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This article was originally published on LinkedIn on the 5th of October 2016 by Mary McKenna, tech entrepreneur & long time public sector SME supplier. You can follow her here: @mmarymckenna.
I recently delivered an impromptu talk on this topic at an unconference. Despite the unconference Law of Two Feet rule, my talk was well attended and generated such a volume of questions that I decided to jot down a few thoughts in this blog to continue the conversation and to gather any useful hints and tips that others out there may have. Warning — this is a longish read as it’s a complex subject.
Before I start, however, you have to ask yourself a very important question which is this. Why do I even want to sell my products or services into the public sector?
This blog (as with most of my blogs) is aimed at SMEs, startups and one man bands. It’s easy to understand why the likes of Capita and Serco and BT and the rest of the huge systems integrators want to sell into the public sector. No-one is able to tell us the exact amount the UK public sector spends annually on IT but it’s thought to be in the £16-£20 billion range and on 21 March 2016, the National Audit Office confirmed to the Public Accounts Committee that 51% of that IT spend goes to just 5 suppliers. Yep. Shocking isn’t it. Now the Cabinet Office, for anyone unfamiliar with this dialogue, has been promising to shift some of that spend to SMEs since the Conservatives gained power in 2010 — but unsurprisingly progress to date has been very slow. The 2010 target set was that 25% of annual Whitehall IT spend would be with SMEs but the current figure is thought to languish somewhere around the 10% mark.
So — those big boys are comfortable, well established, making a fortune, well set up to respond to tenders and indeed at the table (or at least in the room) when the specifications are being drawn up and hard as hell to shift off their lofty perches.
Let’s put all that to one side for a moment and assume there’s enough loose change left around the edges of the public sector to make it worthwhile for the SME to have a go.
There’s a lot to like about the public sector as a customer. You will pretty much always get paid, although you may have to wait an uncomfortable length of time for your money on the odd occasion. If you specialise in being average, your day to day contacts are likely to be undemanding of you and your team, accepting of mediocre service levels and forgiving of delays and mistakes. Once you’re successfully installed as a supplier to a public sector organisation, inertia means you’ll have to work very hard to lose them as a customer (as I mentioned earlier however, the flip side of this is as a newcomer, it’s nigh on impossible to dislodge an incumbent — no matter how good or how cheap your offer).
On a more positive note, it’s easy to shine as a public sector supplier if you pride yourself in doing a good job and providing excellent customer service and your customers will be loyal and love you for your integrity and honesty. It’s also a chance for ethical suppliers who care about public sector improvement to make a significant difference and do some good, certainly if we’re talking about tech or digital.
So — if you’re still reading you must be serious about having a go so let’s get onto my tips.
1. Know Thy Customer. This is the big one. It never fails to surprise me how many suppliers try to sell into the public sector without knowing the first thing about it. Only this week I received an email from a startup that went something like this. “Here’s an article I found in the trade press that says X local authorities are able to bid by the end of Y for a share of £Zm to do A. My product fits the bill exactly. What should I do next? — send a note out to the X authorities I guess…” Good luck with that! This first point demands an entire blog by itself it’s so important. As a supplier, you need to know the public sector as well as or better than the people who work in it in order to be accepted and to be credible. You have to understand the structure of the sector, know something of its history and speak the right language. That’s just the macro level for starters. You then need to know the individual people you’re hoping to sell to — the budget holders, the influencers and the decision makers. People in the sector move around a lot and sales cycles tend to be long so you’re going to need to know a few of each of the above categories. Add onto that lengthening list some senior people in the department or authority as a pincer movement never hurts. Briefly:
a. Bring someone into your senior team or onto your Board who’s from the sector, already has a decent network and is credible.
b. Attend the right events and network like mad, read the trade press and make sure everyone else in your team does, read the business plans that your prospects publish on their websites, take a real interest in the sector, join Knowledge Hub and read and post content.
c. Seek out “champions” within your target customer who are warm to your organisation and able to navigate the system, especially as regards understanding how to access funding/finance.
d. Identify and develop relationships not just with budget holders but with the people or person who will be signing off too — remember that every opportunity is attached to a person.
e. Know who your competitors are, what they offer & who they’re talking to.
f. Accept that the sales cycle is long, that nothing is certain (even stuff that appears to be) and that things move at a glacial pace.
g. Never ever forget that your prospects are being bombarded with sales calls all day long — if you take the hard sales approach with those people you will fail.
h. If you’re just starting out and are convinced the public sector is worth the effort, bring in an expert to teach your team about how the sector operates and fits together.
i. Accept that you will be expected to attend several face to face meetings as part of the sales process, even for low value contracts and especially if you are reasonably unknown. Many companies try to do much of the early stage qualification process by phone call or Skype. Accept that the public sector is still old school about this.
All of this is phenomenally time consuming and expensive and I don’t know of any shortcuts. Social media makes finding and striking up relationships with the right people a bit easier at least but there’s no substitute for meeting in real life.
2. Procurement. Groan. Unavoidable in the public sector. Again there’s a lot to learn about and figure out. Different public sector organisations can have dramatically different standing order levels. If you’re starting out, aiming to slide in below the standing order level for starters will give you the best chance of success. As well as standing order levels do your homework on G-Cloud and take a look at SBRI (the Small Business Research Initiative), a gift for innovative startups that can fit the theme. These are my key points about procurement:
a. Responding to tenders is time consuming, usually disappointing and a complete pain in the ass. If you aren’t already part of the discussion, it’s extremely unlikely you are going to win as this isn’t a level playing field. Anyone who tells you anything different to that is lying to you and probably wants you as a stalking horse. That is one tough lesson to learn. How do I know that? Because in a previous startup a long, long time ago we responded cold to 80 tenders in 8 months and we won 1, which was a miracle in itself. See my previous point about opportunities being attached to a person or a group of people. This is still the case even in a huge procurement process.
b. It’s more difficult if you have no track record, so if you’re a startup or new to the sector, you need to get some early doors customers. Do what you have to in order to get track record.
c. If you’ve decided to respond to tenders, form a coherent bid team and make it as easy as possible on yourselves. Include someone who can write. Expect many late nights, lots of arguments and a huge amount of disappointment as your hit rate is likely to be very low. Also, it’s very hard to find anyone decent who wants to work for you on writing bids.
d. Always get feedback on failed bids. Try and get as honest feedback as you can. This is notoriously difficult in the public sector as everyone dislikes confrontation. Appeal to people’s better nature by explaining to them that you spent a lot of time on the bid and honest feedback will give you a better future chance. Really, the main reason for doing this is to get onto the radar of the organisation so that when the next time comes around, you are more familiar to them. Best to do this in person if at all possible.
3. Beware early success. I’ve seen a few startups get off to a great start in the public sector, make 3 or 4 easy sales and then completely fail to scale. Be honest with yourselves about why you won those early contracts. Did you know people? Were you just incredibly lucky? Did you fail to deliver post sale?
4. Host your own niche events. I’ve given this advice to pretty much everyone who’s ever asked me how they could replicate Learning Pool’s success at selling into the UK public sector. To the best of my knowledge, of all the people I’ve advised to do this in the last 10 years or so probably less than 1% have bothered to give it a try. Why? Because it’s too hard and it involves a lot of work.
5. Working Capital. You will need a lot as the sales cycle is long and unpredictable. The longest period of time a local authority customer was on my pipeline was just over 4 years. They bought eventually and went on to be a legendary customer over time but I’m glad I wasn’t relying on that contract to meet payroll anytime early doors. This is a very real overhead for any company wanting to enter the sector as a newcomer.
6. Avoid Competitions. Especially those with unclear outcomes. My previous company “won” a central government Innovation Launchpad competition. The “prize” was that we got to attend over 40 meetings in London at our own expense and those 40 meetings led to us winning no immediate central government work. Frustrating. Spend your time on revenue generating activities instead.
7. Make it easy for customers to buy from you. It’s your job to remove as much risk as possible from the person whose head is potentially on the block. In my last company, a small thing we did early doors was use a London phone number even though we were based in Northern Ireland. You write the business case your prospect needs for their internal use; even prepare their Powerpoint presentation for their senior management team — better than leaving it to chance. Collect your customer stories and keep them alive. Tell them which of their neighbours are already customers of yours, FOMO is real! Get ISO accreditation if it genuinely ticks another box.
8. Fix your marketing and really monitor where your sales come from and what the path has been from start to finish. Replicate success.
9. Don’t give free trials. Ever. It will bankrupt you because of the pace government moves at and it will also muddy the water of the buying process. Instead offer paid-for short term contracts or pilots if you have to.
10. Word of mouth. This is the Holy Grail of public sector sales. Once you have some sales success incentivise those early clients to sell for you. The best way to do this is by exceeding their expectations and delivering nothing short of customer delight. Do that and your precious early contacts will be happy to tell their colleagues. Back to point No 1, government is like a networked village and everyone knows each other. This is good if your customers are happy and a disaster if you’ve screwed up. I have a favourite story about this. It’s a Learning Pool story. Sam Barbee & I went to a large and remote unitary local authority to deliver a lengthy sales presentation to a big group of people in a most unsuitable room. It was one of those rooms used for computer training and many of the people were hidden from view behind computer screens. We didn’t know anyone in the group and introductions weren’t made. The council had recently become a unitary authority, swallowing up the district councils in the process. Many of those in the room had been through long drawn out rounds of local government restructuring and were feeling fragile and bruised. Sam & I soldiered on with the presentation. Suddenly a woman at the back got to her feet and announced that in her previous role she’d been a Learning Pool customer in one of the district councils. Without waiting for permission, she launched into a tale about how she’d been working one day as administrator on her Council’s learning environment and had got it into a bit of a muddle. Tired and fed up she went home. Next morning she came into work with a feeling of trepidation, knowing she had to undo yesterday’s mess. She switched her computer on and immediately realised that her Learning Pool account manager, Ben Jones, had noticed overnight that she’d got herself into a muddle and without waiting to be asked, had gone in & fixed it for her. She finished off by saying that in all her years of working in local government she had never worked with a more customer focused supplier than Learning Pool. It was incredible. Sam & I could have kissed her. The atmosphere in the room changed in a heartbeat and 6 months later, after jumping through all the usual procurement hoops, the contract was ours.
I’ve written about going the extra mile and whether or not it’s really worth it here if you’re interested in reading more about that topic.
As I mentioned at the beginning, public sector sales is a complex topic and this blog really just scratches the surface to get us started. Please do add your own observations in the comments section below and if you’ve enjoyed this blog, please share it via LinkedIn with your own network.
Mary McKenna is a tech entrepreneur and angel investor. She co-founded successful e-learning company Learning Pool in 2006. You can read her personal blog here. From time to time Mary speaks at events on topics close to her heart. Once in a blue moon she can be persuaded to do a bit of consultancy work but only if she really cares about the cause & loves the people in the team!