B2G sales: How startups can sell to government agencies
Here's how a tiny company started closing huge deals with federal government agencies—and how you too can get started in B2G (business-to-government) sales.
What is B2G?
B2G stands for business-to-government. It simply means that a business is selling its products or services to the government. (It's also sometimes referred to as B2A, which stands for business-to-administration.)
Anytime a business sells a service or product to a government agency, that's B2G—whether it's a multi-billion dollar defense contractor like Lockheed Martin selling missiles, Insight Enterprises selling IT solutions to administrations, or a tiny company you've never heard of selling office supplies to federal agencies.
What kinds of companies are selling to the government?
If you're curious, you can visit USAspending.gov and go through the list of recipients and see how much money different companies have received from government contracts.
Don't let these numbers mislead you though—getting into B2G sales doesn't mean that you have to chase multi-billion dollar deals. There are literally government contracts that are just a few hundred bucks. So whatever you're selling, as long as it could help a government agency work more efficiently, you could sell it, even if you're running a tiny operation.
Where to find opportunities to sell to the federal government?
The government maintains a Contracting Opportunity Finder to find small businesses contracting opportunities with federal agencies.
You can search or browse their database to surface opportunities specially set aside for SMBs.
However, if you're willing to be a bit more creative, you can reach out directly to federal agencies—we'll talk in more detail about that further down in this article.
How a tiny startup accidentally discovered the B2G business model
SeamlessDocs didn’t set out to revolutionize the way governments digitally process forms. The startup—whose software instantly converts PDF or Word docs into dynamic, smart, cloud-based forms—wasn't even thinking about the government.
They began like many other startups—with a vision, a couple of people, and a rough product. They had found some traction with small businesses, but not enough to achieve the kind of growth they aspired towards.
The turning point came two years ago, as Marc Ende, the company’s Director of Sales, was working late into the night. The phone started ringing: “Hey, can I get a demo? I work for the state of Tennessee. I’m in the HR department, and was wondering if I can use your electronic signatures on my forms.”
This call changed the future of the company. (Here's Marc telling the story himself.)
Suddenly, everything clicked. Instead of selling to small businesses with a few forms each, SeamlessDocs looked at the government and saw an industry drowning in permits, registrations, applications, contracts, and surveys. They saw a sector ripe for disruption, and the perfect market for their product.
The whole team sat down and decided to radically shift gears in their sales strategy to dominate one industry: the government.
Why sell to the government?
To most small business owners and startup founders, the idea of selling to governments is baffling. They don’t even know where to begin. If you work in a startup, the things you care about are probably the opposite of a life in public service: potential for growth vs. job security; freedom and autonomy vs. procedural process. The government seems impenetrable, with bureaucratic nightmares, tight budgets, and crazy contracts.
Endless questions pop up that steer most people well clear of pursuing the government. In many ways, selling to the government is uncharted territory for startups. It’s the road not taken.
But because no one really understands how to sell to the government, it’s a massive opportunity to blaze a trail, to go out there and actually do it.
The government is a huge space, ready to be disrupted. Roughly, 33% of government transactions are processed digitally and continue to raise year over year. Once you get your foot in the door, it’s a market that’s waiting and ready to be cornered.
Let’s take a look at how SeamlessDocs transformed the trajectory of its business by focusing sales outreach on the government, and how you can do the same.
Four stages of closing the government
SeamlessDocs saw a huge opportunity for its business to grow and thrive by selling to governments. But one of the major obstacles to getting off the ground in the B2G space was that there weren’t a whole lot of precedents for what they were doing. They had a lot of questions, but not many answers.
The company took a big risk by focusing on government sales. They set out to sell the dream, and they got there through trial and error. What they learned redefined their business, and they were able to create a scalable, repeatable process for B2G sales that continues to drive growth for the company today.
1. Define your government buyer personas
In any area of sales, it’s important to get your buyer personas right and know who you’re selling to, before doing anything else. This is especially true for the government, where you deal with many different buyers, all of whom affect the outcome of the sale.
When selling to the government, list-building is a lot easier than in traditional sales—all the information you need is available to the public. Unlike private companies, the government is transparent.
SeamlessDocs started simple: They went online.
They found the names, emails, and addresses they needed to start building their personas, and split them into three main categories:
- User buyer: the person who’s going to actually use and implement the product, typically in the IT department.
- Economic buyer: the City Manager-type figure. This buyer controls the budget and signs off on purchase orders.
- Executive buyer: can be the same person as the economic buyer. City Manager, City Clerk, City Administrator, CIO, CTO—people who occupy managerial roles in government. This buyer looks at strategic issues and the long-term effects of a product or service.
What SeamlessDocs learned about buyer personas in B2G sales is that they’re much more fixed and isolated than in other areas of sales. Government departments tend to be siloed, in contrast with startups, where members wear different hats, play many roles, and have a good sense of what’s going on between departments.
With governments, the IT department doesn’t really know what’s going on in the Mayor’s Office, and the Mayor’s Office definitely doesn’t know what’s going on in the Department of Records. You have to get a sense of how these different entities communicate with each other—and it’ll be different for each state or municipality.
Understanding how these personas talk to each other allows you to delve deeper into the buying process, and develop a targeted sales strategy for each government.
2. Make a lot of cold calls
SeamlessDocs found cold calls to be the most reliable method of drumming up new business. Emails simply weren’t as effective—90% of the demos that SeamlessDoc sets up are via phone.
Think about your average government employee, with an inbox stuffed with emails from concerned citizens. They’re not going to give your cold email the time of day. Government employees live on the phone—live there with them. Getting someone on the phone is one of the most powerful ways to close deals, and it’s especially true when it comes to B2G sales.
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You want to start by calling up the relevant IT user buyers—for SeamlessDocs, the website manager. They’re going to be the ones who understand the value of your product, and how it actually works. Get them to be your champions.
Kick the conversation off with an exploratory process. Find the specific pain points that your product or solution will resolve, and dig into the problem.
Here’s how SeamlessDocs' Marc Ende would start the conversation: “Hey, I’m on your website right now and I see 80 different PDF forms that citizens are burdened with printing, faxing, scanning, and emailing. 10 days later, once they submit that form to you, Chuck, what do you do with it?”
He knew that governments had huge amounts of paperwork to deal with, but had to find out exactly which pressure points these problems fell under.
He’d then ask more questions:
- “So you’re using a filing cabinet to manage thousands of submissions?”
- “Can I e-sign them?”
- “Can I submit them online?”
Governments aren’t inundated with cold callers, and people who are trying to sell to them. They’re open to giving you information—use this to your advantage. Use your cold calls to find out as much as possible about the specific problems you’re trying to resolve and the people involved.
“You can find all [the information you need] directly on their website. If I called up and said, 'Hey, I want to know how much the IT Director's salary is?', they’ll have to give it to me. They’re very open to giving information and they’re also not overwhelmed by cold callers. There aren’t many people who are trying to sell [to] them. So for the most part, they might not even know it’s a cold call. They think you’re just simply asking them a question. They have no idea. You’re a concerned citizen because that’s what they do get.” — Marc Ende
3. Demo the problem, not the product
You have to do your homework in B2G sales. But no matter how much research you do, nothing beats the power of the product demo, in terms of actually getting inside the heads of your prospects and figuring out their actual needs and concerns. In your product demo, you’re trying to get all the different buyers—user, economic, and executive—on board to help you push through the procurement process later.
Keep in mind that 70% of local government employees are over the age of 50. You can’t just dive into the technical aspect of your product, because a lot of your audience won’t know what you’re talking about. Don’t expect a City Clerk or City Manager to automatically understand what a “cloud-based form” is—or a “cloud-based” anything is.
In your demos, don’t start with your product. Start with the bigger picture. Figure out what the current process for managing things is.
Marc Ende would kick off the demo by asking:
- “How are you currently managing the form process?”
- “What are some of the inefficiencies that you see?”
- “Do you have any existing initiatives to redress this issue?”
Get everyone in the room to feel the pain behind the current process, and to see that there is a problem. Once that becomes clear, then you can flick on the product and zero in on how the problem can be solved. Frame your product as a specific solution to a specific problem, rather than just showing off your product.
Over time, SeamlessDocs learned that governments don’t tend to like new things—but they love efficiency.
Efficiency is the buzzword that lights up faces during staff meetings. When you sell to governments, sell efficiency. Figure out how you can make things run more smoothly while saving time and money, and you’ll be on the path to success.
4. Midwife the procurement process
Once you’ve aced the demo, your product still has to go through procurement before the deal is actually closed. There’s a gap between the stage of getting people excited about your product and the point when it’s actually purchased. To bridge this gap, you need to stay on top of the procurement process.
One of the most powerful lessons SeamlessDocs learned in B2G sales was to never make assumptions, particularly when it comes to procurement. Just because Princeton is next to Jersey City, for example, doesn’t mean their procurement processes look anything alike—and if you make that assumption, you flush time and money down the drain.
Procurement is complicated
Procurement is basically the way that governments buy things. There are two different kinds of procurement situations:
- Single source: there are multiple vendors supplying the product, and they each place a competitive bid on the contract.
- Sole source: there’s essentially no direct competition—there’s only one vendor capable of supplying the product.
Because its product was unique and new, SeamlessDocs fell into the sole source category. They didn’t have to run through the bidding process with other companies, because those companies didn’t exist.
Even if you’re fortunate enough to be a sole source provider, though, you still need to do the legwork to let procurement run as smoothly as possible.
For example, if a government has a $5,000 dollar threshold for buying the kind of software your company sells, you have to know that. Then you can price strategically at $4,950 and make it easy for an economic or executive buyer to sign off on the purchase, without having to run it up the chain, or put it to a vote—dragging the process out indefinitely.
There are all sorts of different checks and balances that regulate the procurement, and they differ from government to government. You need to find out the specific procurement process for the government or agency you’re dealing with, and follow it to the letter each time. The more you know, the more control you have over the entire sales process.
In Marc Ende’s experience, government sales cycles, from beginning to end, are an average of 90 days—regardless of deal size.
Increase internal buy-in
The best way SeamlessDocs found to work around the ambiguity of the procurement process was by increasing internal buy-in from the various decision makers and buyers involved in the deal. If you get these buyers invested in the product and vision, and willing to make the deal happen, it becomes that much easier to navigate the red tape.
Before a council meeting, for example, or a vote on adopting SeamlessDocs, the company would reach out to the various buyers involved with educational content geared towards showing them the value of their product.
They’d point buyers to other governments and cities that they had helped make successful: “Don’t listen to us. Listen to your neighbor all the way in Reno. Our product has a 99% approval rating from its constituents. They’re using it like this. This is how you could potentially use it.”
Governments are, by nature, skeptical of new solutions and entities. They hate to be first to anything. Use social proof in your sales process to help alleviate their concerns. Show them how their neighbor increased efficiency and cut spending through your solution, and how they can do the same.
Patience wins in B2G sales
We love to criticize the government—for inefficiency, long lines, and bureaucratic despotism. But SeamlessDocs is just one of the companies actually out there on the ground, trying to help the government-run more efficiently rather than just complaining.
And in doing so, they’ve increased the size of their team 8x, to 32 people—half of whom work in sales. Their list of happy customers is over 200 governments long, with hundreds more in the works.
What does it take to sell to the government? According to Marc Ende, it’s patience above anything else.
Selling to the government is about much more than just making a transactional deal. It extends beyond the handshake. It’s about pushing innovation on a truly vast scale. It takes salespeople who are committed problem-solvers, who are patient and dedicated to the task at hand.
You need a tool that helps you automatically track every touchpoint with your leads and offers complete team transparency, without burdening the sales process with further complexity.
In general, government employees move more slowly and are not incentivized so it’s vital you do not pressure them into the sale with discounts or other tactics. The pace of the sale is contingent on established norms and the employees reflect those norms. Value sells, discounts don’t.
This is a lesson that all salespeople can learn from. Look beyond just closing the deal, and the immediate parameters of the transaction, towards how you can provide real, long-lasting solutions for your customers. Ultimately it’s knowing when to push forward, and when to be patient and bide your time, that will carry you across the finish line.
Govtech: the $400 Billion market hiding in plain sight
An article by Ron Bouganim outlining the opportunity that's open to startups selling governments. The accompanying discussion on HackerNews is worth a read as well!
SBA Office of Government Contracting
If you want to start selling to federal agencies, the U.S. Small Business Administration offers free counseling and training services via their Procurement Technical Assistance Centers (PTCAs). They can help you determine if your business is ready for government contracting, get registered in the proper places (e.g. the Department of Defense's System for Award Management), see if you are eligible in any small business certifications and research past contract opportunities.
How to Get Government Contracts by Olessia Smotrova-Taylor
A 2012 book by Apress on how to sell goods and services to the government.
Zero to a Billion: 61 Rules Entrepreneurs Need to Know to Grow a Government Contracting Business
Written by the former COO of SRA international, this is a how-to guide for entrepreneurs wanting to build a government contracting business.
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