When planning a B2B market entry strategy, one of the most important things to understand is how procurement works. Time and effort can easily be wasted in meetings with people without budget, or courting individuals who are committed to open tender processes.
Understanding the specific procurement pathways is particularly relevant to companies looking to sell into the public sector, as processes can differ between organisations within the same country, and even in different regions in the same organisation.
White Space Strategy has extensive experience helping companies develop market entry strategies. These span a wide range of market sectors, B2C and B2B and covering multiple geographies. We’ve recently completed a couple of projects looking into public sector procurement processes and wanted to share some of our learnings with you. This approach is up to the task of mapping the trickiest public sector organisations and would also be useful for mapping simpler private sector procurement processes.
After you have identified your target organisations, we believe there are three questions you should consider to help map out the procurement pathway you’ll need to follow:
1. What are the procurement channels?
2. Who are the key decision makers?
3. Who or what are the main influencing agents?
Procurement Channels
The first step when approaching a new market, is to know the typical buying approach in this market. Public sector procurement typically falls into one of these four buckets:
Approaching buyers directly typical for smaller companies or public bodies
Frameworks are common – but knowing they exist, or how to get onto them isn’t always clear!
Public tenders are often used by medium to large public bodies. Identifying the relevant platforms is key to accessing opportunities and approaching buyers directly is unlikely to be successful. UK Police Forces often use tender platforms, but we have identified at least 5 different platforms in our research, and no pattern to indicate which force uses which platform!
Procurement bodies and partners. Some government departments heavily rely on purchasing centres. For example, the principal procurement channel for French public sector organisations is via procurement ‘catalogues’ (e.g. UGAP) which act as a marketplace of products for organisations to choose from. Suppliers must pitch to these procurement bodies in order for relevant organisations to buy their products.
In some cases, the same organisation might use all 4 of these approaches for different products or services. Sometimes frameworks or tender processes must be used for purchases of a certain type, or above a certain price threshold. Understanding these intricacies can give you an easier route into an organisation that seems impenetrable due to their relationship with a large, well-established competitor.
Key Decision Makers
Identifying the most appropriate sales contact might not be as easy as it first appears. Roles responsible for purchasing technology products and services at public sector organisations can be vastly different – from the Head of Department at one target customer to the CIO in another target customer.
Furthermore, your regular sales contact may not be the only decision-maker when it comes to a buying decision. They may be the contact who determines the need for your product or service, but it might be that procurement, or an MD will sign off the spend. This person may have the power to tell your contact to go back to market to benchmark prices, or to kibosh the spending in favour of doing something in-house.
With tender processes, knowing who reviews submissions will help you speak to their priorities. If an organisation is using a framework, you may need to know who decides when the framework is renewed, and who decides which companies are on it.
Having a clear view of the flow by which a buying decision is made, how it varies by target customer, which roles are involved and what their priorities are will give you the best possible chance to make it through all the stage-gates with prospects.
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Influencing Agents
Understanding the inputs that decision-makers use when choosing a product or service helps you target your resource most effectively. 39% of people are more likely to buy a car brand if their parents owned the same brand. Similarly, B2B buyers may rely on the experience of others, or want to test-drive a product or service themselves, or be attracted by a package deal.
In recent projects mapping public sector procurement channels, we’ve seen 3 key types of influencing agents having an impact on final purchase decisions:
Non-competitive industry organisations who know the product or service are often the first place buyers go for a reference.
“We pay close attention to small opportunities – these people will talk to the larger buyers and can give us a reference”
Company selling to European public sector organisations
Field sales people can provide demos or free trial periods that give buyers confidence the product will work in their context.
Other supplier recommendations, particularly where products are bought in tandem. Software providers may specify or recommend particular hardware units to their customers, or it may be possible to make joint approaches with already-trusted suppliers to strengthen your offer.
Take the time to identifying the resources your decision-makers rely on and the sales approaches competitors use. This will give you the broadest range of touchpoints that you can use to talk to decision-makers, and potentially find new and interesting ways to generate sales.
If you can grasp an understanding of all the above elements, you are in a much stronger position to approach the correct sales targets, with the most attractive offer via the most effective channels.
White Space has extensive experience helping clients
i) understand procurement pathways,
ii) identify partners & influencing agents, and
iii) tackle complex market entry opportunities
In the process, we’ll also identify great sales leads and interested parties. If this is something you’re interested in, why not arrange a chat with one of our directors to talk through your challenges and options?