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Fred Diamond's Introductory Chapter to Forthcoming 2nd Edition of Amtower Book

Marketing Strategy

Fred Diamond
DIAMOND Marketing

Introduction

I had hired Mark Amtower on three occasions to provide direct marketing assistance for my employers, who were typically some of the largest providers of technology to the public sector markets.  These were companies such as Apple and Compaq. I had come to view Mark as the leading provider of such services in the market. When I learned that his book was finally published, I immediately called Mark to request my complimentary copy. I read it from cover to cover the day I received it.

The book you are about to read covers all of the typical marketing tactics companies can do to get the attention of its government customers. Having spent a good portion of my career with companies with large marketing budgets, I have been able to try most of the tactics discussed in this book. In addition to some monumental successes, I am proud to say that I have been able to achieve limited success with many of the tactics you’ll read about.  At least they were all learning experiences.  Trust me, you can only improve your marketing skills once you have had your senior VP of worldwide sales travel over a thousand miles to make a one-hour presentation….to an empty room at FOSE. It was that exercise that taught me the value of actually sending out invitations to our best customers to meet one of our top executives.

It is the limited successes that I have had that led me to realize that the tactics themselves are generally useless if they are not part of a well-thought out, documented and understood marketing strategy that is well integrated into the company’s sales strategy. Marketing that does not lead to revenue reward, I have come to realize, is a huge waste of time and money.  Marketers need to think in terms of how the tactics will help the company achieve its Federal sales goals in order to be able to say that the marketing elements they deploy are worthwhile.

The first thing you as the marketer need to remember is that the Federal Government is a huge, wide-ranging entity with hundreds of sub-markets. Companies that attempt to market to “the Federal Government” will eventually fail to some degree. The market needs to broken down into logical segments that can be developed to measure success. For starters, that segmentation needs to be at the department level and then down to the agency level, and in some cases, even more segmented.  Plus, the emergence of Homeland Security further draws down the historic defense versus civilian split.  The government customer, like customers in other strong vertical markets such as Education, Healthcare, and Financial, need to be shown that the vendors they work with understand their specific challenges and need to be communicated to as such.

Marketing Strategy Must Align with the Corporation’s Goals

I often get asked if tactic (fill in the blank) is a good way to market a company’s products or services to the Federal government customer. My usual response is “who knows?” Your specific product and service must be marketed to the specific government customer who most likely needs your product or service. Once it’s determined who they are, a sound plan can be developed. Then figuring out which tactics to deploy, many of which are nicely described in this book, become more apparent.

All marketing you do must be tied to the Federal division’s sales goals. Once these goals are understood and published, a sound marketing plan can be achieved. A non-committed plan that throws in random tactics such as some trade show appearances, some ads, and some e-marketing might look interesting and might interest the sales guys, however if it does not tie back to the corporate goals, it will eventually waste the corporation’s dollars.  These goals usually break out into four categories.

Revenue expectations

Every Federal sales division has a yearly number to hit. A small services company may have a $3 million goal of which 75 percent is defense and 25 percent civilian. When I was at Compaq in the mid-1990s, our number went from $18 million in 1991 to over $150 million two years later. However that year, everyone in the division knew that we had to reach $152 million to be successful. We then spent a great deal of time figuring out and understanding which agencies were going to contribute to that number. The marketer needs to own that number as well, in order to craft and implement a plan that will be of value to the business line.

Once the overall number is determined, the team needs to figure out which agencies will contribute purchases to make that number a reality. Marketing helps in this process by understanding agency budgets, competitive pressures in accounts, product applicability and contract opportunities, all of which help prioritize the customer opportunity. For example, if your main competitor has had a lock selling to the Air Force for the past ten years and the customer is unlikely to purchase off of any of your contract vehicles, the Air Force, even though it may have a huge IT budget, will most likely not be a strong customer for you and should receive limited marketing attention. You may need special discipline to not spend your limited dollars marketing there.

Market share and Customer growth expectations

Your marketing plan should be created to help you grow share in agencies that are most likely to purchase your products or services. If you presently own 20 percent of the Army’s budget for your products or services, the marketing plan may need to reflect what it will take to grow a few extra points, or at a minimum, keep the share you have. The plan can also target the agencies you specifically need to grow in, based on the agency’s growth plan and the applicability of your product there.  The percentage of your plan that is directed there might be a reflection of how important it is to win business at that account.

Other Sales and Marketing Goals

In order for your business line to grow, you may need to grow share or start getting business in certain government centers. Department of Defense and Homeland Security are two that many companies need to do business in based on the influence those departments have. Historically companies that have done a lot of civilian agency business will need to branch into the defense segment in order to grow. The targets must be identified and the marketing plan must be built to develop them.

Other Business Goals

Perhaps a merger may be on the horizon or other major financial development such as acquisition or product line divestiture. In order for any of these events to happen, customer acquisition may be needed to show a stronger business. Easier customers to attain may need to be targeted in this year’s plan, as compared to those with longer sales cycles.

Integrating Marketing into the Sales Process

In most cases, when selling to the government, the sales plan will drive the tactical marketing plan.  The marketing team can provide value in the sales planning effort by understanding and communicating market trends. This entails a detailed understanding by the marketer of a number of key unique factors in this segment such as procurement reform; technology initiatives such as wireless, security, and consolidation; and agency technology initiatives.  By developing a complete and comprehensive understanding and how, why, and when Federal Government customers buy, the marketer can now develop a tactical marketing plan that reflects the highest quality and least cost road to revenue.

Here are five general rules to follow, to ensure that your strategic plan is on track, well communicated across the organization, and ready to be implemented:

Starting with the tactics will doom the plan to failure.

The plan must be tied to the corporate mission and must holistically consider all of what is discussed above.  Webinars, for example, may be a great way to communicate a message and bring people together in a cost-effective, easy to monitor way.  But in order to be effective, there must be proof that the decision makers in the agencies you are targeting would actually attend them or refer to them after the fact. Plus, if the right people do attend, are your sales people equipped to follow up accordingly?

Everyday, new tactical elements are being introduced to the market. On the surface, most can make sense and seem to be worthwhile. The marketer needs to look at each and determine if this particular marketing element will help the company accelerate its path to its revenue, market share, and other business goals.  Will the right number of customers at the agencies we are targeting attend this event? Will it have an impact on the business we are trying to achieve? Can this particular event be leveraged to help accelerate the sales process with the specific people we are trying to influence?

Frequently, marketers will look at the specific activity and judge it as a standalone event. Did the event go well? Was the coffee fresh? Did we have enough people in the seats? Did the direct mail piece go out on time? Was green the right color to use, or should we have gone with orange? While it is critical to ensure excellence in execution, the key questions that need to be asked should concern how effective was the activity in accelerating sales into the specific accounts the company is targeting.

Marketing is a process that begins with offering conception and ends with a specific exit in mind.

Historically in these markets, sales lead the way and marketing needs to prove its worth. This is often because most public sector business organizations are run by successful sales people or strong business development executives who rose up the ranks or came in at a high level after being successful elsewhere. Fair enough. Thus, as part of the strategic initiatives, the marketing organization needs to get the following points across to the entire organization.

Marketing is not just giveaways. Often, the marketing value is determined by how cool the giveaways (also known as freebies, tchochkes, or gifts) are. I have attended meetings where pens, mugs, squeeze balls, and portfolios have been debated more heatedly than Kennedy and team must have discussed the Bay of Pigs.  While giveaways might play a role in giving the sales rep more confidence in meetings with potential customers, if all the marketing team is looked for is success in squeeze ball accommodation, the strategic plan is doomed for failure.

Marketing is not just Marketing Communications. The marketing team needs to ensure that the sales program is replete with the collateral that will help accelerate the sales process.  However, the additional value the team provides come from demonstrating market knowledge, trend understanding, and analyst direction, so that the communications materials contain content that adequately differentiates the company from the competition.

Marketing is not just targeting. Marketing is about not only knowing who to target but how to get to the target(s) as well. The increased facility security we have seen the past few years has made it difficult to physically get into most government buildings. However, marketers still need to figure out ways to get their messages into the hands of the important government customers.  There are many ways to get through to government customers; marketers need to be expert in knowing the processes to get to them.

Marketing is not just the brand or the logo. Here’s an important message. Forget about your company’s logo. It’s fine. By obsessing over elements such as this, the major need to put marketing programs in place that drive sales will be overshadowed.

Aggressively tie “marketing” to sales

Sergio Zyman, former chief marketing officer at Coca-Cola, said that Marketing is about acquiring new customers and growing the ones you have. The best way to achieve this is by aggressively tying the strategic marketing program to the sales plan.  To properly develop the right strategic marketing plan for the company, marketers must be downright rude when it comes to understanding the sales goals. Marketers that do not sit in on weekly sales meetings, account reviews, pipeline reviews, and contract maximization meetings are doomed for failure. Even if there’s not a welcomed seat at the table, feel free to quietly sit a row behind everyone else and take meticulous notes. The marketing plan must be directed towards where the business is and where it is going.  There is no better way to learn this than by attending all of the company’s sales meetings.

The marketing team must be responsible for closing the historic divide that exists between sales and marketing.  Three key ways to achieve this are by demonstrating an understanding of the market, knowing how and why specific customers are buying, and what the needs of the customers are.  Marketers must be armed with detailed reports of customer buying habits, records, and preferences. Only by demonstrating an understanding of how the business of selling IT to the government happens will Marketing be able to truly add value to the sales process.

If your marketing activity will not generate customer behavior (buying), re-prioritize. It’s fine to test activities; however the only activities that should be tested are those that have a reasonable chance of accelerating the sales process.  Marketers need to be resistant to attempt marketing activities that sound interesting just because they want to try them out. Every activity must be grounded in the responsibility that they are about driving sales.

Formalize your networking as a marketing tactic.  As marketers look beyond the traditional ways to market (advertising, direct mail, trade shows, etc.), networking and relationship influence has emerged as a leading way to develop business. There are tons of networking opportunities in this market and your company is probably engaged in many of them already. The marketer needs to identify the right ones, based on the sales plan, and figure out how to maximize.

Ensure domain expertise in verticals. To add any value to the company’s mission, the marketing team needs to intimately understand the business of their government customers so that the marketing materials speak directly to them.  What does the Defense Logistics Agency do? What are the key procurement centers for each agency? How has the Homeland Security roll up affected buying in the government?  Do the agencies that deal with healthcare have the same challenges as their private sector counterparts?  It’s not enough to simply produce interesting materials, events and ads.

The marketing team needs to be a fulcrum of industry data, trend analysis, and direction.

Ensure that everyone’s “marketing”

The strategic marketing plan needs to be owned by everyone in the organization, not just the marketing team.  Its value needs to be perceived by sales management, front line sales, sales engineering, professional services, and contract management.  It needs to be widely communicated, understood, and developed so that the organization can latch onto it and take ownership of it.  The only way that occurs is by having a plan that is logical, strategic, consistent, and well-developed.

Once the marketing team has received sufficient input from sales management, sales, and program management, it needs to go out and develop a sound plan that will maximize opportunities in the targeted and prioritized government entities.  The marketing team should know if there are specific tactics, based on how the customer buys the products they sell, that would be valuable to the plan.  Once the plan has been drafted, developed, and debated, it needs to receive the buy in from the executive team and sales management. In some cases, accommodations may need to be made to sales management for certain activities. Even if those particular tactics may not make sense in the overall scheme of the plan, don’t worry about it. If it takes certain compromises to get your overall plan approved, let it happen.

Now, the plan needs buy in from sales. Nothing will damage a Federal marketing plan more than subordination by sales reps who do not feel that the plan is reflective of their business. The marketer needs to ensure that the logic behind the plan is crisp, well documented, and confidently communicated. Many Federal sales reps have been selling into this market for years, often to the same accounts. Thus, they feel that they know what it takes to get business…and they’re probably justified in this. However, their views are usually myopic and not considerate of the overall goals of the organization.  The communication of the plan needs to show how it will help the entire organization reach its lofty revenue, market share, and other goals while at the same time help the front line sales team accelerate and grow their business.

The marketing team needs to get everyone in the organization on board with the logic behind the plan.  The best way to do this is by implementing a crisp, well-developed communications strategy that ensures that everyone knows why the elements of the plan have been developed. The marketing team needs to know this reasoning down cold and be able to confidently describe why the plan contains the elements that it does.  Everyone from the division head to the receptionist needs to be on board with the plan and confident in its ability to help the division reach its goals.

The marketing team also needs to be creative in identifying leverage and partnering opportunities.  Using “other people’s money” needs to be a mantra across the marketing team.

Market things of value to those who need them

For large, well-established companies, the odds are that the products they are bringing to market are highly-functioning, complete product offerings.  The HPs, Dells, and Oracles of the world have been servicing the market with products that are sound, available, and well-developed. That cannot be said for every supplier to the market, particularly early stage companies with one or two products.  While the Government is still the largest single purchaser of technology products in the world, it is not a dumping ground for products that are not welcomed elsewhere.  Government buyers are interested in well-known, brand name offerings.  While lowest price still frequently wins deals, it often comes down to the cheapest HP product as compared to HP versus no-name.

A marketing strategy based around dumping mediocre products into the Government will not work. Government customers have access to the same data sources corporate buyers have, so they know which products are better than others. They know which manufacturers have consistently achieved high quality ratings and they often know what they need. While there are many places within the government that vendors can drive the technology, companies marketing to the Government should not underestimate the customer’s ability.  If what you’re bringing to market is not ready for primetime, acknowledge what that means. Spend more time in development or perhaps look into the SBIR programs.  But you should not waste your time trying to offload bad products into the Government market just because it’s the largest technology market around. This is a strategy that will not succeed. The government is not a test bed for new products.

Teamed with sales, the marketing team needs to work hard to figure out which Government customers really need your offering.  This often happens during the sales account review process. The marketer needs to ascertain the most likely buyers and develop the strategic marketing plan to grow business there.

Strategic Positioning and Target Marketing

Positioning is critical when developing the plan.  When developing the strategic marketing plan, a starting point is to figure out where the company’s offerings are positioned in this market specifically.  The tactical elements of the marketing plan need to be developed only after careful consideration of market opportunities and identification of most likely customers. Positioning allows the marketer to figure out what the customer is looking for which then presents the opportunity for specific communication.  At the end of the day, the company needs to clearly communicate why it offers a different value proposition than any of the many competitors.

Here are three steps the marketer should do to understand where the company fits compared to the competition in the Government accounts.  Each of these steps must be done specifically with Government customers in mind.  Corporate customers have different buying priorities and view their suppliers differently. It’s also a good idea to do the positioning with the various types of government customers in the buying process in mind. This may include procurement, IT management, program management, and IT executives, such as the chief information officer (CIO) where appropriate.

  • Step 1: Make a list of all significant competitors in the account and write a sentence defining their position in the market.
  • Step 2: Next define the current position of your company, product or service, as it really exists in the minds of Government consumers.
  • Step 3: Identify a specific attribute about the product that can differentiate it from the competition in a way that some consumers will find desirable.

The results of the positioning exercise should be reviewed and debated by the stakeholders.  Since the positioning exercise will lead to the basis of the communication plan, it is a critical step that must be prioritized and taken very seriously. When marketers bring sales into these exercises, the credibility increases significantly.

Target Marketing

This goes to the heart of who really are the organization’s customers. The Federal Government is not one big monolithic entity that should get only one message from your company. It is a complex market made up of numerous verticals including healthcare, customer service, finance, and operations.  And of course, there are the usual delineations, such as military, civilian and intelligence.  The government agencies that deal with healthcare (Health and Human Services, Veteran’s Administration, others) require a different message than do the agencies that deal with warfare and economics.  Once you figure out which customer is most likely to be a true customer for your product lines, you will be able to focus clearly on them and eliminate the candidates that will not buy from you, at least not in quantities that require focus.

One of the great things about marketing to the Federal Government is that there are great public and private data sources. The Government itself publishes agency budget information which is available for all citizens to access. There are numerous companies which distill this information and make it more readily available for the companies pursuing this market.  For an investment of a few thousand dollars, companies can have reports in their hands that detail each agency’s budget and where the money will be spent. Savvy marketers can use this data as a starting point to figure out where their efforts should go in the coming year.

Other elements of research to consider are one-to-one interviews with customers. Many government customers like to discuss their IT needs and buying process. While government customers usually do not want to show favoritism to one vendor over another, marketers can often find government buyers willing to discuss why they use certain technology over another and what goes into making those buying decisions. To develop a sound strategic plan, members of the marketing team must frequently meet with customers to understand why they make buying decisions. Sometimes the marketing team may encounter challenges from sales that are cautious of people meeting with their customers. This should be a non-factor in the marketing process. Marketers need to speak with customers on a regular basis or else the plan will become invalid.

There are other questions marketers to the Government must consider when developing the plan.  How big is the estimated market for your particular product or service in the agencies you are targeting? Some of the companies that track market size often give general numbers for a particular technology for the overall market. Marketers then need to extrapolate those numbers down to figure out how much will be spent for the technology by targeted agency to determine the amount of marketing investment that may be required. In other words, each agency must be treated as an independent entity to determine the marketing effort that must be made to help the company achieve its goals. Part of this effort goes into determining what the true addressable market is. While a market research firm may say that a particular market is a $1 billion market, marketers should be able to determine which vendors will get access to that $1 billion and what their company should be able to get as well.

Summary

There are many creative and high-impact tactics available to marketers to get closer to Federal Government information technology and services buyers. Any marketer could easily pull together a program that offers the company’s sales teams a cadre of activities that would help accelerate the sales process.  However, in order to truly pull together a strategic plan that will help the organization reach its goals, revenue, market share, and other sales and marketing goals must be implicitly understand and considered while developing the plan.

Fred Diamond’s mantra, “Marketing that does not lead to revenue reward is a HUGE waste of time and money” has been adopted by sales leaders around the world. He can be reached at fdiamond@freddiamond.com or www.freddiamond.com

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