How are you planning your success?
Have you ever heard management say they wanted to cover the Federal market, so they would just put one of their commercial salespeople on it? How did that turn out? My experience is that it can be very frustrating for both the company and the “lucky” salesperson.
I am writing this article because, whether you are just starting your Federal sales career or you a seasoned sales veteran, there are five elements of the Federal market that you must understand to be successful.
I was fortunate at beginning my Federal sales career. I served in the U.S. Navy for 5 years. Then in my first job, I was under contract with a U.S. Navy customer for two more years. I then worked as a Federal pre-sales engineer for three more years before I got my first job as a Federal Sales Representative. Why was I lucky, you ask?
Since I had all this experience working in and around the U.S. Navy, I understood the way Federal Government people spoke. Then, while I was under contract with the U.S. Navy, I became familiar with the Federal Acquisition Regulations (FARs). Finally, as part of my duties as a Federal pre-sales engineer, I learned the importance of the Government fiscal year, contract vehicles, and funding requests. These experiences made my transition into Federal sales much easier than someone who began their career without my background and experiences.Without the essential knowledge of the Federal sales market, salespeople are a distinct disadvantage to even begin building a sales pipeline. I have picked five elements of selling into the Federal market below that I feel are very important to begin your sales career. Of course, there are many more elements of the Federal market, but I picked these five for their value to the Federal salesperson.
During the past twenty years of being in a position to sell to the Federal market, I worked at seven companies where I started their Federal sales practice from scratch – no pipeline, no customers, no Federal marketing positioning, no Federal resellers, so I do mean from scratch.
Over those seven companies, I created a Federal Sales methodology. That methodology helped stack the cards in my favor to ensure my success selling into the Federal customer base. I have had many Vice President of Commercial Enterprise Sales tell me “Selling is Selling”. This statement couldn’t be further from the truth. In this article, I want to provide Federally focused salespeople a starting point for success. With that said, this is just a starting point and it cannot cover everything that you need to know, and so if you find this article to be helpful I would suggest you take the next step and find company to provide you with some Federal sales training. Whether you are selling for an original equipment manufacturer or Federal reseller, you need to know the ins and outs of the Federal market if you are to be successful.
1. Creating an annual Federal business plan to crush your annual sales quota
My father once told me that the most valuable commodity we have is time. It is more valuable than any amount of riches or power. Time is the only commodity that we can never make more of. Once it is used, it is gone forever. So, when you call on the Federal Government, think about how you will use your time. The Federal market is enormous but finite market. Even though it is only “one” customer, you really need to develop a business plan so that you can focus your time where you need to. With this in mind, you should plan out your goals, objectives and activities in order to build your business with realistic timeframes to execute your business plan.
Before you start, ask yourself some basic questions:
- What is your territory?
- What is your quota?
- What is your average deal size?
- What is your close rate?
Where are your customers located geographically?
These seem to be very basic questions, but I have seen sales representatives spending countless hours calling on customers that are not in their territory. Don’t waste your time building someone else’s pipeline.
You need to use a little science to understand how to make your quota and build your pipeline. You need to know a couple things.
First, using your quota and your average deal size, you can calculate how may deals you need to close in order to make your quota. If you know your close rate, you will be able to calculate how many deals you may need in your pipeline. For example, if your annual sales quota is $1,000,000 in revenue and your average sales price is $100,000 per opportunity then the number of customers you need to close in your territory for this fiscal year is 10. If you know your close rate to be 1 in 4, you can calculate your pipeline needs to have $4,000,000 in opportunities and 40 customers.
Second, before you walk out the door or call anyone or email anything – you need to know where you customer is located and what your actual goal is for each activity. For example, if your customer is the Air Force, there are over 100 bases in the continental United States. Planning out your travel should include multiple customer visits as possible in that geographic location to save time and money. Remember, time is the one commodity you cannot make more of.
2. Understanding Federal Speak
If you do not understand words your Federal customer and resellers use, it becomes very difficult to position the value of your product capabilities to the Federal market. For example, the word Washington is a person, place and a thing; George Washington, the man Washington D.C., the place and Washington monument, a thing.
A normal conversation with a customer may go something like this: CAPTAIN Smith, we are products FIPS-140.2 compliant as required. By the way, is this requirement funded or a UFR? Is this a year end requirement and should I see it on ITES or perhaps SEWP contract vehicle?
If you don’t understand the statement above, you need to; so let’s review.
- Know who you are speaking: In this case I would be speaking with a Navy CAPTAIN. A navy CAPTAIN is 3 ranks above an Airforce, Army, or Marine Corps CAPTAIN. It really matters.
- Understand the requirements: Your company has implemented the Federal Information Processing Standard -2 encryption standard required for all government encryption within our software.
- Know your funding: Know if there is money allocated for this project, or if it is an Unfunded Request. (If it is Unfunded, there would be additional questions).
- Know how the customer will procure your products: what contract (vehicle) the government will be using to procure my products and services.
- Know when the customer will procure in this fiscal year: Is this is expected to be purchased prior to 30 September this year
This is a very normal conversation to have with customers, and each question would have follow-up questions that would need to be answered to get all the information a sales rep needs to close a deal. If you cannot natively speak in “Federal”, I would suggest you do some additional research on the subject. It would be best that you look at some of the following terms at a minimum.
- Federal GS ratings and what they mean (GS-4, GS-6, GS-9,…)
- All the DoD ranks and what they mean (E-2, Cpl, Capt, CPT, CAPT, O-5…)
- Federally approved Contract Vehicles (SEWP, GSA, ITES, …)
- Federal Funding terms (UFR, IDIQ, FFP, COGO,…)
- Product Certification terms (FIPS, APL, NIAP, etc.)
- Kevinfederal.com has a list of commonly used terms as well.
Federal speak is prevalent in your everyday sales business from your marketing efforts, reseller positioning, Federal product certifications, territory management and customer discussions. It is a must if you want to have credibility with your customer and thereby grow your business.
3. Knowing the Federal Government Funding Process
This one element of your Federal sales process is extremely important to know and understand. The government’s fiscal year runs from 1 October until 30 September of the following year. The government is supposed to pass next year’s budget in the previous
year. When this happens, the government customer is able to spend their budget allocation after October first. Knowing this end-to-end process is critical to developing and executing a Federal territory plan. Fully understanding how and when the Federal customer is funded, and the money will flow provides the territory manager and the company with invaluable information. This process happens every year.
Continuing Resolution: Legislation in the form of a joint resolution enacted by Congress, when the new fiscal year is about to begin or has begun, to provide budget authority for Federal agencies and programs to continue in operation until the regular appropriations acts are enacted.
Shutdown: No funding for the government, and all non-essential government services are no longer paid and are sent home until the government gets funded.
One last point on the funding process is the type of money the federal government spends. One type of funding is current one-year monies, which are appropriated a specific fiscal year cannot be spent beyond September 30 of that fiscal year. If the money is not spent before midnight September 30 of that fiscal year, the customer loses those funds and will not get them back the next fiscal year.
4. How to sell your products through Contracting / Contract Vehicles
The Federal government does not normally purchase directly from commercial companies. If they did, every company would want to negotiate their own specific terms which would greatly reduce the effectiveness of government contracting officers. Another point that is often not understood is, the Federal customer you speak with has minimal influence on the purchasing arrangement. Only a contracting officer can commit the Federal Government to make a purchase. Why are these elements important? Since the Federal customer, generally does not buy direct, they need another vehicle to procure goods and services. This is vehicle is a pre-negotiated contract with a set number of vendors. This pre-negotiated contract is the vehicle through which the government purchases a majority of their IT Budget, also known as a Contract Vehicle. These contracts allow the government to procure goods and services with current one-year monies from a Federal reseller who went through a bidding process and won the contract vehicle. So, what does this mean to you? In order to effectively sell your product and services in a sustainable way, you need to make sure you have partnered with Federal resellers who hold the contract vehicle that your customer will use to buy your products and services.
The second point of this element is that the Federal customer cannot commit funds. What this means to you is your customer cannot tell you they will buy your product or service. Only a contracting officer can commit and obligate funds for the Federal procurement market. That is why sometimes you will be asked to sign a document stating that your presentation and demonstration is not a commitment by the Federal government to buy your product or service.
5. How do your opportunities get Funded or Unfunded Requirements / Request (UFR)
The UFR (pronounced – YOU-fer) is a request for funding from your Federal customer for the current fiscal year because the product or service was not in their current fiscal year budget. This can either be a good or bad thing. During the current fiscal year, as you presented and demonstrated the value of your product to your Federal customer, they can ask for a quote from your reseller and add this requirement to a list of other requirements across they customers department or agency. This means that your quote to the customer has to contend with all other UFR’s that have been submitted to the department or agency and priorities for those funds are compared to the needs of the department or agency. So, your UFR may be at the bottom of the priority list or even second in line. But if additional funding does not come forth, none of those priorities may be procured.
This may seem overwhelming, and I confess it can be. That is why I suggest that anyone selling to the Federal Government, especially anyone new to selling to the Federal market should consider taking a class or two on selling to the Federal customer. I have developed a training series, that has great potential to help Federal sales territory managers to build their territory and close Federal opportunities. The training is the “Sanctum Federal Sales Certification Training”. More information about this training can be found here at https://sanctumfederal.com. I developed this training for anyone selling into the Federal market, whether they work for an OEM or Federal reseller. It is a great course that teaches you the “Old School” way of selling to the Federal Government. It helps you to truly understand the Federal territory, how money flows through the Federal market, and to how build a focused Federal Business Plan for your territory. This will put you light-years ahead of your competition and crush your annual sales quota.
What was your experience starting in federal sales? How did you learn and what do you wish someone told you a long time ago? Tell us about your school of hard knocks.