To Bid or Not to Bid--The Classic Sales Dilemma
I recently received a lot of feedback on one of my weekly tip sheets I send out to subscribers (you can join the mailing list here) regarding bids and proposals. Here's a quick recap of what it said:
"A request for proposal is a waste of time, if you don't have the following things in place first:
- An Executive Sponsor--Exec Sponsor Blog
- An understanding of the specific problem that needs solving within 90 days
- A reason why the sponsor is looking to stop using their current provider
Even when I have the above items, I still add a final check. Before I submit a bid, I'll say to the sponsor:
"I believe proposals are written confirmations with details of what has already been agreed to, so let's determine what we are agreeing to, and then I will write it up for your review, edits, and approval."
Bold? Direct? Assumptive?--Sure, and it also gets me out of the game of be being brushed off by a proposal request. Real buyers don't flinch at this. Explorers, the perpetually curious, 3-bid policy followers, and other time-wasters always balk. Buyers just smile and answer."
One of my readers, who was understandably skeptical, wrote the following:
You talk about not writing the proposals and weeding out the "get 3" folks, but I don't see how to get around that on most of the inbound inquires I get. It's an annoying step in even the early stages as most as those asking aren't always those buying. I've been at this for over a decade and it always makes me cringe when I have to do this but I can't fathom how else to proceed without turning away the masses. I'm happy with turning away some, even most, but....
I understand the fear that my reader had, but facts are our friends even if they are not friendly. Here's what I told her:
Typically, the rate of success for "blind" inquiries in the marketplace is less than 3-5 percent. Blind means that we don't have an executive sponsor, prior working history, or a clear understanding of the problem before the inquiry was received. My question is what is your success rate on blind inquiries? If it is better than 10 percent, certainly continue to answer them, although you may want to use a few more screening criteria. Here are a few recommendations for when you get a blind inquiry from someone who is clearly not the end-user or real buyer:
1) "It's our policy that we must have a needs interview with an end-user as well as the purchasing executive prior to our participation in a bid process with a prospect who is not a current client. Our interview takes less than 20 minutes. Can I schedule those meetings with you, or should I reach them directly?"
2) "How many companies are you asking to participate in this process? (If the number is greater than 5 you can feel comfortable exiting unless they meet the other criterion I mentioned above).
3) "How did you hear about our firm?" (If the answer does not involve a referral of some sort, you can exit with confidence).
When I wrote the book, RFPs Suck!- How to Master the RFP Process Once and for All to Land Big Sales, I did a lot of research on the world of structured bids, RFPs, and other procurement processes. Here are some of the more discouraging statistics I uncovered:
- Over 90 percent of bid processes award the contract to the incumbent
- When surveyed, 83 percent of Fortune 500 Companies admitted that they had selected their vendor before sending out their RFPs
- The top reason that companies go out to bid is for better price. The second reason is for better terms. The distant third reason was for improved performance or additional value.
I think that you have to be really careful when you participate in bid processes where you don't meet the recommended standards I listed above. The numbers are just not in your favor.