Firing A Government Contract Customer?

Boy, this is a tough one.  Sometimes, you’re just better off telling a customer that you don’t want them to be a customer anymore.  Blasphemy, many would say.  It’s hard to get government customers.  When you have them, you don’t want to lose them.

In selling to government, seldom do you need to fire a customer because they don’t pay their bills.  They always pay (although quite often, very slowly).  But, sometimes they’re more trouble that they’re worth. 

I inherited a customer once who had been particularly demanding.  They had their own way of doing things, and wanted us to conform to that way – even if our standard approaches were working elsewhere quite well, thank-you.  We suffered through several years of trying to make them happy, never really successful at it while expending significant resources.  I decided it was time to cut them loose.  This was no easy thing, quite controversial in a company that had just been sold and had never fired a customer before.

So, I hopped a plane to fly across the country to deliver the news first-hand.  (This is not the type of conversation to have on the telephone.)  I had in hand a proposal to make it easy for them to make the transition.  We would give them time to find another solution, but we didn’t want them as a customer anymore.  I explained, as carefully as possible, that while we had utmost confidence in our offerings, we just were not capable of serving them the specific way they wanted to be served.

What I thought would be an uncomfortable meeting turned into a rather pleasant discussion.  They told me they were going to place the service we provided out to bid soon anyway.  They would entertain our different approach, admitted they had some responsibility in the matter, and strongly encouraged us to respond to the request for proposal.  I left, telling them I would re-consider.  I flew back across the country, met with our production/technical people, then decided that perhaps I had been a bit hasty.  We would rescind the cancellation and respond to the RFP. 

The moral of the story, you may be thinking, is to be forthcoming and things will work out.  While being forthcoming is always rule number one, that’s not the moral of this particular story.  You see, there’s more.  As we scampered to respond to the RFP and do our best to continue to keep them happy, a problem occurred one day when they tried to use our service in a very visible situation.  It didn’t work.  The news media caught wind of it, and the same people in that meeting who so badly wanted us to respond to their RFP threw us under the bus…very clearly and very publically.  Ouch!  (Our competitors loved it.  They spread the news clippings all over the land.) 

So, the moral of this story is sometimes it really is better to walk away, despite temptations to hold tight. 

Now, at a later time, I’ll tell the story of how this same situation could have been handled much better from the very beginning…saving several years of hassles for both the company and the customer.

All the best,

Rick

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Will “Green” Mean Greenbacks for Government Contractors?

report released yesterday by the United Nations Environment Program (at the G20 Summit) shows the U.S. lagging behind other key countries in the percentage of stimulus dollars spent on green initiatives.  The report examines the various economic stimulus plans of key nations and the percentage of dollars spent for green programs. 

According to the findings, the U.S. has allocated 12% of total stimulus dollars to “greening the economy.”  This compares to 79% for the Republic of Korea and 34% for China (the green market for China has recently been estimated to be $1 trillion).  Mexico has allocated 10%. 

Even with the allocation, criticism is rising regarding the pace of green spending.  A post on ProPublica’s site points out that most of the 16 states surveyed by the General Accounting Office have not yet started on their Weatherization Assistance Programs (WAP), a $5 billion program for assisting low-income families in lowering utility bills by making their homes more energy efficient.  Similar delays have been reported for public housing according to the article. 

The U.N. report also concludes that only 3% of global green funds have actually been spent.  The bulk of these expenditures will occur in 2010 and 2011.

IMPLICATIONS

For certain government contractors, green initiatives are likely to provide attractive market potential in the areas of clean technologies, renewable energies, water services, green transportation, waste management, green buildings (both new and retrofit) and sustainable agriculture.  Don’t let the U.S.’s smaller relative percentage allocation fool you–substantial dollars are coming for this. 

The challenge from a contractor’s perspective will be in achieving differentiation as flowing money will bring “green contractors” out of the woodwork.  Much of this will go to mega-projects such as high-speed rail, but there should also be substantial opportunity at the SMB level for the right vendors. 

It appears to us that “green” is moving from a passing social fad to a significant global business opportunity.

-Lorin

It’s Tuna Time for Government Contracting!

Well, it’s that time of the year. Yes, the time that all federal sales and business development people long for…the end of the fiscal year when buyers are in a frenzy placing last-minute orders.

I had a high-peforming colleague who, every year about now, would announce, “Hey everybody, it’s tuna time!”. Then, watch out, a whirl of activity would occur. He would go into Tuna Time Mode. And, he was a dang good fisherman, taking advantage of that often-elusive run of activity. He would make his year’s objective (and often the company’s year) in the last weeks of the federal fiscal year.

Some were amazed. Others were biting their nails.

Here’s what they hadn’t seen: our tuna fisherman had been working toward the buying season all year long. He was always laying the groundwork for the frenzy that he knew would occur. This included constantly developing an understanding of his customer’s missions…even a passionate understanding. It was that understanding that made him successful, not Tuna Time. In fact, there would have been no Tuna Time without it.

Now, he’s president of a company…and I assure you he’s still yelling the Tuna Time battle cry!

Note: As for me, I’m writing this post on my Blackberry on my way to Denver for the Great American Beer Fest. You see, in my business of helping companies sell to government, this is not Tuna Time for me. It’s a good time to take a couple of days off for a beer quest. If my clients aren’t prepared for Tuna Time by now, too late to do anything about it this year.

$94 Billion Now Spent from ARRA, But Where are the Jobs?

According to a post by Propublica, the Federal Government has now spent $94 billion of the $581 billion non-tax related ARRA funds.  However, the percentage of budgets spent or committed by department continues to vary widely.  For example, the departments of State, Agriculture and Energy have committed less than 25% of their total funds.  This contrasts with the Department of Justice that has committed 91% of its funds.

Although reports from the Whitehouse have tossed around figures ranging from 600,000 to 1.1 million new jobs created from the stimulus bill, unemployment nevertheless climbed 0.3% in August to a total unemployment rate of 9.7%.

-LBB

Three Simple Secrets to Winning Government Contracts

I’ve talked to a number of business professionals over the years who, while recognizing the huge opportunity in government markets, felt it was too complicated for them to crack.  No doubt, government markets are complex and, at times, seem bent on forcing contractors into processes that take away any competitive edge.  Yet, whether you’re a newbie to the field, or a seasoned veteran, there are three simple secrets that should always be kept in mind in any sales and marketing effort.

First, solve the problem.  You might think this is obvious, but so many times we are guilty of pushing features and functions where we think we have a competitive advantage instead of presenting real solutions to real needs.  In order to solve the problem, you must find ways to get prospects to open up and reveal their true pain.  This means being there first (before the RFP is issued) whenever possible, and it means establishing good rapport and strong credibility.  It also means discovering pain at different levels of the organization since the pain at one layer may not be the same as that of another. 

Once the problem is well understood, the solution offered must clearly and obviously provide a legitimate  fix.  “Smoke and mirrors” may win you the occaisional deal, but real solutions create a long-term business.  If you can’t solve the problem, move on (or at least tell the prospect you’re unsure there’s a good fit–you may find them changing requirements if they really want to work with you).

Second, follow the rules.  Rules and regulations are foundational elements of government markets, and contractors must be adept at following them.  That doesn’t mean a contractor can’t have some degree of influence over the process.  However, influence must come early in the process.  Once RFP guidelines have been issued, for example, it might take an act of Congress to change them (literally).

Third, make it easier than the next guy.  “Ease” builds value in the government market (in all markets really).  So even if your product solves the technical problem, and you’ve followed all the procurement rules, your solution still may not make the cut if another vendor illustrates they are easier to work with, or require less handholding.  You see, buyers subconsciously evaluate the ratio of perceived personal glory and perceived employer benefit to the perceived effort required.  In other words, from the buyer’s perspective, vendors that can “make me and my department (particularly me) look good for the least amount of effort” will win. 

These three concepts may seem elementary to some, but brilliant game plans will not win games if blocking and tackling such as this is poor.  Keep these three fundamental secrets in mind, and you’ll end up with the odds in your favor.

-Lorin

Closing the Government Contract

Go to your local library or your favorite book store.  You’ll find dozens and dozens of books with smart things to say about closing sales.  You’ll find tips on closing methods – the trial close, the assumed close, the if-then close, the social validation close.  There’s even something called the impending event close.  

When selling to the government, most of the closing methods taught in the books simply don’t work.  The books’ methods rely primarily on an instantaneous emotional response.  While emotion can be an important part of a government sale (and often overlooked), instantaneous is not.  It’s rare to find someone in government who can buy on the spot.  Even those at the top have to follow a process.  (See “Always Go to the Top?”)

To close government sales, you can’t wait until the end of your own sales process.  You’ve got to start at the beginning.  It begins with good prospecting, followed by priming to position yourself so that your prospect is poised to share with you their real pain.  (Hmm, lots of p’s in that sentence.)  There are other steps in the process.  Two others worth particular mention are process and proposition.  You must understand the buyer’s process, and you must have a strong value proposition to present.  (Still more p’s.)  Then, as you get close to your sales process, you’re going to need to call on another “p”.  That’s patience.  The process takes time, even after a decision has been made to buy from you.

Now, it’s not easy to tell your boss, “That government sale I’ve been projecting for months will come in soon.   Just be patient.”   Bosses don’t like to be told to be patient, even when it’s good advice.  To make your discussions with your boss easier, make sure you understand your customer’s buying process top to bottom.  In fact, understand the process better than your customer does (and certainly better than your boss does).  This understanding will help prevent you from over-promising your boss.  It will also help you step in when something has gone amuck  with the process, as will happen…often.

Then, there’s another “p” that comes into play…a rather important one.  That’s pipeline.  The larger and more reliable your pipeline, the easier it is to tell your boss to be patient.  I promise. 

All the best,

Rick