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The Cost of Marketing - Public Sector versus Private Sector

Depending on how you account for it, Private Sector marketing costs can include Marketing collateral - leaflets, business cards, promotional gifts, arguably your web-site and costs, and Overheads – the costs of your representative on the road, phone bills, expenses and salary.

We are all familiar with the idea that retaining a customer is at a much lower cost than finding a new one – but this is based on the Private Sector model of having to meet with new buyers over a considerable period of time and seducing them with the allure of your product. After they learn to ‘like, know, and trust’ you, you may then be in with a shout of some business IF their incumbent supplier lets them down, and / or if the incumbent supplier doesn’t suddenly become more cost effective when there is the threat of a new kid (supplier) on the block. You may get a small proportion of the business initially as back-up to the main supplier.

All that cost, and no guarantee of when, or indeed if, the buyer will ever buy from you.

Whilst that’s a flippant overview (with apologies to the authors of many educational scripts on the subject), the Public Sector offers the opportunity to supply business regularly, with prompt payment, for a fixed period of time – and you don’t even need to shake hands with the buyer before you win the business!

The direct cost of marketing for any given Public Sector Tender is the time you put into the tender. Nothing more, nothing less.  The Public Sector MUST stick to rules about awarding business, so if your bid is the best, you get the business. The rules don’t allow loyalty to an existing supplier - if you win, you win. (If you lose, you have to wait several years for the business to become available again, but it WILL come around again for sure).

The challenge is to be ready to tender, and most organisations are already ready  - you have your Policies in place, you have a procedure (however informal) to ensure consistency and quality, but maybe you haven’t written it all down  - how do you deliver excellence? Expressing this properly is the key to winning business – at very low cost.

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