The Business Marketing Institute: Tuesday Marketing Notes

Tuesday Marketing Notes (Number 65—January 16th, 2007)

A B2B Marketing Newsletter for BMA Members
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Selling to the Government (Part 2: B2G Basics for Marketing Professionals)

by Mark Amtower

Last week, we discussed the top ten myths of marketing to the Federal government. This week, we’ll cover the some of the techniques you can use to enter this new and potentially profitable market.

Every year, thousands of companies enter the government (B2G) market. Most are destined to fail for one reason: Lack of market knowledge. Lack of market knowledge leads to several problems, including unrealistic expectations, not identifying the right audience, using generic B2B advertising in B2G publications, and not using niche marketing techniques required for success.

By offering intelligent advice based on solid market knowledge, ad agencies and in-house marketing professionals can help focus and refine a company’s objectives and ensure a better chance of success in the government market.

Every B2B ad agency should have some basic knowledge of the government market, and should also know where to look for more information when it is required. This article will offer several ideas and resources marketing professionals can use to facilitate this process.

Starting Your Market Research Process

What are some of the first steps a company marketing manager should take to find the best marketing opportunities to the Federal government?

Here are a few questions that need to be answered first:

How big is your niche in government?
Who are the major players, and how crowded is the niche?
What are your strengths vs. these companies?

The secret to approaching the Federal market it to find the market niches most likely to buy your product or service, and to determine how large (i.e., profitable) these niches are.

There are several ways to “size” your niche in the government market. For a small fee, you can get federal historic sales data for products and services from the Federal Procurement Data System (https://www.fpds.gov/). For GSA Schedule sales data, you can go to the Schedule Sales Query site (http://ssq.gsa.gov) and see who is selling on each of the 43 Schedules, and how much they make. This is free, and the data goes back to at least 2000.

You will also need to know your GSA Schedule classification to get the right data. This information is available at the GSA e-Library web site, http://www.gsaelibrary.gsa.gov/ElibMain/ElibHome.

Rank the companies in your niche to see who the big competitive player currently is. Most niches have a small group or dominant players and a large group of “also rans.” Check out the web sites for the dominant players and try to determine what their strengths are. There are sure to be a few of the usual suspects there from the B2B world, but there may also be companies you are not familiar with—companies that only sell to the government, and do it well.

What are the Major Ways to Sell to the Government?

Obviously, the process by which the government buys products and services is important for marketers to know, as many contracts have a narrow (single agency) focus, while some are broader (GWACs, or government-wide contracts) and, even inside the government, there is often confusion as to who can buy from which contractual vehicle.

At the Federal level, there are three basic ways the government makes its purchases:

1.) GSA Schedules;
2.) Non-Schedule contracts (there are too many types, and these are not really germane to this article);
3.) Open market purchases

GSA Schedules are the most-used purchasing method, representing about one-third of government purchases. There are 43 GSA Schedules which represent broad product and service offerings. There are over 10,000,000 products and services on the GSA Schedule from over 11,000 vendors. All Federal agencies can buy from the GSA contract.

Non-Schedule contracts are usually driven by a particular need, for example, the Secure Border Initiative (SBINT) contract. Usually a large, experienced contracting firm wins this type of contract (at which point they become the “prime contractor”), but works with many different sub-contractors to fill in the many niches that the contract requires. These contracts represent tens of billions each year, and there are hundreds of sub-contractors making serious money.

Open market purchases simply mean selling products to the government without a contract. This generally means that all orders you receive will fall under the “micro-purchase” level of $2,500. The ideal seller in this category is either a B2B cataloger or a retail operation.

Define your “G” (Government) Differentiators

Once you’ve identified your niches, your next big step is to define your company’s unique positioning to address these government markets. I call these your “G” (government) differentiators. Your company’s major selling benefits, positioning, and the other differentiators you use in your marketing program in the B2B world may, or may not, translate to the government market. Many of your current differentiators will make the cut, but they may not be in the same order.

Differentiators seen as compelling by government decision-makers often vary widely from the marketer’s perception outside government. As a case in point,Market Connections, Inc of Fairfax, Virginia (www.MarketConnectInc.com), conducts an annual market research study to see how the government makes buying decisions.

According to the Market Connections survey, and contrary to what many of us marketers assume, price is rarely in the top five of the attributes government buyers look for in a vendor. Customer service issues usually dominate (customer support, responsiveness to inquiries, the ability to solve problems), followed by company reputation, product/service delivery, wide selection of products, experience in the market, and breadth of contract offerings (not all agencies prefer the same contracts). If you have excellent customer support, you have a big differentiator. If you are a reseller of products and can deliver quickly, you have a big differentiator.

Another type of differentiator in the government market is your company size and economic status. Some government contracts are awarded to “small business” (defined by the U.S. Small Business Administration, www.sba.gov) and 23% of all U.S. federal contract dollars are supposed to be awarded to small businesses.

Important subsets of small business include small-disadvantaged businesses (socially and economically disadvantaged), women-owned businesses, veterans and disabled veteran-owned businesses, Native American-owned businesses, Hub-zone businesses (businesses in economically depressed areas) and others. Understanding what these are and how to use them to you advantage.

The best differentiator is your skill (if you are a service firm), and your multiple customer focused skills, if you are a product vendor. While the business size and status is important, it is usually secondary to what you actually do.

Clear Presentation to Government Markets: Two Who are Doing It Right

A good example of clear presentation of “G” differentiators in a B2B company is Reliable Integration Services (www.risi.com) of Vienna, Virginia, a woman-owned business that sells both direct to government and acts as a sub-contractor. When you go to the RISI Web site, the company’s major differentiator message is their technical expertise: “Design, Implement, Manage Nothing but Networks,” followed by a clear statement of the company’s service offerings and major benefits. Because RISI is well known by the prime contractors who work with it in the government space, it doesn’t need to publicize the fact that it is also a woman-owned business; however, as a new entrant to the government market, it would be a good thing to put your business status on your site, if this is applicable.

Another example is ATD American (www.atdamerican.com), a furniture reseller from Wyncote, PA. ATD sells via GSA Schedule, represents a wide variety of furniture manufacturers, and is a woman-owned business. On the home page of their Web site, they clearly state who they are, what they do, and who they sell to. Their differentiators are clear and bold: “Quality products, Fast Personal Service, and Low, Factory-Direct prices.” They also clearly state that their clients are institutional (government), healthcare, education, and business, etc., and, right on the front page, they have a button to submit an RFQ (request for quote, widely used by government and institutional buyers).

Both Reliable Integration and ATD are relatively small companies, and neither spend tons of money on advertising. However, both leverage their Web sites extremely well for the audiences they seek to influence.

How Government Buyers Look for Information on Products and Services

Your current B2B marketing and advertising program will already be reaching some of the government influencers you need to reach, since potential buyers in government read the same publications and attend the same trade shows as other potential prospects in the markets you’re already addressing in your marketing program.

But to maximize the impact in the B2G arena, you need to target your messages to the “G” audience, using the vernacular of the niche. Simple steps like replacing “company” with “Agency” in your ad copy, and replacing the commercial goal of “profit” with government’s goal of “mission accomplishment” are two ways you can modify your sales copy to address the concerns of the public sector employee.

According to the annual survey conducted by Market Connections, Inc of Fairfax, VA, the top two ways government employees find products or services to buy are through colleagues or Web sites. The other three ways are by reading trade publications (the articles, not the ads), contact with other agencies (information is exchanged through various means, including special interest groups, meetings, and articles), and trade shows. Direct mail is sixth, followed by print advertising.

Do you want to be a prime contractor, or a subcontractor? How you present your company (or client) to the government market determines your positioning in this market. We’ve already offered examples of Web sites, but it’s also important to point out that Web site design needs to take into account which audience you need to influence. If you want to become a sub-contractor, you should emulate Reliable Integration, who presents themselves as a service provider to larger, prime contractors. If you wish to sell products direct to the government as a prime contractor, you should be emulating ATD American.

Colleagues in Federal agencies—potential buyers of your products—are influenced by their personal experience, by what they read, and what they hear. So the PR component of your marketing program is also important—getting your company and its products mentioned in stories, getting your executives interviewed in these publications, and lining up your company’s management for speaking opportunities at major trade shows and conferences.

Identifying Government Marketing Media

Three key questions I have my clients ask their customers who want to market and sell their products to government are: What publications do you read, what events do you attend, and what groups do you belong to? This helps me determine what the marketing priorities should be when developing a marketing program for the Federal government.

Your first step is to identify the key publications, events and associations or special interest groups in the government markets who are most likely to buy your company’s products, You will identify key sources where you need a presence.

The government trade press is similar to any B2B press, but you have to approach them using the vernacular of the industry, and your success stories have to involve public sector success stories, not business success stories. Most of the reporters and editors are approachable, and most are always on the lookout for stories with great angles.

If you think you have a good fit for a publication, read a couple issues of that publication to make certain they reach the audience you want to reach, and to be certain your story is a good fit for what they print. And before you approach a specific reporter at this publication, read several of their articles. You will be able to intuit what their hot buttons are, and you’ll be certain they are the right reporter for your potential story.

Like most things, good press relations is not brain surgery, but it does require a lot of work. Pick a couple of reporters or editors you would like to influence and start the process of building a relationship. It may take a while to get into the publication, but once you are there, the odds of getting back in again have improved tremendously.

Identifying Government Trade Show Opportunities: Think Small!

When it comes to trade shows in the government market, the size of the event (massive trade show versus a tabletop expo at an annual SIG -special interest group- meeting) does not matter. What matters is the level of influence the show attendees have in your niche. If you sell IT security training, attending the annual conference of the Federal Information Systems Security Educators Association (FISSEA), which is a gathering of no more than a couple hundred attendees, will be more important to you than being at the big Federal IT show, FOSE, which draws 20,000 attendees. Or, if you sell transportation maintenance services, being at the Interagency Motor Equipment Advisory Council (IMEAC) conference could be critical, even though it will only attract 500 or so people.

Many of these SIG events are very affordable for exhibitors, and are often “all table-top” exhibit venues, so the playing field is level—this means no mammoth competitors dominating the show with four-story booth setups.

In the B2G market there are the good events, the bad events, and the ugly events. So, when evaluating trade show opportunities, make certain your event producer has a track record in the Federal sector. Event producers like the Federal Business Council (www.fbcinc.com) have been putting on events for the government market for 30 years, and these people know what they are doing.

The big thing to keep in mind is that all niches like to be treated in their own special way, using their own vernacular, and addressing their specific needs and concerns. When you look at the Federal market as a collection of niche marketing opportunities, it’s similar to using a niche marketing approach in your current B2B marketing program. Most important, this approach helps you avoid making big early mistakes, and the big marketing costs that accompany those mistakes, in the first steps you make in marketing to the Federal government.

Mark Amtower, founder and president of Amtower & Company, has worked with hundreds of companies representing a vast array of products and services (manufacturers, publishers, event producers, catalogers, resellers, software developers, associations, and others) helping each to better define and reach their target audiences within the expansive federal market.

You can reach Mark at: Mark@GovernmentExpress.com, or visit the Amtower & Co. Web site at: www.GovernmentExpress.com

Questions? Comments? Send them to me at eric@realmarkets.net

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