As we geared up to attend the ICMA conference this year in Columbus, OH, we did a quick review of the companies in the expo this year. There were almost 200 suppliers on the floor, offering their wares – from concrete cutting services to tax advisory to (of course!) software.
As expected, most of these expo participants run their businesses by working almost exclusively with government customers, especially in the software space. It’s a special kind of customer, with idiosyncratic needs and customs, not easily served by a generalist firm when it comes to application software. Why is that? What does it take to be successful at sales, as a govtech company?
Request For Patience
When speaking to government customers, what is immediately apparent is how different the sales motion is vs. the private sector. The usage of RFP processes is perhaps the most striking: most of the time, RFPs are a must above a threshold amount spent (much lower than in the commercial segment), which means that sales professionals targeting government buyers need to be skilled in tracking and responding to these. No wonder databases such as GovWin IQ are so popular!
If a salesperson learns of an RFP for a software product from one of these services, it might be too late. Helping shape or influence an RFP before it goes out (to match your product specs) is a tried and tested technique in enterprise sales and govtech is no different. What is likely different is the timeline: sales cycles in government are notoriously long, at 9-12+ months, due to a more rigid budgeting and approval process.
This is why the likes of AWS and WorkDay have separate government selling teams. They’ve probably found out the hard way that responding to public sector RFPs is a skill in and of itself, so poaching the generalist account executive from Azure doesn’t do the trick.
Selling to the Government Next Door
If we look beneath the surface of the RFP process, something else catches the eye, namely reference-ability. Public administrators are collaborative vs. competitive most of the time, and tend to have strong networks in their field. This is why we see govtech products that have a core presence in a local area: it’s not just that the state regulatory context is the same, it’s also the "gossip" network! For example, Edmunds Govtech is known for having quite a few customers in their native state of New Jersey. I’m fairly certain that a handful of local entities used them first for their financial management software needs, then the word spread to the neighbors.
This is not something we see in the private sector: if Delta finds an app that allows it to schedule ground crew more efficiently, saving them say $50 million, it’s unlikely that the CEO of Delta would run to the CEO of United Airlines to suggest they implement the same system. There isn’t much to gain from helping a competitor get better, the same way that non-competitive government entities try to help each other out.
You could definitely see this dynamic at the ICMA conference: there is a lot of best practices sharing, and there are associations for various government functions at both the state and the whole country level. Makes for a very nice, relaxed atmosphere at such events, which I'm sure we'll enjoy again sometime soon.