned levy on top of existing property taxes.”
BIDs are usually run by a board of directors, but may provide government services, from cleaning and maintenance to public transportation.
Finally, be sure to consider ways that you may be eligible for a set-aside contract, which ensures that certain types of businesses are prioritized in the bidding process.
For example, the federal government aims for 23% of its budget to be spent on small businesses, while 5% of contracts are set aside for women-owned businesses.
Other set-aside contracts are available for businesses owned by disabled veterans or those located in a “Historically Under-ulitized Business Zone” or HUBZone.
Plan an effective sales strategy.
Before you begin marketing your services to a government buyer, be sure to tailor your approach to their needs. The sales strategies that you use for B2C or B2B clients may not work in government, or at least won’t get the results you’re looking for.
Why? For one, government agencies have to meet a higher level of compliance. That may mean revamping your product with a regulatory framework in mind.
Second, as we saw earlier, government employees are getting older, and may be less open to new technologies than their private sector counterparts. While 40% of workers in the private sector are under 35 years old, only 17% of federal workers are.
Even if your buyer understands the need for your technology, they may not understand the terms you use or how to implement it. Jonathan Ende of SeamlessDocs talks about the challenges he faced convincing local government agencies to go paperless.
At first, some employees thought they already were paperless -- because their website had PDFs that users could download.
Ende explains that “by getting them to realize that these PDFs still need to be printed by citizens, signed, faxed, manually entered into databases by government staff, and filed away, we help governments understand how much room there is for improvement.”
Now, working with government agencies has become their primary niche, and they’ve helped countless agencies transition to cloud-based document storage.
As you tailor your services to government agencies, you may need to rethink some of the language you use to market your products and how you reach your audience.
Inbound marketing tools can be effective for reaching B2G clients, so having a mobile marketing and social media strategy can still have an impact.
So can more creative strategies like geo-fencing and virtual reality. With geo-fencing, you can purchase ads that are only delivered to people who come within a particular radius, based on their GPS or WiFi information.
For example, instead of paying for ads shown anywhere in Washington, D.C., you can target people within a mile of a particular government conference or agency.
With virtual reality, you can walk your prospects through an immersive simulation of your product -- perfect for transportation or workplace innovations.
Whichever strategies you choose, remember to dig in for the long haul. From getting initial buy-in, to navigating the procurement process, selling to government agencies presents unique obstacles -- and opportunities.
Keep track of your B2G sales every step of the way with a comprehensive CRM like OnCourse, which can be customized to meet your company’s needs.
Use it to schedule your sales calls, automate email and social media marketing, and manage all of your client interactions over the long-term.
Schedule a demo to find out how OnCourse can help your team today!