Strike While the Fed Dollars are Hot

Every August and September, there is a spike in federal spending. This is the annual “use-it-or-lose-it” period referred to as the “busy season.”

Government agencies (federal, state and local) are allocated specific funds each year. If money is left at the end of the fiscal year, the agency doesn’t get to keep it; the money goes back to the Treasury Department. The federal fiscal year (FY) is Oct. 1 through Sept. 30, while most states are on a July 1 to June 30 fiscal year.

The question then becomes, how does a company go after that end-of-FY “treasure trove?” Here’s where B-to-B catalogers stand to benefit a whole lot more than they do when they target private industry customers. You don’t need a contract to go after government orders of less than $3,000 on the federal level, and somewhat lower for state and local governments.

To get a good understanding of how to best tackle this opportunity, let’s first put the government market in perspective.

● There are more than 86,000 governments in the U.S — federal, state and local.

● These governments represent more than 20 million full-time employees (out of 151 million total, according to the U.S. Census Bureau).

● Their spending represents more than 25 percent of the gross domestic product (GDP).

● Including health care as institutional spending and a part of government spending, total government spending is more than 300 percent of the GDP, according to the institutional list compiling firm MCH Inc.

● In FY 2006, government spending on the SmartPay card, the credit card federal government reps use for purchases, topped $17 billion on more than 26 million transactions. It’s expected to hit $18 billion in FY ’08.

● The average order on a federal credit card runs 15 percent to 20 percent greater than a regular B-to-B order.

● And above all else, governments purchase just about every type of business product and service imaginable.

A Multistep Strategy
Government credit cards (federal, state and local) are designed so frontline managers and employees can get products and services they need quickly. Oftentimes these cards are used in emergency situations. How can you exploit this?

In all of your advertising material, include the GSA SmartPay logo. You can download this from the GSA Web site, www.gsa.gov/smartpay. There are no fees or restrictions for using the logo. Place the logo wherever you post the credit cards you accept.

Plan your circulation strategy around the FYs. For state and local governments, mail more frequently between March and June. For federal mailings, mail at least monthly from June to September.

Many B-to-B catalogers don’t have government segmented in their databases (and no company has identified it completely). So use an outside matching source to identify likely pockets of current government buyers in your database. B-to-B list firms such as MeritDirect and possibly MCH can do this with your data.

Match your data against similar available mailing lists and augment your lists by selecting similar lists to mail. There are pockets of key government influencers on virtually all of the B-to-B magazine files. So, look more closely at the BPA audit statements from the publication lists you already mail and select government buyers from those files.

Develop a portion of your Web site for government buyers. Note how B-to-B cataloger Lab Safety Supply does this (www.lss.com). On its homepage toward the bottom right is a “Resource Centers” section where you can select government. Once you go to the government page, the first thing you see is Lab Safety’s “welcome” to SmartPay cardholders, followed by several reasons to buy from Lab Safety.

Lab Safety doesn’t have a government contract that I know of. Rather, it’s going after government credit card buyers, and the last I checked, it was doing quite well in this area.

If you can swing it, put the SmartPay logo on the cover of your catalog for your government mailings and create a “government edition.” Very little, if anything, has to be done inside the catalog. But since 1990, when I saw the first National AV Supply “Government Edition” catalog, I’ve seen this kind of catalog pull much better than a standard issue.

As your government program grows, train one or more people on your staff to become the in-house experts on “all things government.” While this may seem like a daunting task, it’ll help you grow your program faster and more successfully.

These merely are “tip of the iceberg” approaches to growing the largest B-to-B segment in the world, but they work.

Mark Amtower is the author of “Government Marketing Best Practices.” You can reach him at mark@federaldirect.com.