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How Inbound Marketing Can Arm Defense Contractors For Diversification

With inbound marketing, defense contractors can cost-effectively attract the attention and interest of the right prospects in commercial markets, and nurture those relationships toward profitable contracts.

Defense Contractor Inbound Marketing Photo: U.S. Navy

 A few days ago I ran into a friend who is an executive at a defense contractor. We got to talking about the thin margins in some of his company's shrinking Pentagon contracts. That's when the subject of diversification came up.

His company has a few federal contracts beyond the Pentagon, but he's been urging his management to diversify more into the commercial sector. His company has had some private sector contracts, but for the most part they were projects squeezed in between military contracts back when defense budgets were growing. My friend would like to see his company develop more commercial business.

He is not alone. In a recent report from PricewaterhouseCoopers, "Aerospace & Defense: 2012 Year in Review and 2013 Forecast," diversification into commercial markets  is going from optional to required for most defense contractors. An excerpt:

Many companies are exploring commercial applications for their technologies. Most defense contractors, and their investors, have approached commercial markets cautiously because of mixed experiences, weighted toward the negative, in the past.

Much of that experience, though, is dated; defense contractors have had ample opportunities in their core markets for more than a decade.

However, many of the industry’s largest commercial markets have their roots in defense and space technologies, such as computers, computer networking, and telecommunications.

Going forward, defense contractors are expected to seek commercial applications for their technologies, even if it means licensing or supplying technology to commercial entities.

-Aerospace & Defense: 2012 Year in Review and 2013 Forecast, PricewaterhouseCoopers

Similarly, a recent Washington Post article (below) explored the diversification intentions of defense contractors. Interestingly, the article quotes Lexington Institute's Loren Thompson on the biggest diversification obstacle facing defense contractors:

...the difficulty typically isn’t about technology or skills, but simply about culture.


Contractors taking diversification seriously as defense spending shrinksAs contractors encounter shrinking federal budgets, they are increasingly seeking to bolster their presences in the international and commercial markets. Companies have long been promising this diversification, but there are now more signs this effort is fully underway.

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The cultural problems defense contractors have diversifying into commercial markets are numerous and very real. One of those cultural problems is marketing.

Most defense contractors have not felt the need to market their companies beyond having a static website, attending some trade shows and answering RFPs. That's what they've done in the past and it was enough. At least for military contracts.

For commercial work, however, defense contractors are realizing that they need to do more in the marketing of their business than they've done for government contracts.

Fortunately for defense contractors, they are stepping up their marketing at a time when a new, more effective approach to marketing is on the rise: inbound marketing.

Inbound marketing is different from the traditional interruptive, outbound methods of marketing. Examples of outbound marketing include advertising, press releases, direct mail and cold calls. For a visual to associate with outbound marketing, think of a noisy bullhorn.

Inbound marketing, in contrast, is focused on attracting attention online by publishing remarkable content to attract traffic to your website, converting that traffic into leads and then nurturing the leads until they are ready to buy. The visual for inbound marketing: a powerful magnet.

Inbound Marketing Methodology (click graphic for larger image)


Two of the most important aspects of inbound marketing are buyer personas and blogging.

  • Buyer personas are a fictional description of a company's ideal customer and include the challenges they face, their motivations and the types of information they need. Once a buyer persona is identified and brought to life, the content that is developed for that persona becomes very focused, helpful and valuable. In addition, a buyer persona includes their description of the problems that they need to solve, particularly as it relates to the search engine keywords that they would use. Their use of keywords in search engines to solve a problem is how they will first find your company.
  • Blogging is the most effective way to reach your buyer persona with your content that is targeted at them. The benefits of blogging are numerous, but include improved search engine results and the ability to demonstrate expertise. Additionally, companies that blog get more website traffic and leads.

According to marketing automation software company HubSpot, in its State of Inbound Marketing Report, one major benefit of inbound marketing is that it costs 62% less per lead than outbound marketing. Additionally, inbound marketing is based on building marketing assets, primarily through blogging, that a company will own and have working for years to come (like compound interest). Outbound marketing, in contrast, only works as long as you're paying to interrupt people (advertising, direct mail, etc.).

Click here to read PricewaterhouseCoopers "Aerospace & Defense: 2012 Year in Review and 2013 Forecast," or see the SlideShare version below.

QUESTION: What obstacles are you facing in diversifying into commercial markets? Please join the conversation below. And if you enjoyed this, please share it with your network.

The Principal and Founder of Artillery, Douglas Burdett is a former artillery officer and Madison Avenue ad man. He also hosts The Marketing Book Podcast, where he interviews authors every week about the latest in modern marketing and sales.

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