CDW Thrives in ‘New’ Market

With $1.8 billion public sector sales comprising more than a quarter of its total revenue in 2006, multichannel computer products marketer CDW nevertheless was slow to capitalize on one of its biggest resources. Founded in 1984, CDW didn’t aggressively market to federal employees until 1998, missing out on a market that now represents more than 25 percent of the U.S. gross domestic product and more than 4 percent of the world economy.

At the Amtower Summit on Selling Products to the Government held in Baltimore earlier this month, CDW’s Director of Advertising and Marketing Operations Jim Garlow outlined how his company broke into the government market. Below is a four-step breakdown of how CDW targeted the market and penetrated it successfully.

1. Focus on service. The company created joint sales teams that partnered “inside” sales account managers with field sales executives to focus on customer groups (e.g., Department of Defense, civilian and independent agencies; system integrators and prime contractors; and by state and school districts). The company is fanatical about providing well-informed sales agents for its customers, Garlow said. New hires are subjected to a seven-week training course, dubbed “CDW University,” plus ongoing weekly training on new products. The sales team also is backed by technical experts at the company’s Vernon Hills, Ill., headquarters.

2. Segment-specific marketing. The company targeted print ads in such publications as Government Executive, Washington Technology, GCN, Stars and Stripes, Governing, and Federal Computer Week. It also began publishing its own federal trade magazine, FedTech, to create relationships with its potential customers. Marketing yourself as a source of knowledge in an industry helps you sell in that industry, Garlow said. At CDW the segmentation approach is broken down into four steps:

* Solid value proposition — world-class inventory (more than 200,000 products offered); same-day shipping as long as the order is called in by 5 p.m.; enhanced e-commerce customer information (order status, purchase history, serial number tracking); a highly trained sales team; and competitive pricing via a low-cost structure, efficient distribution and purchasing direct from the manufacturer.

* Customer research. Research your customers so you know how to market to them. Identify the federal and state agencies that could use your product (e.g., transportation, lottery, public works, social services, etc.) and which factors drive each one’s budget (e.g., tax revenue increases, political pressure to increase funding, etc.).

* A focus on quality and service.

* A targeted marketing approach — the more segmentation the better.

3. Prove how your product or service will benefit the government. CDW recognized the government’s need for interoperability in times of natural disasters such as hurricanes, particularly within the criminal justice and public safety agencies’ computer systems. CDW demonstrated how its outdoor wireless system can extend the networks for first responders, providing them easier ways to communicate. Show how your IT solution will help improve citizen services while reducing cost, Garlow said.

4. Evaluate and adjust your metrics. Adjust your marketing vehicle (catalog, direct mail, advertising in trade magazines, etc.) based on the relative performance of each. The niche your product is in can determine the best way to market your product to the government. CDW’s thinking is, if you’re marketing to a city school district in which teachers generally don’t work with IT products frequently, the print catalog may be the route to go. On the other hand, a federal agency that is more IT savvy may be better off receiving an e-mail campaign.

Among other reasons, CDW has attacked the federal government market because the sector will spend upwards of $65 billion on IT products and services this year. The market also remains steady through changing economic times.