Sales is sales in any industry, right?
While building relationships, assessing customer needs, and closing deals are common tasks in every sales process, there are definitely differences in approach, especially when it comes to private sector and government contracting sales. And understanding these similarities and differences can be extremely important to whether your firm is growing, shrinking, or getting penalized. Yup, penalized, fined, and potentially more – scary stuff!
Whether you’re hiring a new sales or business development leader, growing your private sector firm into the government space, or vice versa, you’ll need to navigate the differences between the sales processes of each of these industries to make sure you’re doing it right.
Check out the key similarities and differences in the categories below.
Developing Business Relationships
“It’s not what you know but who you know.”
That blanket statement is true in the development of both government contracting and private sector businesses. In both cases, it is highly important to develop a positive relationship with existing and potential clients. Expanding your network of existing and potential clients is beneficial for the improved name recognition, work history, and list of references that comes along with those relationships.
Simply establishing those relationships is not enough though; you will need to regularly maintain each relationship you develop. This includes periodic communications, site visits, phone calls, and even holiday or birthday cards. This will make sure your client relationships remain strong and will protect you from falling out of favor due to unpopularity, inaccessibility, lack of recognition, or other reasons.
But you do have to be extremely careful in how you maintain these business relationships. Relationships within the private sector have a greater amount of latitude in what is allowed. Celebrating a sales agreement with a new client by having a lavish dinner or by enjoying a major sporting event together is perfectly acceptable in the private sector. A move like that in the government contracting world could land you in jail.
Every business developer in the government contracting sector has to be extremely sensitive to local, state, and federal restrictions on business relationships. Kickbacks and bribes are clearly defined and aggressively prosecuted in government contracts. Local “pay-to-play” laws will also dictate limits on the donations you are allowed to make to individual or group political campaigns.
You also have to be careful to avoid the slippery path of prearranging future contracts with your government clients. Relationships with government contacts are developed to improve your win probability but they cannot be used to bypass any applicable bidding laws.
Major changes to decision making personnel can be more pronounced and abrupt in the government contracting world when compared to the private sector. Private sector companies will hire, fire, expand and reduce in a generally fluid processes. These changes can often be foreshadowed by predictable measures such as poor sales, bad executive decisions, or loss of clients.
In government contracting, political shifts in elected officials of the governing body can result in major changes to agencies’ thinking, voting, and hiring processes. Political shifts are often accompanied with changes to appointed officials and key personnel in certain agencies.
Successful business developers in government contracting firms will often develop key relationships on both sides of the aisle while never allowing personal politics to enter their business decisions. This could mean making equal donations or attending fundraisers for both political parties. This will keep you in the good graces of both parties and safeguarded from dramatic or unexpected political swings.
Relationship development will always be crucial to the success of your company, but you have to understand the rules and nuances to be effective.
Differences in Capture Process
The processes of actually capturing a new contract in the private sector vs. in government contracting also have their own wrinkles in which you need to be aware.
The driving factors of developing business relationships, actively searching for new opportunities and submitting successful proposals all remain the same. The major differences come in the size of the sales team involved in capturing new business.
It depends on what’s being sold and the size of the contract, but in the private sector, a single person many times can take a deal from lead to proposal to win. A single sales rep may be responsible for calling prospects, maintaining the relationship, assessing needs, writing the proposal, and closing the deal all by herself.
In government contracting, multiple people may be involved in the various stages of the business development process. For instance, your team might consist of the following members or groups:
- Opportunity Analyst – This person may scour multiple contract databases in search of relevant opportunities to pursue. She may leverage free and paid datasets to identify opportunities with various local, state, and federal agencies that may be of interest.
- Business Development or Networking Representative – This part of your team is responsible for building relationships with buyers, whether that entails phone calls, meetings, networking events, industry days, or all the above. In doing so, these individuals will increase your company’s name recognition while developing new and stronger relationships with key decision making individuals. This rep may also help identify teaming possibilities which are beneficial to the development of your business.
- Capture Manager – Once an opportunity is identified and the decision is made to pursue it, your capture manager will need to assess the client, scope of the project, and your possible competition for the bid. This assessment is critical when they assemble your most competitive team for the project.
- Proposal Team – Your proposal team may include one or multiple detail-oriented individuals who create the proposal for submission. These team members should have a firm understanding of local, state, and federal bidding requirements, a thorough understanding of the potential client’s problems, and the unique ability to communicate the value your company will deliver. They may work on several proposals at a time across varying levels of government and will need to maintain good organization throughout.
Your opportunity analyst will research potential opportunities. Your BD rep will secure new relationships and hand-off potential clients to your capture manager. Your capture manager will focus on these potential clients when identifying opportunities and determining bid and no-bid decisions. Your capture manager will hand-off a potential client, bid opportunity, project team and cost proposal to your proposal writer. The proposal writer is tasked with delivering a formal bid for each project in a complete and timely manner.
The different members of your government contracting business development team will work closely with each other but remain focused on their specific tasks. Cooperation and communication within your properly assembled business development team will give you the best chance of developing your government contracting business.
DIfferences in calculation of PWIN
Calculating your probability of winning a contract for private sector opportunities is very different from the proper way to calculate your win probability in government bids.
In the private sector, PWIN is usually calculated by an arbitrarily pre-assigned percentage based on the sales stage of the prospective contract.
A company might set up seven (7) stages of the sales process into their CRM software and assign a PWIN for each stage. These stages might look something like this:
- Appointment scheduled (20%)
- Opportunity qualified (40%)
- Presentation delivered (60%)
- Proposal created (80%)
- Negotiation (90%)
- Closed Won (100%)
As the opportunity progresses, it is moved along into subsequent deal stages. The assumption is that the further along the opportunity is, the higher the PWIN. This is wrong, and we can write many blog posts about how wrong that is, but we’ll leave it here.
In government contracting, calculating your win probability is achieved by building a holistic, data-driven model which incorporates all of the key factors you have identified and comparing yourself to your competition. The most common factors included in government contracting PWIN are listed below:
- Strength of relationship with the client
- Past performance
- Technical skill
- Project management skill
- Key Personnel
- Cost Competitiveness
Inputs for each of these factors may come from differing sources or methods. Some might be determined internally while others might come from outside sources. However, it is important that each factor is regularly monitored and updated to ensure that your PWIN is the most accurate data-driven calculation possible.
As you can see, the PWIN calculation process is very different between private sector and government contracting opportunities.
Business development for government contracting and private sector sales have similarities and differences. By no means is this a comprehensive list, but these are three of the primary ways government contracting BD differs from private sector sales.
Whether you’re a BD rep who is moving from the private to public sector, or a government contractor who is contemplating selling your products and services to private sector firms, you’ll need to learn how business development and capture is done differently.
Review your company’s situation and how you’ve approached business development in the past. Perhaps you’ve overlooked some of the key differences between government contracting and private sales. Maybe you’ve overestimated or underestimated the effort it takes to achieve sustainable growth. The future growth you bring to your company will depend on all of these factors and an honest self assessment of your victories and failures.
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