By Kevin Ruef, below
Being able to successfully close government contracts successfully can be a game changer for SaaS organizations. Government agencies often structure their contracts to last for at least a couple of years and can provide a significant source of stable revenue over time. However, navigating the several stages of Request For Proposal (RFP) bids and the subsequent negations that follow isn’t always easy. Because procurement processes often become more complicated in B2G sectors, it’s important to find ways to simplify them. This involves ensuring that all sales pitches provide a win-win situation for both parties.
Laying the Foundation for Success
Negotiation stages actually start happening well before price points are discussed. Building the right foundation is critical to help you establish the credibility your brand will need to move through the procurement process.
You can start this process by taking time to research local government agencies and start better understanding their needs. It’s important to take into consideration what their mission statements are as well as any high-level priorities they may have when securing new products and services. This could be sourcing more cloud-enabled public safety solutions or identifying more cost-effective methods for running their operations.
Once you get a better feel for what a government organization’s needs are, you’ll need to compare them against your own. Think about your level of flexibility and how much wiggle room you’ll be able to afford if and when negotiations take place. Make sure that if price points need to be lowered you’ll still be able to offer the right level of quality and value in your products and services.
Building Relationships and Communication Strategies
Preestablished relationships play an important role in sales negotiations. Regardless of how great your product is, there needs to be a connection that’s established between the buyer and the vendor to help negotiations go more smoothly.
Effective communication is critical to this process. This includes actively listening to procurement specialists’ concerns or needs rather than listing as many product features as possible. When in meetings or conference calls, be sure to pay attention to everything that’s being said (and sometimes not said).
Don’t be afraid to ask important clarifying questions as well. This shows you value the input of others and helps you to better prepare your proposals so that they’re in alignment with their requirements. Taking this approach helps you to build stronger connections and can give you more opportunities to progress further in negotiations.
Identifying and Addressing Key Negotiation Points
Unlike when selling SaaS products into the private sector, there are often a number of different negotiation points when selling to government agencies. Many times this can include separate discussions related to pricing, deliverable types, timelines, and any service level agreements.
In most cases one or more of these variables will be easier than others to get through. However, it’s important to consider ahead of time where there might be harder roadblocks to get past and think proactively about how different ways you might be able to navigate them together.
For example, if pricing is a major concern for the agency, you might want to consider putting together some tiered service packages that you don’t normally support. This could allow you, the agency, to agree on certain elements that are worth sacrificing to make their solution more affordable. In other situations, you might want to consider offering a phased implementation, spreading the cost over multiple budget cycles.
The key is to anticipate these types of discussions coming up so that you’re not caught off guard when negotiations turn in that direction.
Navigating the Negotiation Process Effectively
Knowing how to approach the actual negotiation process is important to make sure both parties feel like they’ve walked away with a good deal. Here are some tips you can follow to help keep your negotiations productive:
- Establish a Clear Agenda – Before the meeting, you’ll want to document some key talking points you want to cover and send it to all participants. This will help both parties to properly prepare any questions or points they want to make and maximize the value of the conversation.
- Maintain a Timeline – All procurement teams have a lot on their plate. This is why it’s important to value the time they’re giving you to discuss potential partnerships. Be sure to set appropriate timelines during negotiations and adhere to them. This not only helps to show your professionalism but will also help to keep the momentum of discussions going.
- Remain Flexible – Government agencies want vendors they can work with long-term, especially when it comes to improving their dispatch initiatives. As their needs change over time, it’s important that they can count on a certain amount of flexibility from their partners. Be sure to show that you’re willing to adjust your offerings to a certain extent and willing to compromise in different areas.
Contract Drafting and Review
The contractual stage of closing new B2G deals is critical to get right. This will ensure that the actual agreement you’re entering accurately reflects the negotiated terms you’ve been discussing. Be sure to draft clear and unambiguous language in any documents you present when laying out any relevant details.
In most cases, it’s a good idea to have a legal team review any contracts you’re organizing to identify any potential risks your business may be taking on. If any clauses raise some concern, be sure to address ambiguities before signing. Make sure you understand all terms and conditions, including payment schedules and termination stipulations, before you sign.
Take Steps to Improve Your Negotiation Skills
All successful negotiations begin and end with finding common ground. When trying to close new business opportunities in the B2G sector, this is even more critical. By following the best practices discussed, you improve your chances for sales success and continue to build longer-lasting business relationships.
Kevin Ruef co-founded 10-8 Systems after exceeding multiple companies’ sales records (both domestically and internationally). With more than a decade in sales, his experience ranges from B2B, B2G, and B2C. Since the company’s start in 2019, Kevin has been responsible for business development, strategic partnerships, and business operations.
