Is social procurement the next big thing?

The Winshaw events team recently hosted a seminar to help share the benefits of collaboration and social engagement between the public and private sector through Knowledge Hub. Although a leap of faith for some, the benefits of peer-to-peer relationship building and co-creation can be considerable with the cost of sale reduced by over 30%.

Guests from Outsourcery, Rosetta Stone, Critiqom, The Children’s Society and Iron Mountain joined Knowledge Hub Managing Director, Jason Fahy, to discuss the changing nature of public sector procurement and how collaboration is playing an ever increasing role. Large multi-year deals are being replaced by shorter, more flexible supply contracts. This increased flexibility deliberately suits smaller, agile firms and more established organisations are having to adapt in order to remain competitive. Enabled by social procurement, the government agenda to open up public sector contracts to smaller businesses is starting to become reality.

This changing landscape presents certain challenges to the supplier however. By socialising the selling process though, forward thinking companies are starting to reap the benefits. Market research, product development and testing are no longer being done behind closed doors. Capacity Grid for example saw its market share rise from 2% to 45% within three years by empowering their buyers to create the solutions they wanted. But what does this mean in reality?

Well, and herein lies the issue, it requires the private sector to start breaking down its own walls before attempting to knock down those of the public sector. Once the concept of engagement and collaboration is embraced at an organisational level, individual employees can start to change their behaviour and sell socially. We see the six stages in this new social selling process as follows:

  1. Talk about issues not products.
  2. Create a market rather than wait for tenders.
  3. Traditional sales teams replaced with subject matter experts.
  4. Develop reputation as a trusted adviser, pro-bono if necessary.
  5. Build advocacy and referrals based on a social platform.
  6. Increase sales through higher volume, lower revenue deals.

For those organisations willing to take that leap of faith, early adopter advantage could be significant. On the supplier side, recent data points to multi-product sales up 63%, referrals up 26% and cost of sale reduced by over 30% at organisations prepared to change the way they sell. With those statistics it would be foolish to simply ignore this trend and continue to engage using the same old processes and expect everything to turn out rosy. The benefits on the supplier side are relatively well evidenced but it will be interesting to see over the coming months whether we start to see an equivalent benefit on the buying side. If we do, expect to hear a lot more about social procurement.

If would like to join the conversation, take a look at the open Public and Private Sector Collaboration Group on Knowledge Hub to find out more.

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