Winning Public Sector Business by Establishing a Piggybackable GPO Agreement Continued…
Last week, we began to talk about establishing a piggybackable agreement as a means of winning public sector business. We laid the ground work by defining a few terms and briefly discussed the mechanics involved in establishing such an agreement.
If you missed it, take a look here.
Now let’s get to the meat.
What are the advantages of establishing a piggybackable GPO agreement?
- Access to Membership – once you have established a piggybackable agreement with a GPO, you now have access to all the members of that GPO in order to sell your product or service. The GPO members represent a new “book of business”.
- Familiarity – most public sector entities are familiar with their legal ability to purchase through a piggybackable GPO agreement.
- Compliance – one piggybackable agreement allows you to compliantly sell your product or service to virtually any public sector entity nationwide.
- Low Barrier to Entry – typically, a GPO membership is free for the customer, meaning that customer has no fees, dues, or obligations involved in piggybacking off of the contract you’ve established with that customer’s GPO.
What are the disadvantages of establishing a piggybackable GPO agreement?
- Lack of Exclusivity – some GPOs have multiple providers for the same product or service. Therefore, you may find yourself in competition with another supplier.
- Administrative Fee – suppliers typically pay a percentage of sales (also known as an administrative fee) to the GPO.
- Narrow Target Markets – it is not uncommon for a GPO to focus on a narrowly defined target market as they sell their portfolio of piggybackable agreements. Some examples include just K-12 or only counties.
I realize that we’ve covered a lot of ground in such a few short weeks. Our next digest will provide you with a synopsis on what we have covered thus far.