As the recession continues to squeeze the budgets of companies across the UK, the window of opportunity to sell products and services to the private sector grows narrower by the week.
Couple with this the Government’s recently announced cash boost for the public sector, and it’s not hard to work out why an increasing number of B2B brands are shifting their attention to ways in which they can sell to public sector companies.
The proof of the pudding is in the eating; one major public sector data owner reports that activity rates on its website have tripled year-on-year. But public sector marketing is a complex business and involves markedly different techniques to private sector marketing – namely understanding specific frameworks and tender processes. So what are the main facts brands need to know before they can move into this arena?
First off, businesses need to understand exactly where opportunities in the public sector lie. In its pre-Budget report published last November, the Government set out exactly what its plans to invest were, and where, over the next two years. In an attempt to boost the ailing UK economy, it is bringing forward £3 billion of capital spending, originally due to be spent by 2011, into the 2009-10 and 2010-11 fiscals.
The package includes major investment across a whole range of public services, including a £700 million cash boost for the Department for Transport (DfT), £775 million of housing and regeneration investment, £800 million to be spent modernising schools and £100 million to advance the upgrading of up to 600 GP surgeries to training practices. All of this investment creates significant opportunities for businesses to offer services in IT, telecommunications, buildings, healthcare, consultancy and training to name but a few, to these and the many other projects the Government has planned for the sector over the next few years.
But with the public sector itself being so vast (20 per cent of the UK workforce works within it), how do you start to understand its needs and the opportunities? “It is a massive sector – it is really several large sectors, all with very different priorities, needs and languages,” says Adrian Rowe, MD of marketing agency, Red C. “Each one needs to be tackled separately to be successful. The decision-makers will be different depending on sector, and what your firm has to offer.”
His crucial piece of advice to any brand looking to enter this field is to first of all visit the website of The Office of Government Commerce, which is the public sector’s procurement agency. “They have set up dozens of frameworks through the OGC Buying Solutions subsidiary. This is an important route for all small firms, and you should check the website to find out which framework covers your product or service, and when the framework might be up for renewal,” he says.
Establishing a framework
Frameworks aren’t the only way for businesses to target public sector organisations, but they are a good place to start for those new to the idea. The OGC awards ‘Framework Agreements’ to businesses, based on whether they can demonstrate quality and value for money. Once awarded an agreement, a company’s details are listed on OGC’s site, ready for the public sector organisations who visit it to find them. All of the products and services in these catalogues have already been pre-tendered, which means once on this list, you won’t need to put in separate bids each time you want to tender for a government contract – saving time and money. This is good news, because the tender process required when bidding for most public sector work is a complex and time consuming business.
“Completing a public sector tender is a challenging task, and you should be prepared to allocate a team to the task for some months, however, the chance to gain accreditation on a framework is a powerful prize,” says Rowe. But, he warns, one mistake is to assume that having made the roster, the work will come flooding in. “You still have to work hard to market your services – it simply means that the decision is easier for procurement managers, as they know your firm has passed rigorous scrutiny,” he says.
There are instances in which the whole tender process is avoidable – goods worth less than £4000 can be purchased without the need for competitive quoting and an approved business case. But the bigger the worth of the contract, the more stringent the pitching process is likely to be, and any government spending over £90,000 has to be subject to a full EU Procurement Process to ensure open and fair competition and value for money. This is why it is crucial, before intending to pitch for any public sector work, to do your homework.
“Successful marketing to the sector requires an appreciation of how and why it differs from the corporate world – there can be less urgency surrounding decision making in the public sector,” points out Heather Westgate, chief executive at TDA. “Organisations are not as governed by the need to make an impact on the bottom-line or improve profitability, and consequently they can lack a business-critical edge. This in turn should underpin a better understanding of the mindset of decision makers, enabling the development of more bespoke, relevant activity.”
Ditch classic B2B principles
Mike Cross, business development director at public sector data owner Ingenium IDS, adds that too many B2B brands assume that they can simply apply classic principles when in dialogue with public sector decision makers, and warns that this is a dangerous mistake to make. “In the public sector you tend to have decisions made by committees rather than individuals, and you’ll also tend to find that decisions are made by people with very broad remits and some very strange job titles. So for example, you might be trying to sell a technology solution to an NHS department and find you’re dealing with the medical director, who will be fundamental to the purchase.”
Ensure your offering is synergised with the environment or sector you’re looking to target too, says Cross. “We see evidence of companies who’ll say ‘we’ll just repackage our technology solution and sell it to hospitals now’, and it doesn’t work like that. Companies also fall down by failing to realise the potential of the sector they are targeting. So a company might do a deal with a Primary Care Trust and think ‘right, lets try and do another three or four of these’, when there are actually over 150 trusts that they could talk to,” he says.
Building boom
There is particular demand for companies that can supply technology and building services across a range of public service sectors right now. For example the ongoing reorganisation of the NHS presents significant infrastructural challenges and opportunities, and the Government’s £45 billion ‘Building Schools for the Future’ project, which aims to rebuild or renew every school in the country, poses obvious potential for businesses to offer their services.
Freedom Communications, for example, is currently involved in a project to install VOIP (Voice over Internet Protocol) technology in dated school and university campuses. “There has been a massive investment in the adoption of wireless technology in schools,” explains Freedom’s head of marketing, Clare Frost.
“The good thing about marketing to the public sector is that from a vendor perspective, you know how things stand – you can identify exact projects or opportunities and go for them. The trick really is to demonstrate how you can add value to a project. The tender process can be long-winded at times, but on the upside, the value you’re adding to a project can also be very rewarding.”
Local implementation
If the process of approaching such a vast sector still seems daunting, its useful to remember that large scale Government projects like its schools one are typically handed down to local authorities to look after. The ‘Building Schools for the Future’ project, for example, is awarding construction contracts to groups of schools clustered by area.
Skanska has already built some of the first new schools in Bristol. “A consortium would typically include a construction firm, several architects firms, environmental engineering consultants and other specialists,” says Rowe. “The Government was so concerned about the scale of the project, that they ran roadshows up and down the country to encourage architects to learn about the project – their concern was there weren’t enough with the skills to design schools to current standards.”
Similarly, he adds, building relationships at a local level, with town councils, or a local hospital’s procurement manager, can be a useful way to gain business, especially when pitching for small contracts that don’t require a tendering process.
“Dealing with the public sector can be daunting for the uninitiated,” concludes Westgate. The main thing to keep in mind, she says, is how the objectives differ from that in the private sector. “In the private sector there is generally one common thread: the desire to make a better profit. When dealing with the public sector, you need to step away from that outlook and focus much more intently on the specific aims and objectives of the organisation you’re dealing with. The secret is to know your audience, accept that there are longer timeframes involved, and learn how to adapt.”
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