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Improving Business to Business Selling
Effectiveness The Sales Chief’s
Newsletter
www.sellingcoach.co.uk |
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RFPS – LOVE ‘EM OR
LEAVE ‘EM?
Selling Coach Graham French starts a
discussion about Requests for Proposals, the way suppliers get bossed around by
large organisations, the time spent responding - despite poor success rates -
and suggests way of tackling them
Imagine you are a salesperson who has spent most of the month trying to
generate new business by cold calling without much success. This morning, out
of the blue, your sales manager hands you a request for a proposal (RFP).
Phew!… you can stop prospecting. Here’s someone who actually wants to buy your product! You can put the phone down and
start work right away on a real live one!
Is the euphoria about this opportunity misplaced? The problem is that responding
to an RFP is a big job involving not only your
time as a salesperson but, more than likely, a lot of time from pre
–salespeople, technical and/or business experts – at least that’s how it
usually is in the IT space. And if that isn’t the case you’re probably just
snatching at it and sending out barely camouflaged boilerplate.
Typically A Poor Success Rate with RFPs?
I recently reviewed a software firm’s list of forecast opportunities -
deals that they had forecast to close last year. What proportion of these
opportunities involved an RFP? One in
five involved responding to an RFP. What was their success rate? Their win rate
on RFP’s was just 19%. Losses to competitors plus “no decisions” amounted to
81%.
As their overall win rate on all forecast opportunities was 52% (higher
than the software industry average of 48%) it was clear that as far as RFP’s
were concerned this was a disaster area for them. Where RFP’s were involved
their chances of losing were 4 to 1 – a huge waste of scarce pre- sales and
domain resources! How does your RFP success stack up?
Experience tells us that if an RFP arrives unexpectedly without any
prior involvement from us we stand a very small chance (10% -15%) of winning
the business. We might be better off chucking it in the bin and going back to
cold calling rather than taking the trouble and time to respond. In these cases
the buying firm will have already researched the market, may well have met with
one or more of our competitors and, worse case (not that uncommon), already
have a preferred supplier in mind. But nevertheless they need to go through the
motions of a procurement process, searching the market and getting competitive
quotations. Hence your RFP, you lucky salesperson!
How Often Does This Happen?
A little story: an RFP arrived unexpectedly at a software vendor - from
a major building society (now a bank). It was completely out of the blue;
nothing had been known about it before the envelope plopped on the mat.
Everyone in the firm – a start up firm struggling to gain traction in the
market - was excited. “At last… people are beginning to send us RFP’s”
exclaimed the ecstatic CEO. Asked for my advice, I suggested that the
salesperson call the contact name in the RFP and ask for a meeting. He did and
the meeting was denied. Nobody in the firm, by the way, had any contacts in the
building society. Our knowledge about the building society was zilch.
I suggested that our CEO write to the contact person thanking them for
the opportunity to provide a proposal but strongly requesting a meeting in
order to understand the requirement better. If this request was denied we would
respectfully decline to respond in the best interests of both parties. The
letter was sent and again our request to meet them was rejected. If there were
any questions, however, we were to email them to the contact who would provide
a response. They would then circulate the questions and answers to all
competing firms.
The signals were becoming depressingly clear. I recommended a last ditch
attempt - the CEO should write again, this time to the finance director whose
department we were fairly sure would be initiating the RFP. But our CEO did not
want to do this and had got cold feet about not responding. Against my advice,
a decision was made to complete the RFP document and submit our proposal
regardless.
Surprise, surprise in a week or two we got a standard letter telling us
that we hadn’t been successful on this occasion but our proposal would be kept
on file in case…in future etc etc. Phone calls to try to find out who had won
proved fruitless; the building society refused to discuss it.
And the Moral of the Tale?
To me the lesson is clear. If you aren’t involved in discussions with
the buying organisation before the RFP arrives your chances of success are so
very small that you should ‘no bid’ and save the time and expense. But not
before you have tried this. Insist on meeting at least the RFP’s gatekeeper to
understand the drivers for the RFP. Ideally, you want to meet with the sponsor
and the people who would be using your product or service. If these requests
are denied you are probably going to be what
In a brilliant little book entitled “RFP Sucks!” Tom Searcy counsels
thinking hard before responding; ask yourself, he says:
“Do we know anyone within this buying company? Does anyone in our
company know his peers in their company? Does our CEO know their CEO or does
our CFO know their CFO? Do we know any former employees? Any board
members? …If you don’t… think about
skipping this RFP. You won’t be able to
present yourself in your best light”.
One highly successful consulting company I know will not pitch for a job
in an organisation where they don’t have a “friend at court”.
Spending All Your Time on RFPs?
A year or so ago I talked with a sales director of the market leader in
their industry. Whenever anyone sent out an RFP his firm was top of the list to
get one. He told me that his salespeople spent most of their time responding to
RFP’s and invitations to tender.
Why did they respond to all of them? “We have to… to be in the game” he
said “but we’ve got it down to a fine art now – we use a template and cut and
paste so it doesn’t take too much time to respond.” Their loss rate on
proposals submitted was staggering. Looking at a sample of their proposals I
could see that 90% of every proposal was pure boilerplate - generalisations
about their products features and benefits – not specific in any way to the
individual prospect’s business.
I was fairly forthright in my recommendations which the sales director
considered too radical and refused to accept; I never did any work for them.
Some time later I met the sales director again. He informed me - without any
acknowledgment of our past conversation - that they were now very selective in
responding to RFP’s. I bit my lip and congratulated him on his smart thinking.
As
Tom Searcy says “Don’t answer every RFP. Be very selective…..even for
those of you who are adamant about avoiding RFP’s at all costs there will
inevitably come a day when that irresistible RFP lands on your desk. You know
the one; you glance at it and can almost smell the boatloads of money and hear
the accolades of your business associates. I think we should do this, you say
to yourself..”
Better Off Saying “Thanks But No Thanks”?
Who knows? It may be the big one. Or just possibly you may be better off
resisting the temptation to respond. Spend your time prospecting, maybe even
cold calling! (now there’s a topic for another bulletin!).
If you would like more information on how to tackle RFPs more
effectively, talk over how your team
could save time and money and win more RFPs, call us on 01608 66 37 52 or email
graham@sellingcoach.co.uk