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As part of the senior executive staff years ago of a billion dollar public company, I sat through several Requests for Proposal (RFPs) reviews submitted to us by other global players. Sitting in the boardroom with the CFO, CEO and the RFP project leader (a Director), I was able to observe the strategic, analytical and emotional selection process used to buy multimillion dollar, multi-year contracts. It was interesting how the management team inspected each RFP, created a short list and made subjective observations about each vendor, their offering and its value contribution to our company. Since it is estimated that 24% of all RFP's are NEVER implemented even when a short list is compiled, many RFP's are actually Request for Information (RFIs) in disguise and it is important to manage your time allocation based on logic not emotion.
Often senior management and sales teams assume that this is a big deal and they must submit. This approach is called the "rainbow" affect and makes many companies chase RFPs they should otherwise ignore. Yet time and time again, companies chase the RFP rainbow, spending hundreds (or maybe thousands if it's a government RFP) of man-hours trying to sell the impossible.
These experiences coupled with working with clients on RFPs have given the Value Forward Group insight into some best practices you may be interested in considering if you want to increase your RFP capture success.
The following best practices are recommended for companies that have annual revenues less than $500 million per year or where the sales team is required to put together the RFP themselves. Often companies with annual revenues greater than $500 million have an RFP department to manage the submittals.
5 Best Practices for RFP Success
- Deals valued over $1,000,000 in the 1st year
Bid ONLY if you have at least 3 of the following variables in your favor:
- You have worked with the client before
- The deal's location is within a 2-hour plane ride or less of your office
- You know for a fact you will automatically be placed on the short list by submitting
- You have won this type of business before
- You help write the RFP
- Deals valued under $1,000,000 in the 1st year
Bid ONLY if you have at least 3 of the following variables in your favor:
- The deal's location is within a 4-hour car ride or less of your office
- You know for a fact you will automatically be placed on the short list by submitting
- You have won this type of business before
- You help write the RFP
- Packaging
When packaging your RFP, make sure its presentation matches your value. Many companies work on their RFP up to the last day, then overnight it to the buyer to beat the deadline. Focus on the proposal structure (color, dividers, PDFs, etc.) even if you have to submit it through the Internet. When sitting in on RFP reviews, I noticed that the best looking physical presentations always seem to get more attention. Remember, RFPs (like all proposals) are invisible salespeople.
- The Offer
When writing the financial offer to the prospect in your RFP, always give them 3 price options, not one . . . even when they tell you to give them only one. Why? Because once you submit an RFP -- it's the "don't call us, we'll call you" syndrome and you may not have the opportunity to resubmit alternatives they may not have considered or that your competitors have suggested. By supplying three options, you position your RFP differently than others who only offer one.
- Over-Produce
When creating your RFP - the key to success is to over-produce, yet companies barely get the finished RFP out the door. To increase your RFP closing ratio, build a better presentation. Supply audio CD, DVD, or MP3 file testimonials of your clients. Add a 5 minute CD from your President explaining why the prospect should buy from you. Submit an audio Q and A of the questions they asked you to supply in writing.
NOTE: One business metric we see that seems constant is that companies that respond to too many RFPs, normally do so because the rest of their lead generation programs are weak, and they try to compensate for their lack of revenue growth and lead generation by incorrectly assessing their potential RFP success and responding to everything.
To close more RFPs . . . respond less, qualify more and over-produce when you submit!
Writers Resource Box
| Paul DiModica is the author of the best-selling
books: Value Forward Selling, Value Forward Marketing, and Sales Management Power Strategies.
He is founder of Value Forward Group and addresses
thousands of executives each year on the subjects
of sales, marketing and strategy, including
executives and staff of Wells Fargo, Lanier Corporate, Adobe, IBM, Tyco/American Dynamics, Navitaire and many others. His content-rich
workshops and strategy sessions on leadership, sales, management
and marketing bring about immediate changes
and long-term results. For more information, visit http://www.valueforward.com |
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