Understanding how to evaluate an RFP in order to make a better decision about participating is the number one way to keep your sales costs down, and your win percentages and profit up.
In order to make better “Go vs. No Go” decisions about RFPs, I suggest you consider using the following five decision-making filters:
1. Is not responding a realistic option?
- If NO then start responding
- If YES then proceed to FILTER 2
Things to Consider: If you did not respond, would this compromise a long-term relationship or signal disinterest in a potential client in which you are interested? Do you even have the time and resources to write and submit a proposal?
2. Can we do the work?
- If NO then abandon.
- If yes then move to FILTER 3
Things to Consider: Schedule for completion, current capacity to deliver, sufficient expertise in the required area, appropriate licenses/registrations/insurance, potential conflicts of interest, etc.
3. Do we want the work?
- If NO then abandon.
- If yes then move to FILTER 4
Things to Consider: Will the work be profitable, does it align with our marketing strategy, will it strain our resources and impact on other projects, is there strategic value to getting this work, is this a way to introduce/position our firm to a potential new client for future work, do we not want our competitors having this work?
4. Can we win the work? This requires a bit of work...
- Identify the most likely competitors
- Quickly use your best guesses to score them using the scoring criteria within the RFP
- Compare their score to your own projected best guess score
- Are you top 3 or better?
- If not what could you change to get there?
- If NOT TOP 3 then seriously consider abandoning the RFP
- If yes then proceed to FILTER 5
Things to Consider: This requires some benchmarking by your firm to get a “best guess” as to how you and your competitors will rank in the competition.
5. Do the fees available justify the cost of submitting? If NO then abandon.
- If YES then proceed to submit
Things to Consider: When calculating your cost to submit use the opportunity cost which is the “retail value” of writing this proposal not your internal hard costs. Would winning the project mean 10X the cost of writing the proposal? 20X? 30X? And what fee multiple does your firm need to cover the cost of writing a proposal as part of the project delivery cost so that the project remains profitable?
About the Author
Cal Harrison inspires change in the buyers and sellers of professional services. He is the author of The Consultant with Pink Hair as well as Buying Professional Services: Replacing the Price-Based Request for Proposal with Qualifications Based Selection.
Cal is the President at Beyond Referrals - anti-RFP sales advice for the consulting professions. He is a Certified Management Consultant (CMC) and a graduate of The University of Manitoba (MBA, BA). For more info, visit: http://beyondreferrals.com/
Interested in learning more from Cal about reducing your RFP costs while maximizing your win percentage and new revenue? Join us in Winnipeg on September 27 for an exciting seminar. Learn more.