Many companies are frustrated by the RFP (Request for Proposal) bidding process. More than in any other type of sale, the buyer is in total control of the process. The opportunity to meet with the prospect and gain information is limited, and often one supplier has the inside track and the others are just “column fodder.” To make matters worse, the low bidder often wins. Information is critical to determine if it is worthwhile for you to participate in the bid process.
Before you decide to participate in an RFP (RFQ), try to get positive answers to the following questions:
- Did you know about the RFP before it came across your desk?
- Did you have any influence in the creation of the RFP?
- Are you able to meet with the prospect before responding to the RFP?
- Is the playing field level, or does one company appear to have the inside track?
- Will the effort to complete the RPF be worthwhile if the bid is won?
- Is the revenue significant, and profitable, for your company?
- Does the business fit with the strategic direction of your company?
If you can’t answer these questions without meeting with the prospect, here are two strategies to consider:
Re-Direct: Get the buyer aside and say the following, “We’ve looked at the bid specs and see some problems. It looks like you might have made some mistakes in planning. If we bid the contract the way it’s set up, you’re going to have problems. By the way, if you’ve ever awarded a contract only to discover that there are cost overruns, lots of costly change orders, and the work not done on time, it’s probably because the specs were flawed from the beginning.” (Most contracts have cost overruns, changes orders, etc. because the specs are often flawed, so the buyer can usually relate to those issues.)
Continue with this tactic to take control of the bid process. “If you want us to bid, here’s what we suggest…let us come in and review the bid specs. We’ll have to charge for this service, but you’ll avoid lots of potential problems and we’ll credit the money back if we’re awarded the bid.”
Time Trade-Off: “Mr. Buyer, in order for me to be responsive to your RFP I’ll need to spend two hours meeting with you and those most affected by the purchase. I’ll need to do this so that I can deliver something that is meaningful and truly addresses your issues. You should also know that my company and I will have to invest (_______) hours of time to put our response together. When can we set a time to meet?”
Sell the analysis, re-write the specs to favor your company and enjoy a much higher close rate and higher margins. If the prospect is unwilling to give you the time to so you can do a better job for him, you must seriously re-consider whether or not responding to the RFP is a good investment of your time.
Self-Study Assignment: If you participate frequently in RFPs and need to do something to gain a competitive advantage, discuss these tactics with your manager and peers. See how they feel about trying something that’s a little unconventional.