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How Can A Government Contractor Expand to Commercial Markets?

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Posted by John Beveridge on Mar 14, 2013 6:09:00 AM

Sequestration is causing most government contractors to reevaluate their marketing strategies. If you're a government contractor and you're not exploring diversifying into the commercial sector, you should be. Even if sequestration is magically resolved, the political pressure to reduce government spending will challenge government contractors for years to come. Whether we like it or not, the world is changing and we need to adapt and overcome.

Diversification is an essential risk management strategy for both business and finance. You won't be able to diversify your government contractor business overnight, but you need to set the wheels in motion now. Here are some tips to consider as you pursue a strategy to diversify into commerical markets.

 Identify target industries and buyers for your products and services

Some of the potential markets for your products and services are obvious. For example, if you manage health information databases for the Department of Veteran Affairs, the healthcare industry is an obvious target. Within the healthcare industry, think of targeting medical insurance companies, hospital chains and healthcare providers.

Think behind the obvious - here are some potential customers for our health information government contractor:

  • Large corporate and union health plans

  • Assisted living facilities

  • Employee benefit consultants

Think outside the box and develop a broad list of potential customers. You may need to modify your product to meet the needs of these potential customers, so be prepared to pivot your efforts as you get feedback from the marketplace. Your next step is to pare down your target list to high probability targets.


 

Identify your ideal customer profile focus your efforts

Successful growth organizations use a focused sales and marketing process to target prospects that are most likely to become long-term, profitable customers. An ideal customer profile is what Ardath Albee calls “looking at your customer through a wide angle lens”. It is a broad overview, a simplified characterization of the type of company that will buy your product. It may contain basic demographic information such as company size, executive titles, and the industry it is in. As you develop your ideal customer profile, you will define a subset of the broad net you defined when identifying target industries.

A more definitive approach to creating a commercial strategy is to develop a buyer persona(s) for the types of people that will buy from you. This persona is a more detailed picture of the employee of the prospective company you will be dealing with. A complete buyer persona will closely resemble an individual that you can think about while developing your sales and marketing strategy.

By developing an ideal customer profile and buyer personas for the types of people who will buy your products and services, you have the means of targeting prospects most likely to become long-term profitable customers.


Use a B2B selling process

The B2G selling process is very different than the B2B selling process. Government contractor executives who have been out of the B2B world for a while will find that the B2B selling process has changed drastically. Old outbound marketing techniques like cold-calling, direct mail and e-mail spamming are no longer effective. Technology like caller ID and spam filters has made it much easier for B2B buyers to tune out unwanted interruptions to their busy schedules.

A recent study by the DAC Group found that 71% of enterprise purchase decisions originate with a search engine query. B2B buyers are turning to Google and social media networks like LinkedIn to research solutions to business problems and to identify potential vendors who can fill their needs. Successful B2B companies sync their sales process with the customer buying process. They use inbound marketing, referrals and networking to connect with potential buyers.

Inbound Marketing is a coordinated series of tactics designed to help B2B sellers:

  • Get found by potential buyers when they search for your products and services

  • Convert buyers at the top at the top of the sales funnel to leads by providing relevant information like eBooks and videos in exchange for contact information (usually an email address.)

  • Convert leads to customers by using marketing automation to help "nurture" prospects through their buying process by providing the right information at the right time.

  • Convert customers to promoters by offering an excellent customer experience using social media, content marketing as well as good old-fashioned customer service.

  • Using marketing analytics data to measure, refine and improve your B2B sales and marketing processes. 


Referral Selling 

Referral selling provides warm introductions to prospective buyers by offering "social proof." Wikipedia defines social proof as "a pscyhological phenomenon where people assume the actions of others in an attempt to reflect correct behavior for a given situation." If a trusted colleague recommends to a potential buyer that they meet with you, they are providing social proof that you may be able to offer value to the buyer. Who would you rather meet with - someone who's called you 10 times and left numerous unreturned messages on your voicemail or somebody that a trusted colleague recommended to you? A tool that I recommend to help find people that can introduce you to people you want to meet is Reachable. Reachable allows you to target someone you want to meet and analyzes your social media networks to identify people that can introduce you to your target.


Networking

Networking is another way to make connections with people who can either buy from your or introduce you to people who can. Networking is a two-way street - you need to help your networking partners in order for them to help you. A selfish attitude will doom your networking efforts from the start. Find the trade associations and business groups where your potential buyers participate and attend events. Give to get - asks questions to get to know people you meet. This will encourage them to ask similar questions of you.


Government contractors are facing a challenging business environment for the foreseeable future. One means of managing this business risk is to diversify your revenue sources by targeting commerical markets. You should develop a strategy to target the commercial sector and use modern B2B sales and marketing tactics to execute your strategy. It won't happen overnight, but there's no better time to start than now. The longer you wait, the further you fall behind your competition.

Topics: Inbound Marketing, Government Contractors

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