Question

Topic: Strategy

Thoughts On Selling To Government

Posted by Anonymous on 10/14/2008 at 11:13 AM ET 250 Points
I have a client that has been very successful in selling technology products / services to police agencies as well as public works and transportation departments for 20+ years.

The client has a vast knowledge of the government sales and procurement cycle / process and believes that this knowledge would be beneficial to small and medium size businesses that are either:

a) under / not achieving sales goals (more toward medium size businesses)

or

b) do not have adequate in house resources for pre-sales / lead generation (small or new businesses)

The client sees there is a business opportunity for providing qualified lead generation service to businesses that are offering products / services that would typically sell for (on the low end) $50-75 000 +.

The cost for this service would be based on a monthly retainer of between $3000 and $5000, plus a commission of sales resulting from the qualified lead list that would be generated.

I realize this is a nutshell overview and I am not able to disclose in detail the process the client would use to generate the leads, however; I would like to get feedback on the following:

1) Gut feeling on the opportunity - does the client have business offering that it is appealing and needed?

2) Thoughts on pricing as noted above or alternatively thoughts on how to determine the value of the service.

Your feedback and comments are greatly appreciated.

Kind regards,
VQP


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RESPONSES

  • Posted by CarolBlaha on 10/14/2008 at 12:26 PM Accepted
    There would have to be a boatload of quality leads that I can't get elsewhere to justify the retainer. If a sale is $50 -75K, do you know the net profit the client would generate? Net vs gross-- cause that is the number they'll pay you from. Can in the industry you are working afford/justify those numbers? While you can get the client leads-- you cannot control their ability to close a sale.

    If one has a GSA contract, it is stated that you are not allowed to sell anyone less than GSA pricing granted to our government. (Which means tight margins) If the product is on GSA contract, the ordering process is very simplified thru GSA Advantage. I am not saying have a GSA contract assure success-- you're one of many. Its merely a hunting license.

    I am thinking I'd market it as a virtual lead generation source. It would be easier to sell if you adjust your commissions (higher) and make it totally performance based. However because you can control the quantity of leads but not quality of their sales force-- you might want to add virtual sales management to the service.

    That way, you can track your leads that have turned into sales. Assure the quality of the sales force. And know if they tell you they got a $50K sale, you know it wasn't $500K?

    Sell Well and Prosper tm
  • Posted by Frank Hurtte on 10/14/2008 at 4:59 PM Accepted
    I believe this is a good time to start up such a business. I would prefer to hear a of a pay for performance type of plan. I feel it will be a hard sale in this economy without a proven (out of house) track record.
  • Posted by telemoxie on 10/14/2008 at 8:06 PM Accepted
    I have been a marketing consultant on retainer for several years and there are more pluses and minuses to that sort of arrangement than I can describe in this little box.

    However, I would suggest that you would have more luck selling such a service to companies outside of the Washington, DC area.

    I would be happy to discuss this with you further off-line.
  • Posted on 10/14/2008 at 8:45 PM Member
    I think this is actually a very competitive space - helping businesses to market to the government. I would suggest some internet searching first on companies that already do this to see how your client could compete and differentiate itself from what exists.
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