The Down Side to Right-Sizing in the Public Sector
7 minutes

The Down Side to Right-Sizing in the Public Sector

March 31, 2023

In today’s market, with budget uncertainty and a shaky economic environment, private enterprises might respond by pulling back, or right-sizing. However, the public sector is a completely different landscape. Opportunity abounds and counts for one-third of the US GDP. Just a few public sector wins can completely change the outlook for entire organizations. With stakes this high, it’s understandable that some may be focused on right-sizing to minimize risk. However, that tunnel vision means missed gems of possibility and growth along the way.

In a recent GovExec webinar, “The Down Side to Right-Sizing in the Public Sector,” we gathered our team of experts to discuss how right-sizing can end up hurting organizations and their internal and external partnerships. Panelists discussed alternative plans of action to capitalize on public sector opportunities and their best advice to win. Participants in this discussion were Nick Wakeman, Editor-in-Chief of Washington Technology; Ellory Monks, Executive Vice President and Co-founder of The Atlas; Paige Elmore, Head of Customer Success of GovTribe; and Andrew Werner, Group Publisher of Federal Brands at GovExec.

Marketers who cut spending risk losing 15% of their revenue during a recession, according to EIN Presswire.

EIN Presswire cites the “ROI Genome Intelligence Report – The Rules of Recession-Proofing” by Analytic Partners, which found that “60% of brands that increased their media investment during the last recession saw ROI improvements, according to analyses of hundreds of billions in marketing spend. Brands that increased paid advertising also saw a 17% rise in incremental sales, while those who slashed spend risked losing 15% of their business to competitors who boosted theirs.” With all the funding currently available, some of it once-in-a-generation, can you afford to right-size? Mike Menkes, SVP at Analytic Partners, said, “The best way to get through a possible recession and prosper on the other side of it is to think long term by investing in your brand and your relationships with customers.

How does the public sector differ from the private sector in times of economic uncertainty?

Public sector is unlike any other enterprise vertical.

In state and local government, spending is often countercyclical during economic downturns. While the private sector is pulling back on spending, this is often when the public sector is ramping up spending. There are cuts across the board in private sector technology, but those cuts are happening at the same time that state and local governments are seeing once-in-a-generation funding, including $1.2 trillion from IIJA alone.

One of the most worrisome trends that Ellory Monks sees is that some of these cuts are happening indiscriminately. A client’s B2B business might be suffering, but there is enormous opportunity in the public sector, particularly state and local. Monks said that companies who make these cuts won’t have the resources they need to take advantage of the funding.

In the federal market, Paige Elmore is seeing companies get more strategic about engaging the public sector, like reaching out about specific Top 20 Opportunities, or wondering what top 10 areas they should focus on. They’re seeking to narrow their purview to opportunities that are applicable to their skillsets, capabilities, and past performance.

Elmore stated that government contractors and vendors are losing resources to make these opportunities happen. “There’s 10,300 something open opportunities this minute, with more added every 15 minutes,” said Elmore. (Federal Agencies are also using GovTribe to make sure they find the right vendors with the right capabilities and diverse portfolios.) The key is to be strategic and smart about pursuits. Using data and intelligence to work more efficiently is crucial.

How is right-sizing impacting key partnerships and company ecosystems in a relationship-dependant market?

While B2G companies may be hurt by macrotrends in the private sector, particularly with their technology partners, there are also opportunities for these companies. Nick Wakeman said government contractors can pick up people who have been laid off, but also leverage what’s happening in the public sector to hire qualified candidates; showcasing the stability of B2G as opposed to B2B is a great incentive.

However, with layoffs comes the loss of institutional knowledge. Wakeman said that while he hasn’t seen a major impact at the moment, he believes he will as the year moves forward. Regardless of macrotrends in the private sector, it’s difficult to hire people in the public sector with the right skills. For positions like cybersecurity, cloud migration, and IT modernization, the Primes of federal contracts are looking for partner organizations that can fill some of the gaps that they have themselves. Also, since the pandemic, companies are pulling away from partner ecosystems and building them internally in order to protect their supply chain. But even throughout these obstacles, Wakeman has not seen an effect on the amount of funding flowing through the federal government.

Frankly, now is the best time to partner with the government if not only for the security of your investment. In the article, “Recent Market Volatility Shows Value of Government Funding, DOD Official Says” Nextgov reported on the importance of government partnerships in today’s environment. Market volatility caused by the collapses of Silicon Valley Bank and New York-based Signature Bank demonstrated “the value of government partnerships and the value of government-guaranteed financing when it comes to the things that are vital to national security,” said Jason Rathje, head of the Pentagon’s Office of Strategic Capital (OSC). Particularly in terms of innovative technologies, Rathje noted that it is a federal government priority to “support and guarantee financing in innovative new ways that allow us to advance these critical technology areas.” OSC is even partnering with the Small Business Administration for the Small Business Investment Company Critical Technologies Initiative to provide startups with long-term funding.

What is one key to winning in this market as companies navigate budget constraints?

In state and local, Monks said, the key to winning is being hyper targeted and hyper personalized. This is difficult to accomplish, especially in state and local where the market is fragmented, geographically distributed, and not centralized like the federal government. “There’s no consistent job titles across organizations. There’s no consistent budgeting or procurement processes across organizations. Whereas in federal, because of Congress, there are laws that govern these things.” There are 90,000 different local government entities alone, and there are 100,000 distinct job titles. The only way you can be hyper targeted and hyper personalized is with really good first party data.

Additionally, local priorities, like what you see on your local news channels, can have enormous implications for buying priorities. For example, if there’s a flood downtown, you can pretty much guarantee that’s where funding will go. But a few towns over might not have a flooding problem and will focus on other priorities. So, a message that resonates with an IT Manager might not resonate with a City Manager of the same organization. Or, a message that resonates with an IT Manager in the southeast may not resonate with an IT Manager in the northwest.

Essentially, with all this diversity in state and local, it all comes back to first-party data. Your data shouldn’t just go to the account level, but the persona and individual level. Ultimately, that’s where the decisions are made. Targeting and personalizing at the persona and individual level is the only way to win in state and local government.

In the federal space, Elmore agreed that being targeted is key, but added that collaboration is equally important. You have backend data to understand the space, previous awardees, and what the customer is really asking for in the RFPs/RFIs (if they’re written well). You need to be focused on what they’re looking for and collaborate with your entire team to get in front of these contracts. In some industries, one third of the work is not competed for and goes directly to the vendors. “Being able to understand your industry, your space, how [the government] buys for it, and working with your marketing and BD teams and making sure everyone is marching to the same beat so you have the most impact is going to be key in federal,” said Elmore. There are thousands of opportunities for complex projects sometimes in the trillions of dollars and you can’t boil the ocean. Therefore, focus and collaboration are most important.

Wakeman said the biggest challenge he hears from companies is differentiation. That’s where marketing and BD teams need to come together. As much as you have to understand your customer, you have to understand yourself and your competitors. What do you bring to the table that sets you apart? When companies can explain this to their customers, that’s when they become competitive. The customer, for the most part, sees the industry as all the same, so finding ways to differentiate and stand out will give you the edge. You can accomplish this with external marketing and collaboration amongst internal teams.

Shouldn’t using data to target specific audiences allow companies to save on marketing budget?

There is often a misconception from leadership that if you are taking a more targeted approach and reaching a smaller number of people, that should equate to less dollars for marketing and sales. It’s not that your marketing spend is decreasing, but it’s being re-allocated. Monks said that this type of targeting doesn’t decrease your spending. This is essentially account-based marketing and data-driven BD strategies. Monks said the way she has seen companies be most effective in these strategies is when they combine data with excellent thought leadership and education campaigns. “You’re spending more on data, more on thought leadership and education, and less on the traditional spray and pray marketing approaches,” Monks said.

What can organizations do to bridge the gap between sales, BD, and marketing?

By nature of his position, Wakeman has his ear to the ground for companies who are successful in the federal market (for example, the top 20 companies in Washington Technology’s Top 100). Their team includes marketing, BD, solutions architect, CTO, CIO, and finance. “All of those parts have to understand each other and have to work together, because that’s then how you can put together the best proposal,” Wakeman said. Get away from one team selling something that the rest of the company can’t deliver. The market is moving faster and is much more competitive. The infrastructure must be in place to bring all these teams together.

When Elmore speaks to companies, she emphasizes the importance of having everyone in the room to get the clearest picture on what they’re looking for. This is the reason tech companies can grow how they do. Take from their playbooks using things like agile scrum and bring it into the rest of your operation. The top 20 companies are all in the room collaborating, even in this hybrid environment.

Monks said in order to break down silos between marketing, sales, and BD, they should unite under what the business priority is, and align those teams together in pursuit of that goal. Then, get the right tools, data, software, and processes and empower those teams to march towards the goal together. That’s what the companies that are growing the fastest are doing.

What can marketers do to get an early seat at the table?

According to Monks, “The great unifier… is building pipeline.” Marketers have a crucial leadership role here. They can accomplish this in state and local with early intent data, like what MarketEdge offers.

In the federal space, Elmore recommends shaping the RFP/RFI beforehand. Educate the person reviewing the contract. Focus on your key differentiators when educating the market, and by the time the RFP reaches the reviewer, they not only understand what’s happening, but see your value. In order to do this, marketing has to be in the conversation 12, 18, or 24 months before the contract drops to be sure your company is distributing the right content.

How can organizations better position themselves to win?

In state and local government, Monks said that you need to prioritize being seen as a trusted partner. You won’t be viewed that way if your teams aren’t aligned on the same goals.

Elmore agreed that breaking down silos is crucial. Ask what your department can do to better work with marketing, and start collaborating. That’s the only way you’ll be successful.

Wakeman recommends parking your ego out the door and listening to your teams. One of the huge benefits of DEI initiatives is that they are giving people more of a voice. Listen to them.

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The Down Side to Right-Sizing in the Public Sector

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