B-to-B: Ask 4 Questions Before Targeting B-to-G
Most B-to-B catalogers sell to the government, albeit in a passive mode. Using the SmartPay credit card, federal buyers appear on B-to-B buying lists with some regularity. When properly targeted, they can become a significant percentage of any B-to-B cataloger’s business.
The few B-to-B catalogers that are proactive in the B-to-G arena are generally quiet about it. They have no desire to let other catalogers know about this lucrative market segment.
The reasons for targeting the B-to-G market are fairly simple:
- one out of every seven-and-a-half full-time employed adults is a government employee;
- there are more than 86,000 governments in the U.S.;
- the government buys every legitimate business product and service; and
- government spending represents more than 30 percent of the GDP.
Here are four questions to think about before spending time and money targeting B-to-G.
1. How do I start? Ignoring the government market as a major revenue center is no longer an option. In this economy, B-to-B catalogers have to look at any growth areas, and government business is as recession-proof as it gets. In fact, if you analyze your 24-month buyer data, there’s a strong likelihood you’ll find that 2 percent to 5 percent of your customers are government.
This data also will show that government orders tend to be 15 percent to 20 percent larger than B-to-B orders. These orders most likely are placed using a government credit card, such as SmartPay for federal orders, but are still registered as Visa or MasterCard orders in your records. On the federal level, this surpassed $19 billion in fiscal year 2008. The micropurchase level — the level under which no contract is required — is now $3,000.
This isn’t an easy or fast market to enter, but real growth with real profit is doable for companies that sell in both open market environments and via contract.