The government market in the United States still represents the largest untapped segment for most business-to-business direct marketers. It is huge, confusing and, to most, daunting. $250 billion. That’s “Billion” with a big “B.”
This country has more than 80,000 governments: 3,042 counties, 19,296 municipalities, 16,666 townships, 14,566 school districts, 31,131 special districts, 512 Indian nations, 5 U.S. territories, 50 states and Uncle Sam. These represent more than 20 million workers and 25 percent of domestic spending. And they buy virtually every legitimate business product and service imaginable.
That $250 billion is just the federal government. Add in those others and we’re talking real money. Do I have your attention yet?
After 20 years of working in the trenches, I can tell you those 80,000 governmental entities represent a morass of niches, many of which are improperly and sloppily served by entrenched vendors. They are ripe for the picking. The trick is identifying the niches and the most effective ways to reach them.
I have worked with more than 100 BTB firms – catalogs and others – and have grown market share for each, often without any government contracts. Working with companies willing to listen and try different things, I have helped sell billions of dollars in products and services.
The government market remains untapped by most BTB direct marketers because of partial information, misinformation, lies and myths. You’ve heard stories that you can’t sell to the government without a GSA “number.” Not true! Any sale under $2,500 does not require a government contract. This is the “micropurchase” threshold established in 1994 by the Federal Acquisition Streamlining Act.
You’ve heard stories about mandatory government contracts. Some of these are true, but even this glacial market changes. The Federal Prison Industries, also known as UNICOR, is no longer a mandatory source for government buyers. The Senate recently passed the $328 billion omnibus bill held over from last year. This bill is important to the office furniture industry because this legislation contains the Transportation-Treasury, and General Government Appropriations Act of 2004 (S. 1589).
Section 638 eliminates the mandatory contracting requirement that agencies are subject to when it comes to products made by Federal Prison Industries. Set-asides exist for the National Industries for the Blind and National Industries for the Severely Handicapped. But these are not insurmountable.
Then there are the rumors about the government demanding the lowest price. There is an element of truth to this, but it applies only in certain circumstances. First, you have to have a contract for them to ask for the lowest price. Even then, it need only apply in instances where they are your best customer. If they order more than anyone else, they will ask for the best price. But you have to know this upfront, or they will demand the best price and you will give it out of ignorance.
You’ve heard stories of companies entering the market, running into reams of red tape, miscues and barely escaping doing hard time. Some truth exists here, too, especially if the company enters the market without doing its homework. There are make-or-break nuances in this market that you must know and obey. Even experienced government contractors, like PC Connection and its subsidiary, GovConnection, can make missteps. GovConnection was thrown off the GSA Schedule last fall.
But these are usually situations where voluntary ignorance or arrogance reigned. If you enter the market after doing sufficient homework and getting experienced guidance, you can play the game successfully.
Market Connections of Fairfax, VA, does an annual buying habits study for the federal market. Every year certain things stand out. The No. 1 influencer three years in a row is service. Fast delivery has beaten price three years in a row. In the past three years, the top five influencers have been customer service, responsiveness to inquiries, reputation, quick product delivery and wide selection of products. This is custom-made for catalogers.
The major differentiators that direct marketers offer are:
· They know how to target.
· Most understand customer service.
· They deliver faster than traditional government contractors.
Life, and some decisions, can and should be simple. Let me put it another way: If you are not in the government market, someone is eating your lunch, driving your car and getting ready to move into your house.
