Welcome to Science with Shrike! Today will be for everyone interested in selling to scientists, specifically academics. Shrike will go through purchasing from the PI’s perspective, and some of the common ways of solving bureaucratic hurdles, and give you better ideas of the decision-makers for different applications.
First, let’s talk about university purchasing structure. Shrike’s experience is with state institutions, so there might be fewer rules for private entities, but keep in mind the university is a bureaucracy run somewhat like the franchise system—lots of individual small business owners (the PIs) with central brand/support and rules (the university). There’s also lots of differences, but the important part is that you have decision-makers at 2 main levels: the individual faculty members/labs, and the university as an entity.
How do you know which group is your target?
You’re targeting the university itself when your solution would need to be university-wide to work, would cost large amounts of money to implement, or mainly benefits the administrators. For example, if you sell software that helps run the key parts of the university, if you want to establish a monopoly over a SaaS used by a fraction of the faculty, want to win the construction project to design/build the next building, want to develop art for the university, want to use the university branding to sell your products, or otherwise want to be a partner with the university.
You’re targeting faculty members and labs when you are selling things individual labs/faculty will need. For example, textbooks, active learning solutions, lab supplies, lab equipment, and specialized lab software.
The bigger money is always selling to the university, but the contracts are more competitive. If you have the right offer, you can sometimes get things aimed at faculty implemented on a university-wide basis. For example, if you can sell the university (instead of individual faculty) on your clicker technology, it could grant you monopoly status at that university. Most faculty using other brands will switch over, and the university has to field their whining. Shrike’s experience with this is that some of the sales reps for the leading technologies are total clowns, so achieving monopoly status may be easier than you think. This is true for other SaaS as well that is widely used.
Workflow
Before we discuss how to target decision-makers, we need to review the general purchasing work-flow. At the level of the faculty and labs, there are two main workflows: teaching and research workflows. For teaching, faculty choose textbooks and other learning resources to “adopt”. The adoption decision is usually at least a semester in advance (ie Shrike will need to select textbooks for the fall in the next month or two), though there is some wiggle room. Since the money is made from the students buying your textbook, you will need to send the instructor a free teacher’s copy, and make any extra resources freely available to them for their review. In theory, if the instructor doesn’t want it, they might send the textbook back, but Shrike wouldn’t count on it. Digital review copies sometimes work, but if the instructor likes to flip through the book, they’ll need a physical copy to close the deal.
Remember—for textbooks and learning tools, you’re selling to the instructor, not the 20-200 students who will be forced to buy the book. The easier you make the instructor’s life, the more willing they are to adopt. Easy = pre-made lectures (with the textbook figures in them at minimum), testbank, pre-made assignments, ‘interactive learning tools’, ISBN easy to find, etc. Some instructors worry about cost to students, but if they can justify it as worth it, it won’t be a problem. They don’t have to pay for it, after all. If price is a deal-breaker, the instructor wants something free or close to it, and you don’t waste your time with them.
Purchasing for labs is more complicated. Fundamentally, the decision-maker is the faculty member running the lab, the lab manager, or sometimes all the students and techs in the lab. Generally assume that the more expensive the product is, the higher up the lab food chain it will go. Once you break $10-$20k for an item, the department and/or college might also get involved to help fund (depending on the faculty member’s funding!). While they have veto power, you’re still primarily selling to the faculty member.
Purchasing at universities relies on a centralized software solution. Shrike’s experience at multiple institutions is with Jaggaer. The university (as an entity) executes contracts with preferred vendors to supply most needed things. These contracts are negotiated at the university level, and give the university certain rates for various items. This case is where the Contracts office of the university is involved and makes the decisions. Depending on the vendor and space, monopoly status can be won. For example, Coca-cola and Pepsi do this—part of their deals usually prohibit using the competitor’s product. Staples will do this sometimes too—university personnel are not allowed to buy office supplies from other sources. This is made more palatable by including a clause stating that if someone finds the same product 40-60% cheaper, then they can buy it from the competitor. There are usually one or two software suppliers, and the major biomedical distribution firms also execute contracts. Some states have laws forcing institutions to give preference to minority/veteran/woman-owned businesses… keep this in mind, especially if you are setting your business up in a family member’s name, or planning on creating a subsidiary to do business. In Shrike’s experience, all the big players have figured this out—Fisher and VWR (the two largest distributors for biomedical supplies) both fit these requirements in Shrike’s state.
Along with the major vendors who have established contracts in the university and have their purchasing system tied into the university’s, minor vendors still have a chance. In order to get added to the purchasing system, vendors need to fill out some paperwork and send it to the university’s purchasing office so that they can added to the system. Generally faculty and students find out about this the hard way, so they’re usually in a hurry when they send the paperwork. Fill it out promptly and correctly, and keep the faculty member/student in the loop. The bureaucrats in purchasing don’t care about the faculty member or your company, so the faculty member and/or student is your ally here.
The purchasing system will generate a purchase order (PO) and send it to your company once the order is approved by the university. Once you fulfill the order, and invoice the university, the university will mark the item as ‘received’ and pay the invoice. If you invoice for more than the PO authorized, you might run into trouble, but this depends. In Shrike’s experience, shipping overages are not a major problem.
If you are selling to universities, you need to accept POs as payment at time of purchase.
Make it easy for them to find where to put their PO on the website if you’re not tied into the university’s purchasing system. Note that universities typically require the PO to be issued *before* the item is purchased (or invoiced!), so a ‘quote’ option that lists item, catalog number, Qty, price, shipping, and total is really helpful.
Credit cards are limited at universities. Typically they require pre-authorization to spend more than $1000-$5000, and there’s a long list of what the faculty member can and cannot buy on a university credit card. For state institutions, adding sales tax is the ultimate, unforgivable sin. That means you need to show the tax on any receipt that you provide, and make it easy for the faculty member to send you their tax exempt documents, and apply the tax exemption on your website during checkout.
However, credit cards let faculty purchase items outside of the regular channels. POs and credit cards are the two payment options for universities. Alternatively, you can work with a vendor that already has a relationship with the university and distribute through them. This is how most biomedical science companies operate. They list their items on Fisher and/or VWR, and then fulfill the orders. Think of Fisher and VWR as the Amazon of biomedical science, complete with making generic versions of your winning products and competing with you. Fisher pushes for monopolies with universities more aggressively than VWR, so listing on Fisher is more important for reach. Shrike has no idea how much of a cut both VWR and Fisher take, but they do both require ‘free shipping’. Some labs order almost exclusively through Fisher (this seems to be more common for hospitals/clinical labs and where bureaucracies make the purchasing decisions).
One other challenge with purchasing via university systems is the discounting game. If you look at Fisher’s prices without signing in, you get the wrong pricing. For example, consider the ultimate commodity in biomedical science: the 1.5 mL microcentrifuge tube. Fisher’s list price is $82.58/500. Shrike pays closer to $8/500. So how do you know what the real price is? Amazon is helpful for many items here, because the prices on Amazon are much closer to what the labs actually pay for these products. As part of the contracting with the university, Fisher and/or VWR have to offer good pricing. Keep this in mind when checking prices. The default ones are sometimes 10x or more what anyone in their right mind would pay.
When it comes to purchasing, many standard lab supplies are commodities. So long as they fit some basic specs, they’re entirely interchangeable. This means price and inertia are the two driving factors when Shrike purchases. Inertia means that Shrike does not price shop 1.5 mL tubes every single time they’re ordered. Instead, price comparisons happen less frequently. Finding the catalog number on the bag of tubes is way faster than hunting through Fisher’s list of 1.5 mL tube offerings to find the cheapest one. The ability to easily reorder the exact same part is probably #1 for Shrike in reordering. Price is a close second. Note that this assumes a basic level of availability and functionality. Shrike bought some 0.6 mL tubes that would not stay closed. Price and inertia didn’t matter when it was time to reorder. The supply chain disruptions during the pandemic have also opened the door for new vendors. If 1.5 mL tubes are on backorder for 2 months, it’s time to find a new vendor. That new vendor has a chance at retention, so long as the price is reasonable (eg if Shrike is paying $20/500 tubes because the regular ones are out of stock, Shrike will go back to the $8/500 ones when those are back in stock.) This is also why promotions work. Get the lab to start buying with good prices, and some will continue even after the promotion is gone.
The other aspect of the commodity game is standing out. When Shrike knows exactly what to purchase, it’s just type in catalog number and go. If Shrike searches “1.5 mL tube” on Fisher or VWR, there’s a bewildering array of options. Especially when Shrike was setting up the lab, there was a tendency to rely on the sales reps to get started, by which Shrike means the local Fisher or VWR rep. Have a good offer (ie catalog numbers and pricing) ready to go for common items at standard specs to make both the Fisher/VWR rep’s life easier and the faculty member’s life easier.
Specialty items and higher ticket items are a different game. Usually in this case, there is a specific product, or set of products that Shrike will need. Shrike purchases first based on need—if you run the only company that makes the product, there’s only a bare minimum of what you need to do to make the sale. Second is trust. Trust is not trusting the sales rep, but trusting the product and the brand. For example, Shrike uses Molecular Probes for fluorescently conjugated secondary antibodies because they have a proven track record of quality. Third is balancing quality with price. The item needs to reach a certain threshold quality, but above that threshold, price dominates. Note that Shrike ranked trust before this—if an existing product works, and works well, it’s not worth the hassle of testing a new product unless price greatly improves. For example, it’s not worth Shrike’s time to test out a new fluorescently conjugated secondary antibody… quality is unlikely to surpass Molecular Probes and you will unlikely compete on price well enough to make it worth considering. Note that brand loyalty varies by person/product—this is just an example, and not intended to discourage selling secondary antibodies. When there are multiple distributors of the same product (eg two distributors selling Molecular Probes antibodies), however, it goes back to commodity considerations.
This is a lot to consider for one post. In the next post, Shrike will discuss purchasing much larger items and talk about how the university decides on products. This will also include discussion of the sole source scam (hint: if you sell single ticket items $5-$10k+, you should have sole source justification ready for the purchaser).