Two weeks ago, I outlined my recommendations for effectively running an RFP. Now it’s time to show the RFP respondents some love (and maybe a little pity).
This one hits close to home for me. For most of my time in procurement, I was responsible for managing the internal RFP process – from assigning stakeholders, to the RFI responses, to the pricing proposal itself, all the way through to preparing the final submission – for the several major bid events to which we were invited each quarter. Many late nights were sacrificed in the futile quest for the perfect RFP response. I’m not sure we ever got there, but we did learn some things along the way that increased our conversions on some pretty big proposals.
Over the course of the next few weeks, I want to share some of the steps we gradually incorporated into the process in an attempt to help some of you learn from my (many) mistakes.
So how the hell does Barry Bonds have anything to do with RFP participation?
Performance-enhancing drug usage aside, the guy was the master of pitch selection. He had probably the best eye of any batter to ever play the game. For non-baseball fans that have managed to make it this far (thank you), this translates to his ability to decide whether to swing before the pitch reaches the plate.
So many factors contribute to making that decision… Is the pitch going to be a strike? What direction is the ball spinning? What’s the ball/strike count? What inning is it? Are there runners on base? Where are the fielders positioned? What’s the score? What have I done in my earlier at-bats? What has this pitcher thrown me before in this situation? Who’s behind me in the lineup?
All these thoughts race through your head as you’re forced to make a decision. Oh and you have 0.45 seconds not just to choose, but to actually swing and (ideally) make solid contact.
It’s a really difficult thing to do and even the best players fail way more often than they succeed. But Bonds was the best at it. He was patient, swung at only the pitches that allowed him to do the most damage, and accepted his walks when pitchers wouldn’t put the ball over the plate.
This approach led to his launching more home runs, reaching base more often, and hitting for a higher slugging percentage (a metric that awards points for hits, but 4x more points for a homer than a single) than any player in history during his peak from 2001-2004.
For a much more thorough, slightly ridiculous analysis, check out SB Nation’s great video on ‘What if Barry Bonds played without a bat?’
Okay, let’s bring this back around to RFPs and what seems to have become a foregone conclusion for most RFP respondents – the decision of whether or not to participate.
To set the stage… One of your salespeople comes flying into the conference room with dollar signs in his/her eyes. They just got off the phone with a Fortune 500 prospect and you’ve been invited to their exclusive RFP (along with 15 other bidders). Dollar signs are suddenly mirrored in the eyes of everyone else sitting around the table. News starts to circulate through the office of the $xx million opportunity and it’s immediately all hands on deck.
While the excitement could be warranted, let’s exercise some Barry Bonds selectivity. Much like a batter walking into the batter’s box, the RFP process inherently creates a competitive, unfavorable environment for its participants.
If we’re going to step up to the plate, we should only be swinging at pitches we can knock out of the park. We’re playing for slugging percentage here, not plate appearances. We should care a lot more about total dollars won than we do about total proposals made.
So before investing time, energy, and resources into a multi-week bidding event, we should take some time to evaluate the true attractiveness of an opportunity…
Do you have a real shot at winning?
Yes, the potential revenue is exciting, but the expected return of a 1% shot at $10M probably doesn’t warrant weeks of effort across multiple teams.
Take a step back and try to reflect on reality of the situation. How have you performed in similar RFPs? Do you have a strong relationship with a key decision-maker on the other side? Are you just one of the bunch submitting a bid?
Setting realistic expectations from the outset can salvage significant time and energy for all stakeholders.
Do you actually want it?
Does the prospect fit your ideal customer profile? Would they slot in nicely to your current operational model or would they become a constant source of insurmountable headaches? If the sole driver in your participation is the potential revenue, be sure to consider the tradeoffs.
Similarly, try to discern which criteria will be most important to the prospect when choosing the winning bid. Will lowest price win out? Are there regional preferences? Is there an environmental focus? Whatever key drivers exist in their decision-making should closely align with the unique values your company provides.
Is it real?
Is this a real thing or is the prospect just testing the market? Many companies repeatedly take their products/services out for bid every two years purely to validate their current pricing.
Even if they find more competitive rates from another vendor, they’ll often just leverage the quote to drive down their current vendor’s pricing. The RFP process is a sunk cost at that point anyway, so it’s a less expensive and less time-consuming alternative to secure the same rates with their existing provider.
What happens if you win?
So great news…You won. What’s your first reaction? Okay probably wild excitement at first, but is it followed by any immediate concerns?
Do you have the right team and resources to manage the big fish you just landed? If not, can you scale quickly enough to accommodate?
What’s the tradeoff internally?
Let’s say you’ve decided that you do have an outside chance of winning the RFP, but you acknowledge the odds are relatively low. How else could your team use that time and energy productively? In any ways that would be more valuable than taking a stab at a low likelihood RFP?
Are there lingering projects that you never have time to address because of the constant fires? Can you take the time to streamline and automate your process so you’re more prepared for the next, better opportunity?
Is there a downside if you don’t participate?
Does someone internally have a relationship with the prospect that could be jeopardized should you choose not to participate? Are you making any other sacrifices if you decline to bid?
Do you win even if you lose?
On the other hand, throwing your hat in the ring may establish a valuable long-term relationship. The prospect could be impressed with your proposal and prioritize your bid when going back out to market. Or maybe they have other, better fitting opportunities coming in the next few months. Better yet, they might even make an introduction to another company in the industry.
So don’t forget to think big picture. You don’t want to swing at every pitch when you step up to the plate, but you do want to make sure the pitches keep coming. Then, when the pitcher grooves a fastball right down the middle, you’ll know exactly what to do. Swing hard and start trotting around the bases.