| What's the difference between selling to the US | | | | results can be disastrous. The "right way" of doing |
| Government and selling to the Commercial | | | | things in the two businesses are so fundamentally |
| market?It's like night and day.Sales and Marketing | | | | different that it would work out better if they |
| to the government is truly the flip side of | | | | took the OPPOSITE path from what their |
| commercial activities. You really can't believe how | | | | instincts told them. Not an easy way to do |
| different these markets are--until you've actually | | | | business.Commercial to GovernmentSo what's a |
| come from one side--and tried to go over to the | | | | C-level manager in a commercial company, which |
| other. I emphasize, tried, because it usually doesn't | | | | would like to secure some government orders, to |
| work out very well!First of all, in the Government | | | | do? Given the different business cultures of the |
| world, the term "marketing" is a standard term. | | | | two markets, it seems pretty daunting. Those |
| But its meaning in the government world is very | | | | poor government guys who have tried to go |
| different from its definition in the commercial | | | | commercial have had their hats handed to |
| world. When you hear someone talk about | | | | them-does the same fate await me?Fortunately, |
| "Marketing" to the government-they really mean | | | | it doesn't necessarily need to be so bad. If you |
| SELLING. That's in large part because those | | | | are selling services, or highly customized products, |
| businesses that deal primarily, or exclusively, with | | | | you may need to closely replicate the |
| the government really don't do much in the way | | | | government-contracting model, if you are going to |
| of marketing in the commercial sense.Everything's | | | | be successful. If you are selling fairly standard |
| DifferentIn a traditional government contractor, | | | | products, however, it may be possible to gain |
| there is usually no one with a sales title. There are | | | | significant government business leveraging your |
| often a couple of people with grand titles like | | | | normal commercial marketing efforts.A few years |
| "Vice President of Marketing" or "Vice President of | | | | back, I was running a startup commercial |
| Business Development". These people have very | | | | software product group within a company that |
| little in the way of real marketing | | | | was otherwise a pure government contractor. It |
| responsibilities--they are the chief sales people of | | | | was a diversification effort for the company. Our |
| the company. They are usually former | | | | sister groups within the company were all very |
| government employees, and in the case of a | | | | successful, and extremely well connected within |
| military contractor, often an ex-general or | | | | government contracting and procurement circles. I |
| ex-colonel. Key to their hiring was that they are | | | | expected, and was promised, a lot of help in |
| very well connected in the government or service | | | | placing our products in large quantities within |
| branch that the company is targeting. Included in | | | | various government agencies and military |
| their charter are some "light" Marcom | | | | branches. For a lot of different reasons, that help |
| activities--putting together data sheets, and | | | | never materialized. But a funny thing |
| coordinating a few targeted trade shows. In | | | | happened-this startup software product group |
| addition to the dedicated "Marketing People", much | | | | ended up with 40% of its revenue from US and |
| of the technical selling of individual deals is done at | | | | foreign governments. This was without a |
| the project manager level.Of course, it's not just | | | | government-specific product, no real marketing |
| the sales & marketing functions that are so | | | | advantage provided by our well-connected parent, |
| different in the government world vs. commercial. | | | | and no special government emphasis in our sales |
| Almost everything is! The typical government | | | | and marketing programs. Contrary to popular |
| contracting business model more closely | | | | belief, if you have a great commercial standard |
| resembles a grocery store, than it does a typical | | | | product that has use within the government, the |
| high tech company. Margins are very thin, but | | | | agencies and branches will find a way to purchase |
| profit is pretty much guaranteed once you've | | | | it. Our product was aimed at Network |
| secured a contract. Up front R&D ("IR&D" in | | | | Administrators, and their needs were similar to |
| government terminology) is generally discouraged, | | | | their commercial counterparts. The government |
| as it's a great way to lose money. IR&D can also | | | | market is huge, and we did well in the |
| be funded by the government; that is utilized | | | | government sector. With a few modest |
| heavily, but it has limitations. Spending an | | | | investments, however, we could have done even |
| amount(without government funding) that would | | | | better. So what steps should a commercial |
| be modest in the commercial world on up front | | | | company do to maximize its penetration in the |
| R&D can easily wipe out the thin margins that the | | | | government marketplace?Tips for SuccessCreate |
| government contracting business yields. The | | | | a great product-Above all, your market research |
| government contracting model works like this: Hire | | | | and product planning are the starting point to |
| an ex-employee from the agency that you are | | | | success. Make sure to include a few potential |
| targeting your "marketing" at. Leverage that | | | | government customers in your upfront planning, |
| relationship to secure the contract, with a | | | | which should ensure that you don't miss any |
| minimum of up front product development | | | | special requirements they might have. This is a |
| expenses. Then hire the people to staff the | | | | huge market you don't want to miss.Have a |
| project, and of course do a good job executing | | | | modest entry-level price for your product-Even if |
| the project. Add new "marketer" from another | | | | in a production environment your product costs |
| agency and repeat.So for those purely | | | | hundreds of thousands of dollars, or even millions, |
| commercial readers out there, this must sound | | | | it's very helpful to have an entry-level price of |
| pretty different than what you're used to. That's | | | | less than a thousand dollars. This will allow a |
| only because it is! There is no Product Marketing | | | | motivated prospect to acquire your product |
| Product Management function in a true | | | | initially by "going around" the laborious, lengthy, |
| government contractor. In the government world | | | | confusing-and often competitive-contracting |
| your "market" is one customer, or a small number | | | | process. Even if you have to go through a |
| of customers, who are basically specifying the | | | | contract later to secure the full production |
| product for you. There are a few sales people, | | | | purchase price, the bidding process may then be |
| but as I mentioned earlier, they're called marketing | | | | "written to your specifications".Hire an experienced |
| people. The actual marketing tasks are few and | | | | government sales executive-This can NEVER hurt. |
| far between-collateral creation, trade shows, a | | | | It really helps having someone who knows his |
| party here or there.Difficult to make the JumpAs | | | | way around your target agencies, to head your |
| you imagine from the discussion above, it's difficult | | | | Government Sales Division.Place your products on |
| to move between the two worlds. That's the | | | | the GSA schedule via an established Government |
| reason that nearly EVERY government contractor | | | | Reseller-Getting on the GSA (Government |
| that has tried to enter commercial markets in any | | | | Services Agency) via your own company is a |
| major way has failed abysmally. | | | | long and complex process. For most commercial |
| Government-oriented companies typically don't | | | | entities, it isn't worth the effort. It's much easier |
| have the entrepreneurial cultures found in | | | | to give up a few margin points to a reseller |
| commercial high tech companies. They lack | | | | already on the schedule. It's much easier for him |
| fundamental Market Evaluation and Product | | | | to add your products. They won't do much for |
| Planning skills required for success in the | | | | you in the way of promotion, and I've found that |
| commercial world-because it's not required in their | | | | being on the GSA schedule in most cases isn't |
| core market.Senior managers at Government | | | | REQUIRED to buy your products (although some |
| contractors are often profoundly aware of all of | | | | will tell you otherwise). But it does make it easier |
| this. They may intellectually understand that they | | | | for the customer inside the government, and if |
| need to do things differently for their companies | | | | nothing else, raises their comfort level. They will |
| to make the jump to the commercial side. But | | | | know that they won't face a major hassle to buy |
| especially if they have been very successful in the | | | | your product.That's my take on selling to the US |
| government business, a difficulty emerges that | | | | government. Hopefully there's a nugget or two in |
| won't be obvious on the surface. And this is the | | | | there that can help you. Send me a note with a |
| worst of all: Successful senior managers tend to | | | | few of your own tips.Phil Morettini is the Author |
| fall back on their what I like to call their "Common | | | | and President of PJM Consulting, a Managment |
| Business Sense", when they encounter new or | | | | Consultancy to Software and High Tech |
| stressful situations. Often they don't even realize | | | | Companies. PJM Consulting executes special, |
| that they are doing it. Unfortunately, when an | | | | strategic projects and can also supply interim |
| executive with a government contractor utilizes | | | | senior management in General Management (CEO, |
| their "common business sense" to make a | | | | COO, Division Manager), Product Marketing, M&A, |
| decision involving a commercial business, the | | | | Distribution Channels and Business Development. |