Well, your first questions may be:
WHY DO I NEED A FEDERAL RESELLER?
Why can’t I just sell directly to the Federal customer?
Easy answer: With larger procurements the Federal customer procures their goods and services through Federal resellers who have pre-negotiated contracts with the Federal Government.
This is why OEM’s need to develop a strategic relationship with Federal resellers who can help streamline the process of closing opportunities with the Federal customers.
DECISIONS …. DECISIONS …. DECISIONS
There are many decisions that face an OEM’s sales person when selling into the Federal market. When dealing with the Federal reseller, here are some of the questions that should be answered even before selling to your Federal customer:
- How do I control the purchasing process, or at least influence it?
- What are the OEM’s Federal customer procurement strategies?
- Who is the customer and what contract vehicles can they buy from?
- Who are the Federal resellers that have that contract vehicle?
- Does my company have a reseller agreement with these Federal Resellers?
- What is my strategy with the Federal resellers moving forward?
- Does the Federal reseller have a good relationship with the Federal customer?
- Does the Federal reseller have a good relationship with the Contracting Officer?
- Does the OEM give registration to the Federal reseller for the opportunity?
Yes, there are many questions that need to be answered while trying to close opportunities with the Federal customer.
During my career, I have been on both sides of this equation, so I have a unique perspective from both sides of these types of business operations.
Prior to writing this article, I surveyed 20 different sales professionals I have great respect for, asking the question “Why do OEM’s need Federal resellers?” I received some interesting feedback. In fact, I had to add to this article based on their feedback. The OEM and the Federal reseller have a symbiotic relationship. They both need each other to fulfill the federal government’s requirements.
One of the participants, Jimmy, sent me this story about one of his lessons:
Early in my Federal sales career I was selling laptops to the US Army. I had several meetings with a new Federal customer and they were very interested in purchasing my product. My company did not have any Federal contracts, so it was necessary that I found a Federal partner with the specific contract the customer needed to use to close the opportunity. I asked my customer which Federal reseller they preferred, and I was promptly given the name of one of their contract holders. I reached out to their sales rep, “John,” and confirmed that they had the required contract. ALL GOOD! Not even close….
After that, we quickly began to do some account planning around this customer to figure out what else we could sell to them. Everything was going very well. John knew everyone at this site and had a great relationship with the decision makers. He was a trusted advisor and we were able to up-scope the solution, almost doubling the value. We confirmed the customer had money and our solicitation moved to contracting approximately 3 months later. That is when I realized I had misjudged my reseller pick. John’s company had a “services-only” contract with the customer. This meant that the customer was not able to use John’s contract.
The next sequence of events I will remember the rest of my career. The contracting office was now in control of the opportunity. The contracting office decided it wanted to award this opportunity to one of their one of their preferred 8(a) set-aside businesses. Here are some of the issues with the decision of the contracting office with my opportunity.
- The Contracting Officer sent out the request for quote to three 8(a) businesses.
- I was being asked for pricing by 3 different companies, none of which were John’s company.
- My company had zero business relations with any of the respondents.
- That means credit checks and other background checks for all three companies.
- I had already given deal registration to John’s company. (giving them special discount pricing).
- John’s company had zero relationships with any of the 8(a) businesses either.
- John had the best pricing which matched the customer’s budget, but the other companies’ pricing was significantly higher because of John’s special pricing discount.
- John’s company still wanted the deal registration trying to work with the 8(a)’s.
- This contract situation cost one thing – TIME.
- The deal went sideways very quickly and my forecast went from $500K this quarter, to $0.
I learned so much from this painful situation. I should have done a better job vetting my Federal partner. What should I have done differently?
I should have asked the customer which contract vehicle to use and not a just a contract.
Let’s begin this discussion with:
The FIRST reason that both sides of the discussion agree upon is:
THE CONTRACT VEHICLE
What is a contract vehicle?
- Is it something I drive?
- Is it something I build?
- The correct question should be:
- How can my Federal customer buy my products and services?
I am amazed at how many OEMs that are new to the Federal Market pick their reseller partner based almost entirely on their perceived relationship with their Federal customer. In the commercial market this is a workable strategy because the customer is the king. If your solution fits the customer requirements and customer likes your solution the best and they have money, then almost any other obstacle can be overcome. This is not the case when you work with Federal Government. Getting to “Yes” with the Federal customer is only half the challenge. It’s once the customer says “yes” that the Federal Reseller truly adds value as the order moves through procurement to the Contracting Officer.
Contract Vehicle defined:
A contract vehicle is a streamlined method the government uses to buy goods and services. Contract vehicles are centrally managed by a federal agency, which reduces acquisition administrative costs and creates time and resource efficiencies.
Simply: A contract vehicle is the common method to buy your products or services from a Federal customer. The contract vehicle has a set of pre-negotiated terms and conditions which allow the government to award contract on a level playing field, and with a high degree of confidence that the vender will deliver what is stated in their quote.
The Federal Resellers hold the contract vehicle for tactical procurement strategies for the OEM’s. Federal resellers spend a lot of time and money submitting request for proposal responses to bid on and winning a specific contract vehicle. This process can take months and in some cases years to win this capability.
Why would the Federal reseller go to this trouble?
Because once a Federal Reseller bids and wins the right to be the facilitator of that procurement method, these companies can sell products or services to the Federal customer. The Federal reseller effectively bridges the gap between the Federal Government and their contractual demands and the OEM and their need for standard commercial terms.
Why is this important to you?
According to the Washington Technology 2017 Top 100 list (washingtontechnology.com/toplists/top-100-lists/2017.aspx) the ten top Federal Resellers revenue from the Federal market was over $4 billion dollars.
An analogy to the importance of a Federal contract vehicle:
Look no further than your wallet. Imagine you only carry an American Express card (and no cash) in your wallet. You go into a nice restaurant to eat a great meal. As you pass by the register you notice that the restaurant accepts MasterCard and Visa, but not American Express. So, you cannot eat at this fine establishment.
This is the same in Federal procurement. Most times an OEM needs to find the correct contract vehicle for the customer to procure your goods and services.
Note: There are other procurement methodologies in which the Federal customer can procure products and services. This is the contract vehicle procurement strategy.
So now that you have a way for your customer to procure your products or services, what is another reason OEM’s need Federal Resellers?
The SECOND reason OEM’s need Federal Resellers:
Leverage Their Sales Resources
I know from experience this is definitely a reason to have Federal resellers in your corner. I have worked at many great companies that have helped me close millions of dollars of business. Once you work with a couple of the reseller sales people and close business, everyone else around them wants to do the same. It can be a difficult task to gain the Federal resellers attention because of all the thousands of products in their catalog to sell. But it can be done, and very successfully. You have to go in with a very distinct plan to attack the Federal territory that you want to begin this campaign with your Federal reseller. The better prepared you are, the more effective you will be in building your tactical pipeline.
When a company enters the Federal market with a new product or service and a new Federally aligned sales force, how can that person have the most effect on revenue quickly?
This is exactly how the Federal reseller can assist the OEM. The Federal reseller can dramatically increase the effectiveness of your Federal sales person on building a tactical pipeline, especially for smaller companies.
Now that you have the contract vehicle understood, the Federal reseller wants to use their contract vehicle to sell more products and services. They have the in-depth knowledge of the procurement processes with their customer, but also how the customer operates. They can help create a specialized marketing campaign to reach their customers. They have direct relationships with the Federal end-users and decisions makers to help open those doors and assist your Federal sales person(s) amplify their efforts in building that pipeline.
The Federal resellers have multiple inside and outside sales persons that can help the OEM penetrate very quickly into their accounts. These companies have been selling into their accounts for years and can assist in validating your capabilities to their customers. This helps leverage their relationships with your products and services gaining that must needed trust factor.
Most Federal resellers act as honest brokers to their customers. They have a perceived impartiality toward any solution or capability, thereby providing their customers with multiple solutions and capabilities. (As a side note, this honest broker status that all great VARs hold is an asset that OEMs need to be willing to use. It is OK for resellers to speak of your competitor’s advantages, as long as they end with your solution being spec’d into the final solution. Let the reseller use all their tools.)
Now that you have the contract vehicle and a tactical pipeline plan in place with the Federal reseller, next comes a very large reason that OEM’s need Federal resellers.
The THIRD reason OEM’s need Federal Resellers:
DELIVERING A COMPLETED SOLUTION
The third reason brings reason one and two together for the Federal customer. The Federal customer may require an “entire” solution, not just your capability. Because they have the contract vehicle, the Federal reseller can combine complete solutions to the customer. Here is an example:
I was working with my DoD customer in selling my software capabilities. The customer’s requirements and the software I was selling were a perfect fit. The customer also needed thousands of new laptops which my software was going to maintain and control. Bring in the Federal reseller.
I partnered with my reseller to deliver both the hardware, which I did not sell, with my software capabilities. As a team we met with the customer, demonstrated the capability on the specific hardware. It was a complete success for the Federal customer, Federal reseller and of course me.
The Federal reseller has all these critical components to allow the OEM to be highly successful in the Federal market.
The FOURTH reason OEM’s need Federal Resellers:
THE CONTRACTING OFFICER
Who and what is the Contracting Officer (a.k.a contracting or KO)?
A Contracting Officer (CO or KO) is a person who can bind the Federal Government of the United States to a contract that is greater than the Micro-Purchase threshold. This is limited to the scope of authority delegated to the Contracting Officer by the head of the agency.
The Contracting Officer is a separate decision maker within the Federal sales process. It may be one of the most important as well. The Federal reseller you choose for any particular opportunity should have a very good relationship with the KO that is processing the requirement through procurement. If a reseller does not have a good relationship with the KO, then you may want to reconsider your choice. One of the key purposes of the Federal reseller you choose is to get this opportunity closed. If they do not know the Contracting Officer, then when difficulties arise in the process, they won’t know who to speak to and/or they won’t have the relationship necessary to affect changes required to close the opportunity in your favor. I am reminded that a Contracting Officer will not specify my product to purchase, but can absolutely affect the outcome in closing the opportunity.
More important factors to know about the Contracting Officer:
- Contracting Officer may not be located with or near the end-user customer.
- Depending upon the contract vehicle, OEMs may not have access to the contract shop.
- Contracting offices are extremely busy with many other requirements other than yours.
- Sometimes even the customer does not have access to the Contracting Officer procuring their requirements.
- There are thousands of contract vehicles.
- The Federal customer you are selling to should determine which contract vehicle may be used to close the opportunity.
This is the part of the Federal sales process that can make forecasting Federal opportunities to companies difficult. I have had so many Federal opportunities forecasted and be delayed because of the contracting processes. Again, it is not the fault of the Contracting Officer, their responsibilities and authority to obligate taxpayer funds is essential in ensuring what is procured follows the Federal Acquisition Regulations. Without this incredibly important process, taxpayer money could be spent without oversight and compliance standards. That does not mean I am happy when my Federal opportunities are with the Contracting Officer and I have no visibility into when something will happen with my opportunity. It is just part of the process we in Federal sales have to ensure we communicate properly to the company.
When entering the Federal market in selling your goods and services, your execution needs to include a Federal reseller plan. They are essential in closing business with your Federal customer. Though there are many other reasons to include the Federal reseller in your plan, these four areas are extremely important.
NEXT ARTICLE: I will be directing my attention to the “Three Ways Original Equipment Manufacturers view Federal Resellers for product sales”. I hope you will join me.
BLOG 8: Three Ways Original Equipment Manufacturers View Federal Resellers for product sales