Key Statistics B-to-B Catalogers Ought to Know

The attraction of the business-to-government (B-to-G) market for B-to-B catalogers is rising. Though some catalogers have experienced little success, others have had tremendous growth in this market even without those hard-to-come-by government contracts. The two keys are education and perseverance.

All levels of government (federal, state, local, school districts) buy every type of legitimate business product or service imaginable. Over the years, many catalogers that have grown successful government-business units have done so even without a government contract. Some of these mailers are very significant players in their respective niches. Consider the following stats and factors:

1. GSA SmartPay program. Formerly the IMPAC program, the GSA SmartPay credit card is a Visa or MasterCard used by federal employees for small purchases. Until recently, the “micro-purchase” threshold (the level at which a card could be used for any business-related purchase — even from vendors with no contracts) was $2,500. That level recently was raised to $3,000.

For B-to-B catalogers, this means that if your catalog reaches a federal office, you have every chance of getting orders for up to $2,999.99 and being paid immediately via credit card.

Research I’ve conducted over the past 15 years with more than 100 B-to-B catalogs shows that the average order size from a federal buyer averages 15 to 20 percent more than a traditional B-to-B order.

The fiscal year 2007 year-to-date statistics for the SmartPay program are as follows:

* Total spent year to date is 3.5 percent ahead of last year. If this holds, I predict sales of $18.4 billion, up by roughly 3 percent;

* The total number of transactions is down by more than 40,000 per month over the previous fiscal year;

* The number of cardholders is down 7,000 over the same time last year; and

* The average order size is up to $759.23, up almost $60 over the previous fiscal year.

State and local governments also use credit cards for small purchases, though there are no known usage statistics available. Considering how many state and local governments there are, however, you can assume you’re dealing in the tens of billions. Even guessing conservatively, state and local government credit card spending is twice that of the Fed’s. We’re talking $54 billion with 3 percent annual growth.

2. Actual number of governments. There are more than 88,000 governments in the U.S., and that’s counting both the federal government as one and each state as one. Here are the others:

* 3,034 counties;

* 19,429 municipalities;

* 16,504 townships;

* 35,052 special district governments;

* 13,506 school districts;

* 512 Native-American nations;

* District of Columbia; and

* 6 U.S. territories.

Total: 88,095

3. The employment statistics. According to the U.S. Census Bureau (www.census.gov), as of the end of 2006 there were 151 million full-time employees in the U.S. Of these, more than 20 million were government employees, not including uniformed military personnel. More than one in eight full-time employees in the U.S. works for some level of government.

4. Other data. Some data that’s been out there, but not verified: Fifteen percent of all dollars spent in the world are spent in or by the U.S. We know from the Census Bureau that government (federal, state and local) spending in the U.S. represents more than 25 percent of the gross domestic product (GDP).

So, if the world statistic is accurate, based on Census Bureau statistics, almost 1.5 percent of the spending in the world is by the U.S. federal government. This means that Uncle Sam isn’t simply Fortune One, but Global One.

Research I’ve conducted with B-to-B list firm MCH indicates that if you replace “sales” with “revenue,” more than half of the Fortune 100 would be some level of government, likely the same for the Fortune 1,000 list.
What This Means ...
B-to-G spending represents more than 25 percent of the total U.S. economy. More than $54 billion annually is spent by government employees (federal, state and local) via credit cards and often with no contract required.

We also know that government credit card usage has grown every year since the program was deployed (on the federal side) in 1989. That all adds up to a no-brainer: If you’ve ever thought of tapping into the B-to-G market, there’s never been a better time to try it.

Mark Amtower is a B-to-G consultant based in Highland, Md. Each November, he produces the Amtower Summit on Selling Products to the Government. You can reach him at mark@federaldirect.net.

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