More than 100 governments across 9 countries use our team’s AI pavement assessment technology to reshape the way they manage their road networks for millions of people. The core users and customers of our tech are governments. Why? Well, because the world’s largest, most expensive public assets (aka roads!) are managed and maintained by governments–ranging from federal to local. As such, most folks describe RoadBotics as a GovTech company.
After announcing our 100th customer, we had an influx of other GovTech companies and entrepreneurs reach out to ask, “How were we able to get 100+ governments to adopt our technology in just over a year?” This core question illuminates the challenges that many companies (from GovTech startups to MegaCorps trying to create news lines of smart city business) experience when trying to sell to governments (i.e. B2G).
However, our team’s experience selling to government customers leads us to argue that the B2G challenges folks regularly describe are more misconceptions than they are facts of life. Here’s a list of the top four B2G sales challenges we hear and some insights on how our team has overcome them:
Myth 1: The sales cycles to governments is too long to successfully sell technologies.
Ok, so a government may not be as nimble with its decision making, purchasing or procurement processes as a corporation or small business. But broadly saying that government sales cycles are too long treats a “government” as a monolith rather than a complex entity comprised of a series of offices and officials managing their budgets, setting priorities and delivering a service.
The sales cycle for one office or branch of the government may be longer than others. So, first get granular on who in government is the beneficiary of your product and service. By being laser focused on who in government is your target audience, you will get a much clearer sense of their specific timeline for purchasing. Next ask yourself two important questions: (a) “What significant problem does your tech improve for my target audience?” and (b) “Are resources already allocated in the budget to address this problem?”
Your solution should solve a critical problem, meaning that at least one person in the targeted government office is thinking about this issue every day. If not, rethink your product focus. In our case, our pavement assessments address the foundational problem that public-works officials think about everyday: It’s very difficult to have reliable information about the condition of our road network, which impacts all of the expensive down steam maintenance activities.
The more painful the problem–like having good data to inform how the government makes maintenance decisions about its largest asset–the more likely it is that resources are already allocated to addressing the issue. Or the more likely officials would be willing to plow resources into resolving one of their biggest pains. For example, some of our customers already have pavement assessment line items in their budgets because they knew that having annual assessment data about their road networks would result in improved, cost-saving maintenance decisions. In these cases, we have a very clear value proposition: Our data is more objective, convenient and cheaper than anything else on the market. At the same time, we have customers who had not assessed their road networks in over a decade. Why did they allocate resources from their budget to subscribe to our solution? Because they recognized that reliable pavement assessment data would positively impact the problems they face in maintaining their road networks.
Moral of the Story: Sales cycles can be shortened if you are truly delivering a product that adds value to the people who are closest to the problem–whether that’s government or a business.
Myth 2: RFP processes are too cumbersome to sell to governments.
Like any other purchaser, a government official is going to be price sensitive, particularly in the case where all budgets and purchasing decisions are scrutinized by public officials and citizens themselves (woohoo transparency!) as part of an RFP (request for proposals) or standard procurement process.
Undoubtedly RFPs do draw out the sales cycle for GovTech companies: The RFP is released into the wild and there is a set time in which proposals are received, reviewed and decided upon. This is typically not a one-week or even one-month process. If you are selling expensive hardware or extremely capital-intensive products or services than there may be no way around the RFP process*. If this is the case, then we strongly encourage you to build a sales process that is always thinking three-months ahead and planning your sales and revenue generating activities accordingly.
However, we would also encourage you to take a look at your pricing model and ask if it makes sense. In our team’s case, we are a SaaS company that provides the high value product of annual pavement assessment data based on an annual subscription. The subscription fee that any government pays to receive data and use our tools is scaled based on the size of the road network that the government is responsible for (by the way, we have complete pricing transparency on our website).
Our scaled or tiered pricing ensures affordability at all levels of government–whether you are managing 50 miles or 5,000 miles of road network. This pricing model means that we can deliver a valuable SaaS product across all levels of government at a reasonable price that does not require a lengthy RFP process. Compared to other GovTech companies out there, this is where we have seen a major difference. Most tech companies going B2G seem to be offering very expensive solutions that (justifiably) trigger the RFP process. This approach could be due to an expensive upfront installation cost, expensive hardware or just a tech product that is really pricey. Regardless, if the price of your tech solution is too high, then it is a barrier to government officials making quick purchasing decisions. In this way, companies that offer affordable solutions to governments of all sizes help their customers make faster purchasing decisions.
Moral of the story: There are certainly cases where there is no way around your pricing, but if you are getting caught up the RFP spin cycle, then consider how you can deliver a more affordable product that empowers your potential customers to adopt much faster.
Myth 3: Government officials are too resistant to adopting new technologies.
This particular challenge is hard to understand. And, in our opinion, it is the most confusing misperception about government officials. There has been a massive, global effort to create a ‘smart city’ brand as well as to cultivate a community of smart city professionals. There are so smart city councils, conferences, podcasts, publications and more. Although, the term ‘smart cities’ may seemingly focus on the embrace of tech solely by cities, it is actually inclusive of counties, rural town, states and federal governments.
There have even been new technology-focused c-level positions created like Chief Innovation Officers and Chief Technology Officers that are tasked with supporting everything from a single government agency to an entire State government in its adoption of new technology. Without question, leaders across all sizes of government, geography and political affiliation are embracing innovation and more technology in government. From small towns embracing govtech like the Village of North Fond du Lac, Wisconsin (population: 5,042) adopting SeeClickFix tech platform for 311 services to presidential hopeful Kamala Harris recently putting forth legislation that would expand the United States Digital Service. Leaders at all levels of government are adopting more tech.
And yet, this misconception of technology backwardness remains pervasive. Why is this the case? For every online story about a local government official using technology to make lives better for citizens, there are a dozen articles about a government office using Windows 98 for all of its operations. Pop culture has incepted the belief that governments are just behind in terms of adopting new tech, despite government being a driving force for some of the most impactful technological innovations in the modern era (see the first US Chief Technology Officer Aneesh Chopra’s book Innovative State).
So, you are probably asking yourself how does this pervasive notion of government backwardness combined with this new smart city movement help my company? The key is to understand the role of the smart city leaders within a potential customer’s given administration. If you are seeking to secure a customer that has a Chief Innovation Officer an Innovation Coordinator or something of the like, try to understand their role. From our team’s experience, these individuals typically are (a) innovation hunters who are tasked with finding new tech to support government operations, (b) technology translators who help the relevant government officials incorporate new technology into their operations and (c) colleague connectors who connect tech companies with government officials who would be served by the tech company’s product or service. Notice that none of these roles included buying, purchasing or making decisions about the adoption of a particular new technology!
From our experience, the technology-facing team members within government are vital to helping thread the needle on the adoption of new technologies, but rarely are they the decision maker. Without sharing names, several GovTech companies have contacted us to vent their challenges in working with officials who have ‘innovation’ in their titles. From our perspective, the problem lies in how the GovTech companies are approaching these innovation-focused officials.
We recommend that rather than targeting your sales efforts at these critical innovation-centric contacts, first focus your outreach on the government decision makers who your technology directly helps. In our case, this is a Public Works Director, Streets Manager, City Engineer or City Manager. As part of your sales conversations, you should feel free to invite the primary contact’s innovation-focused colleague to join, so that they can play that supportive, translator role. In multiple cases with our customers, the innovation head for the town has sat in on sales conversations only to speak at the end to endorse the value of our product to the actual decision maker. That vote of confidence can go a long way in gaining a new adopter.
If you are going the route of directing your sales activities to CIOs and other innovation-focused government officials, then certainly keep in mind that as hunters of new tech they will likely be interested in learning about your solution. But, that they are not the decision maker who can purchase your tech. Instead approach such contacts with the mindset of developing public allies who can make strategic connections to the right decision makers within the government and vouch for your tech’s potential impact.
Moral of the story: The old narrative that governments are averse to new technology is just not true and, in fact, now there are individuals in government whose job is to help source and verify new technology.
Myth 4: Government problems are too complex to sell a scalable, ‘out-of-the-box’ product.
This is a common refrain that we hear from startup GovTech companies that are still trying to determine where their product fits into the market. Because so many startups, particularly GovTech startups, spin out from universities (e.g. RoadBotics spun out of Carnegie Mellon University) it is very easy to get stuck in doing projects rather than building products.
Early stage GovTech companies often get caught up in this belief that although governments have similar responsibilities (such as maintaining roads) the way in which they execute these core responsibilities may vary greatly. Such companies take a product route that emphasizes customization – customized dashboards, metrics or applications just to name a few. Customized solutions are expensive to your company and too often the resulting solution cannot be used to impact another customer, thus the customization for a single customer (and ironically make governments less effective by losing out on best practices).
Where does this GovTech customization phenomenon come from? Our team thinks it begins at the very genesis of the company. Corralling a GovTech startup’s first set of adopters can feel like a monumental challenge. When you finally get a hand full of governments to pay attention, you want to make them happy and address their concerns to the T. As a customer-focused company, you should certainly strive to achieve both of these goals, but not at the expense of building a company that only impacts your earliest of adopters. Giving into this tendency early in your company’s growth, raises the potential for your product to take the slow, spiraling path of customization.
Instead, embrace the feedback from your initial adopters. Having a core group of initial customers is actually an opportunity to determine what is the core, shared problem that you are addressing. From our experiences, a solution is well positioned for wide scale adoption, if it addresses a minimum of 80% of the problem that any single customer faces. For example, for some of our customer we address 100% of their problem by being the only tool they deploy to attain data and make maintenance decisions about their road conditions. While other customers layer in additional activities, like targeted ground penetrating radar. In either case, our technology always plays the primary role of addressing at least 80% of their pavement assessment problem. Moreover, your team is going to have the very difficult task of translating the feedback into a product that captures what your customers need and not necessarily what they say they want. Deep listening and rapid, iterative product development will help your team focus on building solutions that address the need that meets 80% of your early adopter’s problem. If you focus on the direct things that your customers say they want, then your dancing with the danger of customization and placing your ability to build scalable products in jeopardy.
Moral of the story: Following the 80% rule, will focus your product development on the core problem and fend off the tendency in GovTech to build highly customized, non-scalable solutions.
Summary & Key Takeaways
There is an immense opportunity for a new generation of entrepreneurs and technologists to play a vital role in how governments provide services for people. Although there is a growing interest in building companies that help governments tackles big problems at scale, there also exists a pervasive sense that selling to governments is a sisyphean task filled with company-killing challenges. From our team’s perspective, these perceived challenges are misconceptions. And for those entrepreneurs willing to drill down into this misconceptions, there is a ton of opportunity to impact millions of lives and build thriving GovTech companies.
*The RFP process is definitely good for governments to collect information about all the options that exist for them to acquire a service or product, particularly if it is a very expensive purchase. Our team at RoadBotics thinks that there are some really interesting ways in which the web and social networks could make the RFP process even more valuable to governments by enabling them to receive more choices and more competitive pricing options.