While the calendar says early autumn, businesses are already projecting year-end results, many with the hope of making interim course corrections to end 2016 in as positive manner as possible. That’s because this year, three issues created roadblocks to success and low return-on-investment (ROI), with even the most experienced businesspeople: These issues involve professional relationships, business development processes and diversification.
Issue No. 1: Assuming Relationships Are in Good Shape
Both the private sector and government contracting markets are relationship-based. The basis of this business fact is that, essentially, people do business with people they know, like and trust; however, maintaining a relationship takes effort and communication, and most businesspeople are primarily focused on the current project or problem. The reality is that no effort is expended to maintain a new or existing relationship.
It’s human nature that, once a business relationship is in place with a new customer, the honeymoon phase kicks in. This phase is where the customer and the vendor are very happy with their choices, and imagine only good results; but, as the work commences and hurdles are experienced, it becomes difficult for either party to acknowledge limitations in expertise, poor customer service or even outright failures. The customer does not want conflict, and the vendor wants to believe that everything is on track. Many vendors end up failing to address the negative issues directly with the client and instead ignore the challenges, all the while remembering the feel-good honeymoon phase. The customer, on the other hand, begins to regret her choice and resentment builds because she feels that the vendor is ignoring the problems with the project.
All projects will have hurdles. It is the subsequent communication between vendor and client that will determine if reasonable effort is expended to right the wrongs, weaken or strengthen the relationship and, ultimately, if repeat business will occur.
Assuming that “no news is good news” paves the path to failure — while a scheduled, disciplined, proactive and ongoing customer service feedback process that mandates two-way communication will set the stage for trust and respect — the result will be increased ROI and revenues.
Issue No. 2: Failing to Commit to Year-Round Business Development Processes
The majority of companies have no defined, trackable or measureable corporate business development process with clear timelines, assigned tasks and effective tools. Instead, the standard is to rely on the sales team to chase prospects and RFPs.
In the federal market, the term “capture” is generally used; however, this is exactly why there are so many failures. True capture is absolutely opportunity-specific and actually assumes the company’s business development process is already in place, setting the foundation of a strong corporate relationship.
When successful, capture takes place after the corporate message is heard, believed and trusted by the customer. This year, capture managers are seeing their win rates drop, because companies have ignored the critical first step: disciplined, effective corporate business development.
Too often, large, mid-sized and small companies have relied only on long-standing relationships to keep winning business when contracts are re-competed. However, three issues are converging to create a situation where the previous awardee actually has less chance of winning. These incumbent challenges are higher labor rates, aggressive small business goals and decision-makers with whom past relationships existed retiring in droves. This triple-threat can only be addressed with a proactive business development process aggressively counterbalancing those challenges.
Building a strong marketing and sales culture demands an ongoing, year-round, measurable corporate business development plan and process. However, in the age of operating lean with either too few employees or employees not trained in effective business development processes, it is rare for companies to incorporate a disciplined, well-thought-out and trackable sales and marketing plan.
These are the companies seeing remarkable results and a high ROI. The main goals of such a corporate plan are to educate the prospects of the inherent value of the company’s services and products, the value they add to the targeted client and the differentiators that set them apart from the competition.
This process then effectively builds a strong foundation for the business development team to prioritize target opportunities, and focus time and effort, on the short list worthy of the capture process. The result of a well-thought-out business development strategy is a higher win rate and a financially strong year-end.
Issue No. 3: Not Diversifying Aggressively
Diversification is a key watch word for every government contractor. It is no longer wise to focus all of one’s efforts going deep into only one agency, and this is especially an issue in the intelligence community.
However, diversification is not just client-centric, as it also impacts products and services, as well as geography. Successful contractors are diversifying now by strategically broadening their services and products range, and by exploring a wider geography with existing clients. This strategic multi-prong diversification leverages current client relationships and capabilities to increase sales and profit margins in as short a time as possible.
As one evaluates sales and revenues three quarters through the calendar year, there is still time for an effective course correction. The challenge is to immediately address these top three issues and create an aggressive written, measurable, trackable plan to improve revenues and improve ROI. Setting up a strategic, disciplined business development plan and process also will have long-term benefits well into the coming year.
Gloria Larkin is president of TargetGov, in Linthicum, and is a national expert in business development in the government markets. Visit www.targetgov.com or call toll-free 1-866-579-1346 for more information.