By Bill McCrary
Many salespeople try to respond to all proposal requests that come across their desks, as long as the scope of work fits the capabilities of their companies. It’s easy to see the allure. Pursuing an opportunity that falls in your lap seems more desirable than beating the bushes to find prospects.
Desirable, yes. But, is it smart?
Like the pursuit of any project, responding to a request for a proposal (RFP) has many associated costs:
- You invest time analyzing the prospect’s request and delineating the solution your company could offer.
- You invest time researching your competition and the solutions they offer.
- You invest time positioning your solution as superior to your competition’s solution.
- You invest time writing the proposal and developing appropriate supporting materials.
- You or your company pays to produce any required presentation materials.
- Finally, you experience the opportunity cost of working on a proposal instead of pursuing other opportunities that, were it not for the arrival of the RFP, may have seemed more appropriate.
You should also remember that all RFPs are not created equal. There are various reasons buyers send out RFPs, and not all of them involve the intention of doing business.
One reason companies send RFPs is simply to obtain some no-cost consulting. For example, they may be considering establishing a new process or system using in-house resources, and sending RFPs is a way to gather relevant, valuable, and FREE information about processes, costs, implementation timetables, and so forth to guide them in their development efforts.
Another reason companies might send RFPs is to gain leverage with a group of competing potential suppliers. The buyers end up with several “bargaining chips” with which to negotiate—playing the bidders against each other. This is also an effective way to pressure an existing supplier, especially when negotiating contract renewals or requesting additional services at prices favorable to the company.
To be fair, there are other, less manipulative, reasons for proposal requests. You may have discussed a business opportunity with a new or existing client, and the client may send an RFP to obtain information that will determine whether they will be comfortable moving forward. Or, if the buyer has made the decision to move forward, the purpose of the request could be to secure confirmation of the arrangements discussed.
The point I want to make is that blindly responding to an RFP is an iffy proposition, even if the scope of the work is well within the capabilities of your company.
Think of it this way: A proposal is simply a presentation that’s delivered on paper rather than in person. Whether delivered in person or on paper, it doesn’t make good business sense for you to invest time, energy, and company resources developing a presentation without first thoroughly defining and qualifying the opportunity it addresses.
There are opportunities that simply aren’t worth your time. Be selective and pursue only those projects in which you can provide a best-fit solution and in which the prospect is ready to make an appropriate investment within a reasonable timeframe.
You may not always be able to be as thorough in qualifying an opportunity from an RFP versus one that you’ve developed through ongoing person-to-person interaction with the prospect. But it’s imperative that you have a conversation with the buyer or an appropriate representative in order to qualify the opportunity, and, at the very least, determine the underlying reasons for the request. Only then can you determine if the request is worthy of your time and effort.
Bill McCrary founded Strategic Partner in 1997 after a 20-year corporate career with Fortune 500 companies Georgia-Pacific and Wyeth Labs. Strategic Partner, a sales force development company, is an authorized licensee of Sandler Training, ranked No. 1 in training in 2015 by Entrepreneur magazine. You can contact Bill at 803-771-0800, www.sp.sandler.com or Bill@Sandler.com.