Due diligence would suggest that, for clients to choose the best vendor, they should investigate several competing firms to compare cost, quality and reputation before making a purchase decision. So they solicit proposals or quotes from a few suppliers they’ve identified who can meet their needs. So far, so good but keep reading …
Every legitimate RFP presents a potential selling opportunity if there is a reasonable budget and directive behind it. But a budget and the client’s will to choose a vendor are only two of perhaps dozens of conditions that should be met before you decide to answer that RFP with your company’s resources. Most salespeople want to pursue any legitimate RFP they receive, but as their manager your role is to help them know when to say no.
Writing and submitting business proposals is a lot of work without a guaranteed outcome. By virtue of spending time learning your prospects’ issues, meeting with them, offering recommendations, writing and producing the finished proposal, you’ve essentially become an unpaid consultant and invested a lot of professional man hours without compensation. Even if you win the contract, you can’t always recover the cost of pursuit.
RFPs submitted to several potential vendors or those for public offering may seem like low-hanging fruit to a salesperson because it’s an open invitation to sell. Getting on a “bid list” might even feel like a big accomplishment to the salesperson going after that account. Maybe it is and maybe it isn’t.
A client pursuit decision tool can help you and your sales team win the most profitable kinds of business and avoid the low-margin, high-stress clients that drag on your firm’s ability to deliver best-in-class work. Chasing after nominal-fit RFPs also makes you miss more profitable opportunities that good prospecting would uncover.
A “Pursuit Navigator Tool” is essentially a strategic checklist of potential issues that must be addressed and satisfactorily met before a response decision is made for a proposal request. Every company selling expensive products and services should have some kind of decision-making process for qualifying worthy new business opportunities.
It’s all about arriving at a go/no-go decision. Less experienced salespeople will tend to lean toward go and can’t imagine saying no to a proposal or quote request. Requiring your sales team to use a go/no-go decision process will help them and you better distinguish the real opportunities from the losing propositions.
Because of opportunity costs and real money spent on submitting proposals, pursuing them involves risk, sometimes very significant risk. As such, the decision to pursue an RFP should not be the salesperson’s alone but rather a team-driven one. Certain conditions must be met to arrive at a “go” decision.
A Pursuit Navigator Tool is essentially a comprehensive checklist of existential issues relating to three main components:
- Client
- Selling team
- Contract and financing
Client issues can be myriad and may include unfamiliarity or weak relationship, lack of client direction, poor client-side communication, cultural issues and office politics.
Selling team issues are things like no experience with vertical industry, internal capability, no client pain identified, your proposal is used for “due diligence” or no information on the competition.
Contract and financing examples may include no written agreements, unreasonable guarantees required, questionable payment history, up front out of pocket cost required and no dedicated funding.
Each issue identified on the three lists will have a corresponding strategy to solve the issue. Only you can determine an acceptable level of issues and corresponding mitigation strategies an RFP poses to your selling effort. The number of issue checkmarks, especially the ones with no solid mitigation strategy, can be your key metric for a go/no-go decision. It’s up to you to determine whether the proposal investment can be absorbed with a high enough probability of winning profitable new business.
Unfortunately, organizations sometimes take advantage of sales eagerness and will simply use salespeople to get better educated as buyers, while their friends end up keeping the contracts. Never let your company or your sales team be used as an on-demand proposal generator that satisfies a prospect’s need to get a few proposals so they can fulfill their procurement policy. Sales is and always has been an honorable profession. Let’s keep it that way!
Originally published in the New Hampshire Business Review.
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Kevin Hallenbeck is a Principal of Sandler, a national consulting firm specializing in business development strategies, sales and sales management training. Kevin holds both a B.S. and an M.S. in Engineering. He lives with his wife, Diane, and their five children in Bedford, New Hampshire. Kevin is active in church, community and professional organizations.
