Executive Conversation recently visited with Dale Colbert, Procurement Unit Manager for the State of Washington, who is responsible for developing and managing a range of statewide contracts. We spoke with Dale about how government entities make purchase decisions.
Q: What’s different about selling to a government entity compared to a business?
A: First, it’s incorrect to believe that government entities can just make a purchase, like a private enterprise. Unless the purchase price is very small, purchases go through a bid exercise. As a result, sellers should view early meetings as an opportunity to initiate a conversation around something that could begin the contract process, such as informing their account of new market developments. In my experience, many sellers go for a PO to quickly, when making an immediate sale is often not a practical objective.
Q: How can sales professionals deliver more value to their government accounts?
A: Government entities are spread very thinly today. Often a small number of individuals have responsibility for a wide range of areas. For example, today I’m working on contracts pertaining to debt collections, motor vehicle emissions and recycled lighting. With just a few people managing hundreds of contracts, chances are low those individuals are going to have expertise across the board. Recognizing that government buyers are dependent on vendors and people in the market, sellers can add value by helping their customers avoid mistakes, recognize market changes, and anticipate coming market changes.
Q: What single thing can a seller do to best establish their credibility with you?
A: Demonstrating that they understand how government buys goods and services. Purchases are probably going to have to go through a process; it’s not a relationship sale. Also, some sellers think that applying more pressure to close a deal is somehow helpful, which it isn’t. At executive levels, we’re interested in making an intelligent purchase.
Q: A ‘contracting process’ suggests a long sales cycle, how can this be shortened?
A: Those who take the time to come in and share ideas have an opportunity to influence the resulting contracting process, and the way the market is evaluated before going to bid. When the result could be securing a statewide contract for something which can confer a really big opportunity, it’s worth the effort.
Q: What metrics do you consider when you’re evaluating purchase decisions?
A: The idea of performance is a fairly new one for government, because it behaves so differently than the commercial sector. For example, while a retailer may look at sales per square foot or gross margin, those metrics have no meaning in government. The key metric I would advise sellers to focus on is ‘ease of adoption’. Nearly everything in a government entity is hard, hard is the base level and it goes up from there.
The other key performance metric is cost savings. Did you save any money in the process; was there a net improvement in how taxpayer money was used? This can be tough to measure. Take people costs, such as FTEs committed to completing the project. In government, just because a project uses fewer FTEs, those costs don’t necessarily go away. The individuals may end up working elsewhere on some other project begging the question did we really save any money?
Q: If you could swap roles and become the seller, how would you approach selling to government accounts?
A: If I suddenly found myself as a private guy selling to government, I would begin by researching if my customers are currently using what I’m selling. If those entities are using my products, do they have a contract in place? If so, when is the contract next due for rebid? Knowing that information would dictate when and how I would engage. I would want to time my engagement when it’s time for rebid, when the matter is on my customer’s mind as well, not in the middle of a contract when the customer can’t do anything about it.