Business to government (B2G) simply means that a business is selling products or services to federal, state, or local government agencies. It is one of the most challenging sectors to serve, but this challenge also represents an opportunity. In this article, we are going to break down common B2G tech challenges and how you as a business owner can operate in the technology sector and establish credibility among government clients.
How B2G differs from B2B or B2C
Before we dwell on the challenges that B2G comes with, let's first understand how it can differ from other business paradigms such as B2B or B2C.
B2C or business-to-consumer is about selling a product or an online service to a consumer. The number of consumers depends on the population of a demographic. Researching the market is necessary in this case because the target consumer may vary based on factors such as income, groups, gender, place of residence, and other demographic categories.
B2B or business-to-business marketing is about selling a product or a service to other businesses. Unlike consumer marketing, business marketing targets for-profit businesses and organizations that are non-profit. This type of research is often complex, as the pool of likely buyers is more limited and more discerning.
In the B2G model, a company is selling their product to meet the requirements of a certain government agency. This happens through a well-organized bidding process that takes place online and can be highly competitive. This is a major difference between this model and other models like B2C or B2B. A business interested in developing products for government agencies must have a very well-defined go-to-market strategy with.
The purchase decision for the end consumer in a B2G model is usually slower and more complex than in a B2B or B2C model. Typically, the buying process for B2C is the shortest, is longer for B2B, and is longest for B2G.
Common challenges when selling to a government agency
If you are a business owner who is approaching your first B2G sales opportunity, you have a few preconceptions about B2G buyers. Let's discuss some common B2G challenges and how you can turn them into opportunities.
Government officials are resistant to adopt new technologies
This challenge is often a misperception about government officials. Technology is used to make the lives of citizens better. The first step when improving government operations with technology should be to develop a clear understanding of area where the technology will provide a real benefit to its user. For example, the product or service you are developing may help a city engineer or a city manager work more efficiently, which makes that employee more valuable to the government and to the public.
Today, you will find that many government agencies have technical individuals who have authority to make purchasing decisions. They will be the key personalities who are interested in learning about your solution. Approaching these people as their ally is a great way to cultivate a positive relationship with them. By providing an optimal, easy-to-understand solution for their key problems, you can win their support for your technology.
The RFP process is cumbersome
A request for proposal (RFP) is a business document that is used to make announcements about the details of a project. Government agencies use this type of document to announce funding as part of the bidding process with terms and guides on how bidding should be formatted.
To avoid getting caught up in the RFP spin cycle when submitting your proposal, consider you how can deliver the most affordable product at the highest value to the government agency. You don't want to pitch the cheapest solution just to win the bid; rather, pitch a competitive price point and then highlight the specific benefits that are unique to your solution.
Bidding against other applicants
Government agencies tend to focus not only on what they need but also on how the vendor is going to provide it. You want to establish strong relationships with your government points of contact, meet all necessary deadlines, and underscore the key differentiators that set you apart from other applicants. Sometimes it will come down to cost, but many times you can gain an edge by building a positive rapport with the buyer and speaking directly to their most salient pain points.
Sale cycles to the government are slow
The sales cycle in a B2G model is usually longer than other sales cycles. Researching your target B2G buyer can help you get a clear understanding of their specific timeline, but it's always best to assume that there will be some delays all the way through the process. You can shorten a sales cycle by making a strong early impression and submitting all requested materials well ahead of schedule.
The flip side is that B2G buyers often have million- or billion-dollar budgets. By solving the problems in this space, you can also generate a fair amount of profit for your business. Startups with the necessary sales resources have a strong incentive to pursue B2G contracts because they can be a reliable source of millions of dollars.
Stringent regulatory requirements
Government projects often have demanding technical requirements. Decisions such as budgeting and purchasing are scrutinized by public officials, and minimum security requirements often apply. Regulatory compliance varies by country. Organizations must be cognizant of the regulatory compliance rules of each country they operate within. For example, GDPR went into effect in 2018 and applies to all data produced by EU citizens, whether or not the business collecting the data is located within the EU.
Determining laws and compliance regulation can help you understand which emerging or existing regulations influence the problems facing the government agency. Incorporating and developing compliance can be a culture you, as a business owner, can promote throughout your own organization.
Key strategies for selling to B2G buyers
In any area of sales, it is important to understand the requirements of a buyer. There are some high-level strategies that you can use to structure your proposal and vision if you are planning to sell software as a business in the B2G model. Below we have highlighted some of the key points:
- Conduct advance research into the government agency you are trying to sell to, including any recent RFPs and an analysis of the companies who have won those RFPs.
- Each government agency exists to solve a specific set of problems, so develop at least a passing knowledge of the various current debates and approaches within that field.
- Focus on how the agency is currently trying to solve its problems. Understand what technology they are already using and how you can add value by either working with that technology or improving it.
- Try to understand the agency's hierarchy. For example, if the product or service you are developing for the government agency helps a city engineer or a city manager, be prepared to pitch directly to those buyers in a compelling way.
- You can often outbid competitors by maintaining total transparency with your point of contact and by fostering meaningful and constructive conversations with stakeholders throughout the process.
- Reaching out directly to key decision-makers who are involved in using technology is a good practice. They are the ones who are going to understand the value of your product, the way it works, and likely use cases for their department.
- Working with government agencies, email isn't as effective as in other business models. Setting up calls via phone is highly effective.
- Buyers in B2G do not usually care about the technical aspects of the product you are trying to sell. Diving into the technical specs of your product is not a good strategy to lead with.
- Instead, a product demo is a highly efficient way to showcase a solution to the problem you are solving and suggest the next steps. Focus on building the product that resolves actual needs and concerns.
- Using contacts to increase internal buy-in can help you outbid your competitors. Networks are developed through trusted channels. This is an important factor in building and selling products or services for a government agency. It can also help you expand your government buyer network.
Identifying B2G buyer personas
All the information you need to build a list of potential buyer personas in the government is available to the public. Use this to prepare hyper-specific sales resources that win over key users. Start by dividing your list list into three broader categories for buyers: User, Economic, and Executive:
- A User Buyer is the person who is actually going to use the product.
- An Economic Buyer is some who has authority like the city manager. They have control over the budget and the power to create purchase orders.
- An Executive Buyer (who could be the same person as the Economic Buyer) reviews strategic issues and the long-term effects of purchasing a product or a service.
You want to consider User Buyers and Economic Buyers first and foremost in your initial pitch strategy, but as the process goes on, you will want to foster the strongest relationships with Executive Buyers. Government buyers often renew their contract with trusted vendors, which could give you an inside track on future large-scale RFPs.
In this article, we have covered the B2G model, all the major pain points that it comes with, and areas where you should focus as a business owner if you are selling to a government agency.
At Crowdbotics, we have experience building for the U.S. Air Force as well as state and local government agencies. Our key advantage in these sales cycles is that the Crowdbotics platform is built for secure development and deployment in a modern tech stack.
Get in touch with us today to learn about the technologies we use, the process of building an app, our expertise in your industry, and what other clients have to say about development services with Crowdbotics.