Requests for Proposals (RFPs) can be a significant source of revenue for many sales organizations. But they’re also time- and labor-intensive, and using the wrong strategies in pursuing them can result in a net negative to the bottom line, the hidden costs exceeding the revenue gains of won deals. So it’s worth examining both how to choose which RFPs to respond to and how to reduce the resources sink for the ones you do pursue.
- Realize that not every RFP is an actual RFP.
A common occurrence in the job market is that the positions being posted already have a pre-determined candidate in mind and the postings for those spots are merely legal formalities or a way of harvesting resumes for future openings in the same role. The same is often true of RFPs – the winner is already essentially decided, and the call is a way of getting a framework of solutions and costs.
They can also, like major college sports coaches, be used as leverage against a pre-existing contract to seek more favorable terms for the requester. Another option – a way to obtain consulting without paying for it, then implementing the recommendations in-house. While the ethics of these reasons for an RFP are certainly questionable, be aware that it does happen.
So this might require doing a little detective work beforehand. If you have a contact at the firm requesting proposals, reach out to them and see if you can find out if it’s legitimate or not before committing to the project.
- Calculate the estimated costs vs the anticipated income.
One thing businesses should do due diligence on is figure out not only what the expected income is, but what the costs (both time and financial) are in determining whether or not to pursue the RFP. In one case study, it took a company approximately 32 hours for each proposal with an estimated cost of $3,200 per proposal. In the calendar year tracked, the organized responded to over 100 RFPs – resulting in excess of $320,000 worth of costs. Depending on your company’s annual revenues, that’s a massive sum.
But that’s just the dollar amount. The other, perhaps even larger concern, is that the time you devote to answering RFPs comes at an opportunity cost to other areas – likely involving multiple departments in your company. So one of the questions to ask is, “Are these departments’ time best served crafting a proposal or focusing on other business activities that contribute to the bottom line?”
- Collect and establish a repository of previously used RFPs and answers.
While proposals, whether business or grant-writing, each have different requirements and asks different questions, there will be some parts and questions that repeat across various requests. Therefore, one of the best practices is to store previous proposals and answers digitally for easy retrieval and referral when those same specifications come back up again. Obviously, there will be adjustments made to match each proposal’s specific requirements, but simply having a base of material to work with is a major resources savings.
- Remember, your proposals still need to be customized.
While we’ve been discussing ways of being selective in choosing the requests to answer, and making the creation process faster and easier, it’s worth emphasizing that you need to take the time to find out a prospect’s situation, needs, and desires. If it’s generic, the prospect will recognize that and the time that you’ve spent will be wasted.
That means engaging in discovery and conversation before drafting your proposal, let alone submitting it. And if they opt out of discovery, that’s a sign to pass – then it’s likely one of the situations we covered above where it’s not really a RFP.
While organizations can get lost in the frenzy and cross-departmental undertaking that involves answering an RFP, it’s important to remember the following: an RFP is an opportunity, just like the ones you’ve captured via your usual sales process. Stick to the process and trust the process as much as possible. After all, you’re ultimately still selling, they’re still buying, and the stages and steps are still the same. It’s only the material form involved that’s different.