Building a Successful Federal “Product” Sales Practice

FEDERAL SALES 

Federal Government – Fiscal Year 2021

$90 Billion*

Government-wide Information Technology Spending

*According to ITDASHBOARD.GOV

During these unprecedented times, information technology product companies may be feeling the pain of decreased revenue and dwindling pipeline from your commercial enterprise sales teams. Not to be depressing, but it is our new normal. 

    Question: How can you build a revenue stream in this type of market? 

    Answer: By selling to the Fortune One of the world: The U.S. Federal Market

The U.S. Federal Market will be spending $89.3 billion on information technology products and services this year and has a budget increase next fiscal year, 2021, to $90.9 billion. 

Some people shy away from Federal Government as a market, because it is enormous and the bureaucratic red tape is legendary.  So, the thought of trying to close a large government contract is quickly dismissed.  It is just too overwhelming to figure out where to begin.

Most commly held beliefs are based on truth, and the statement above is based on truth, however, it is not not entirely accurate.  The Federal Government is indeed a huge market, but it doesn’t have to be overwhelming.  That is why companies need a well-structured, written Federal business plan.  With this plan, companies can successfully implement, manage, and execute their plan within this market. With that stated, if these companies want to be successful, they need to ask themselves a couple of fundamental questions:

  1.  Do they have a long-term commitment mindset? 
  2.  What are their expectations? 
  3.  Do they have the right people to execute their goals and objectives to be successful?
  4.  How will this impact other investments of the business? 

Long-Term Commitment

Building a Federal sales practice is a long term commitment, and those involved need to have a long-term commitment mindset from outset with active support from the highest levels of the company from day one. The Federal Market is quite different from the enterprise commercial market. The Federal Market has different rules and laws that restrict or permit specific behaviors while the Federal customer is procuring commercial goods and services. 

Additionally, the Federal Market has its own funding and buying cycles. The date you choose to  begin your Federal sales vertical will impact your total ROI and when you can expect to see your first revenue. The cycle makes sense once you understand the idiosyncrasies of the Federal Market and how to close deals in this market. 

Thus, the C-Level personnel of a company should be prepared for a longer sales cycle, but in most cases this yields larger revenue opportunities. Be patient and give additional time to the Federal territory managers to build the pipeline and use the Federal sales cycle and funding cycle to their favor. 

Your Expectations

If a company is going to succesfuly enter the Federal Market, they must be able to correctly set leadership’s expectations in closing deals in the Federal Market. A company needs to have a strong belief that this bet is worth it, and the Federal sales teams will close opportunities in the future, but it may take 2 years. Leadership needs to understand that the Government’s buying and funding cycles are set in stone.  This means that they do not always align with the company’s quarterly reporting. It is for this reason that even though opportunities may feel like they are perpetuarlly delayed, that this is just how the Federal Government works, and closing opportunities may be delayed but not lost. 

I would also remind you that setting the correct expectations early onhelps C-Level personnel make strategic decisions regarding product development, marketing, hiring and other pertinent areas that need to be addressed and funded. Take the mystery out of your plan. You may need to bring your products through Federal product certifications that could cost thousands of dollars and need product development’s time to add features needed by the Federal mandates. If this plan is laid out upfront, it allows the sales team to plan around any risks and mitigate any challenges.  A company may need to develop a new Federal reseller strategy to gain the force multiplier and needed Federal contract vehicles to close Federal opportunities. These elements of the Federal sales practice take time to develop and execute. 

The Right Stuff

When executing your Federal business plan, ensure you are hiring the right people for the right reason. Many companies interview Federal salespeople without truly understanding what questions to ask during the interview process. Federal salespeople need to know much more about the sales process.  The federal salesperson needs to know as much about the acquisition process as they do customer relationships. Being able to align opportunities from the first conversation through to the award is simply a requirement of any competent sales person. A Federal sales practice needs are specific to the Federal Market. Some of these elements include:

  • Federalizing marketing collateral
  • Building a Federal reseller channel
  • Knowing what products need to go through the Federal product certification process
  • Knowing the Federal product certification processes
  • The ability to execute on the revenue plan

Effect on Current Initiatives

This goes right along with setting your expectations. Your company may need to re-write or “Federalize” your marketing material to speak directly to the Federal customer. The Federal Market has their own “Language”, and if you want them to hear your message, you need to speak their language. The Federal customer’s requirements should be stated in your material or they could bypass your product because they cannot find the answers they need from your current enterprise marketing. 

Another factor could be changing your user interface to comply with the Section508 compliance or Americans with Disabilities Act (ADA). The Law’s Section 508 mandates that any technology employed by a federal agency or department be accessible to those with disabilities. The law applies to technologies that (a) will be utilized by federal employees and (b) those that the public will need to engage with in order to access the services of a government agency. 

Could the Federal requirements have an impact on your product development or other areas of the business? These elements of the Federal business plan should all be defined, refined and understood by the C-Level personnel to ensure your commitment to the Federal Market. 

Summary

To recap:

  1. Unexpected economic downturn
  2. Revenue and pipeline struggles with commercial enterprise customers
  3. Fiscal year 2021 – $90 billion Federal IT budget
  4. Committing to the Federal Market for net new revenue
  5. Setting your expectations
  6. Have the right people for the right job
  7. Build a Federal business plan to manage, track and execute 

This is the right time to enter this market. Sanctum Federal can help you successfully achieve your goals throughout the building of your Federal sales practice with real results. Please ask us how we can help you. 

I’d love to hear your comments.  What other things do you think are necessary to build a successful Federal Sales business?

Kevin Mahoney, CEO, Sanctum Federal

 

 

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