RFPs aren’t going away. When driven by purchasing alone, the intent is to reduce costs or number of preferred suppliers. And both are appropriate goals to control spend, logo usage and rogue buyers. Fortunately, what has diminished is the reverse auction determined to lower pricing beyond that in the document. But the exercise of spending days explaining your every process remains.
For some quick tips, read the Guide.
Can you get good business through an RFP process?
RFPs arrive for different reasons. Your client regularly uses them or has now decided to try the process. You’re on a company’s list because you approached them. Government agencies use them to drive lowest price. Or they come unexpectedly because the purchasing or marketing department saw your corporate name on a list somewhere. Sometimes procurement officers include lots of companies to see what they can learn about what to look for that’s different vs. what’s standard in every answer.
Yes, you can obtain and/or maintain good business through the process, but it’s not the primary means of growing your business. Filling out RFPs can take from 20 to 40 to 50 hours, depending on the document and your qualifications.
Do you have an internal system for when RFPs arrive? Are you organized internally to respond accurately and impressively? If you want to get business through RFPs, you should have a selection of files ready to be included. Start with charts, graphs, case studies and photographs of showroom, product, offices, and warehouse. Can you delineate your ordering, proofing, quality control, technology and online store processes? Verify your testing techniques? Demonstrate adherence to environmental and social responsibilities?
If you run a good business, you can get good business through the RFP process.
How do you find more RFP opportunities?
If you’re targeting accounts you’d like to add to your client roster, then introduce yourself to purchasing and/or marketing personnel, discuss your capabilities and what you bring to this prospect, and ask to be included in their next RFP. Ask about their RFP schedule so you can check in nearer the time to remind them of your interest.
Finding more RFP opportunities starts with presenting yourself and beginning that relationship building process. And that’s what we as promotional professionals do best: Listen, learn, match messaging to the right product and reinforce corporate brands. So whether approaching customers via a direct mail campaign, a written letter or an actual appointment, distinguish yourself as a knowledgeable professional.
Approach companies where you see a fit to bring your specialized services and capabilities to reduce their costs of both time and money. Should multiple RFPs come out simultaneously, do you have the man-power to complete them? If you land the business, can you fulfill your promises?
RFP, RFI, and RFQ differ. The RFP is Request for Proposal, though you’re doing less “proposing” and more responding to the numerous questions. An RFI is a request for information, basic facts about your company to determine if you belong on their RFP list.
Publicly held, large corporations and many government agencies have places on their websites to register as a vendor or to be included in RFQs. The Request for Quote is for the lowest price. Government agencies and entities, including state universities, often use this format. So do companies that are pricing commodities such as tires, fuel, replacement parts, and yes, logoed merchandise. To them, a pen is a pen.
What percentage of RFPs are written well and truly reflect an opportunity vs. someone simply following corporate procedure?
Some businesses are changing their RFP procedure. They list their conditions and instruct you to propose how you will address their defined issues. Rather than insisting on rote questions on processes and procedures, they’re asking about your management style and skills and what you will bring to the account.
Beyond their criteria, you still want to address the basics of quality control, proofing processes as well as social responsibilities, testing and compliance. And still use charts and bullet points for faster reading and highlighting points you want to make. But somehow these are nicer RFPs!
Most RFPs tend to be too long, too repetitive and too focused on minutia. Frequently the writers, or committee, don’t understand our business. Each committee member has his or her own agenda. If questions are submitted by different departments such as technology, marketing, and H.R., each may ask the same question, for instance about your quality control methods. As the responder, we feel they’re repeating the question, but in fact, only the person responsible for that section is reading the answer. So form your replies based on the section heading.
Or, the repeated questions about on-time delivery, service levels or product quality could be a clue. Perhaps that’s an issue, and you can speak to their pain with case studies or examples.
As for the opportunity being real, yes, it generally is. Even if it’s corporate procedure, even if they stick with the incumbent, change can happen. You may be added as a preferred partner, which is basically a license to hunt, not a guarantee of a piece of the business. But if your service lives exceed expectation, you may end up as primary with the incumbent dismissed. It happens!
What percentage of RFP's are simply awarded to the incumbent supplier? Are you able to put a figure to that?
While some RFPs are awarded to the incumbent supplier, most are a genuine effort to improve costs and services. If no distributor delivers a compelling reason to change and if the existing situation is “good enough,” management may feel it’s simply too complex and cumbersome to shift suppliers.
Larger companies with extensive stores and purchasing requirements don’t like the disruption of changing partners. Show them how you’ll help. A key element is to provide a smooth, clear implementation plan and a case study of how you worked with another company to transition their store and merchandise to your account.
If they remain with their original supplier, stay in touch. The RFP will come up again in a year or two, and you may be better known to the decision makers at that time. Don’t overwhelm them with information, but remain visible with any service or capability upgrades, a note about awards received or community involvement. Personalize yourself.
Should you participate in an RFP if you have no relationship with the company?
Learn as much as you can so you can understand the opportunity and make an intelligent decision:
- Who is the incumbent?
- What is the client’s objective?
- Can you get perspective on what’s missing in the current relationship?
- Is the process being initiated/managed by the marketing or procurement department, or is a procurement organization involved?
- Have you been included as a price comparison or for your reputation for creativity?
- Is it a reasonable document, and can you easily fulfill the requirements?
- Have you approached this client or is it a referral from an existing client or one who changed companies?
- Have you a realistic chance to be on the preferred partner list?
- Might you been included as a minority business?
- What end result does the client want; can your business be their solution?
- How complex (and thus time-consuming) is the market basket?
- The time, expense and resources necessary to participate
- The size of the current promotional products volume, the type of program and any financial obligations
- That whatever value they put on the current business may be exaggerated
- That their goal is to reduce that spend
- If you are experienced with their business field (healthcare, entertainment, financial, grocery chain)
If you don’t participate without explanation, you won’t be included the next time. If you participate and impress, you may have a future opportunity. A real example is a distributor who participated through three RFPs. Three times the company chose the wrong partner for their business needs. Then they called him. He had been consistent in his responses over six years and three RFPs, explaining the service and creativity he would deliver that evidently they weren’t receiving after so many attempts. It’s turned into an excellent and lasting relationship.
Sometimes we simply don’t have the time or resources to respond. Decline graciously and professionally. That, too, keeps communication channels open.
How should one handle politely declining participation in an RFP?
Sometimes it’s smarter to decline than to try to win business you can’t profitably service. Perhaps you have a conflict with another client. Whether participating or not, you want to be your professional best. Some documents include a form to return. If you email that form, include a note within the body of the email. Then follow up with more detailed explanation on your letterhead.
Of course you’re appreciative of the opportunity. You may not see a fit for your business; explain nicely that your current services or focus doesn’t match their requirements. Your area of expertise is X; briefly explain your company’s strengths and capabilities.
We’ve seen surprising things happen when distributors are clear and direct, including client acknowledgement that the distributor’s concentration, though not the intent of the RFP, was a desired capability. One distributor, asked to participate anyway, “spoke” to the reader throughout the document, explaining what he could--and could not--do for the client. He was added as a supplier.
As your services and capabilities change, notify the client. Don’t cross the line between follow-through and nagging, but staying connected may provide a future opportunity.
Can you explain cost plus as it pertains to our industry?
Whether called sourcing, procurement or purchasing, this department’s objective is to reduce pricing and number of vendors. By demanding our costs plus a concrete markup, they obtain pricing consistency to control budget within this category. Through demanding, negotiating or setting their own markup, they don’t have to bid everything or require multiple bids (time-consuming). They can place a firm figure in the contract and move on to the next RFP category.
Cost plus assumes that there is a finite cost for the pen, cup, shirt or anything we produce and that the markup will include associated overhead expenses. It does not take into consideration the value of selecting the right product to reflect the corporate brand, theme and message, creative ideas, research time and the service levels on which we built our businesses and reputations. Cost plus ignores our marketing value and concentrates on our products as commodities.
A sourcing manager once told Tango that marketing doesn’t care about cost; they care about ideas and creativity. Hooray! That’s what we hoped. But in larger companies, the decision is probably being made by a committee that includes sourcing, marketing, IT, HR, safety and similar affected departments. And in small companies, procurement and marketing may be battling over which controls the promotions budget.
Keep in mind what they want the ultimate outcome to include:
- Fewer suppliers
- Lower prices
- Better customer service
- Specific qualifications and services
- More creativity
- Fewer errors
- Faster response time
So if forced to present pricing in a cost-plus format, explain in detail and demonstrate through case studies that what you deliver ultimately saves them soft and hard costs (time and money), thus validating the “plus” figure you provide.
Are there some big negatives to watch for when reviewing an RFP?
Who is conducting the process? If this is run by procurement only, the purpose is lowering costs. If run by an outside/third party sourcing company, then they must demonstrate cost savings to prove their value and cover their fee for managing the RFP!
That doesn’t mean you can’t win an RFP run by a third party. Visit their website to see what promises they make. Then show how you’re the solution they promised to bring to the client. Yes, it can happen.
It’s a tough document if the:
- RFP doesn’t provide sufficient information, including the value of the business
- Market basket is not clear or is a laundry list of items in every size
- Market basket’s pricing formulas don’t work
- Purchasing representative doesn’t want to or can’t answer questions
How long does a typical RFP process last?
Some RFP time frames comply with what’s stated in the document, but too often that self-imposed limit is not met. A good company will update you as to if and why there’s a delay; others will simply take their time. Period.
If the RFP began with an RFI and is followed up with presentations from the finalists, the time frame could be two to four to six months. A presentation might be followed by an on-site visit to your offices, showroom or warehouse to validate that your RFP statements are true. Even then, unable to make a decision, they may keep the incumbent, add you as a preferred supplier and continue to ask you questions and for more information over a period of time. And they may eventually choose you. Yes, it has happened. So don’t give up!
What can delay an RFP decision? The committee doesn’t convene or can’t come to a decision. The client issued so many RFPs and/or is so unfamiliar with our business that they can’t process all the documents and answers. Or they can’t find a differentiator in the answers (so position yourself to be the expert and the difference!).
What are the positives to look for when reviewing an RFP?
- A list of their requirements so you have a check-list to address through your answers
- A reasonable pricing exercise interested in how you price rather than a price comparison of everything they purchased the previous year
- A market basket that factors in your overhead and demonstrates an understanding of our industry
- Stating the different departments participating in the process
- A willingness to answer questions, even if the answer is shared
- Clues throughout the document as to their pain and the real reason for the RFP exercise
Are there specific questions one should ask when allowed an opportunity to?
If you need clarification on an item or concept, ask. Be aware of the deadline.
Review (and begin) the pricing exercise immediately. Confirm you have enough information to correctly price and to price the correct item. If not, ask for more specifics, which you may not receive. Test the formulas; if they don’t work, respectfully question them. We’ve seen where purchasing has had to make changes.
What percentage of RFP's have an open meeting or an actual chance to ask a verbal question?
Open meetings are more a function of larger organizations like Coca-Cola bringing together their multiple vendors for a single explanation/question/answer session.
Unless specifically instructed to limit yourself to written questions, you might call the contact person for clarification. Even better, if you’re attuned to their RFP schedule, make a learning appointment with purchasing or marketing prior to the RFP.
Is there any way to break the RFP process or is this inadvisable?
What…break the process and put all those procurement people out of work and third-party sourcing firms out of business? Tsk tsk.
The RFP is a vetting process that worked for years as businesses purchased services and materials (tires, fuel, fax machines, office supplies, widgets). It gradually overlapped into our industry as procurement departments went head-to-head with marketing over expenses. And with marketing’s needs in mind, an RFP checks your qualifications to see if your business is a match for their needs.
Let’s be fair: Our industry did--and still does--sell some product where value is questionable. Industry professionals understand the relationship between brand and perception, the importance of matching product with messaging. So our job is to distinguish ourselves to the client through the RFP, demonstrating through words and case studies our ability to contribute to the professionalism of corporate branding and marketing.
This doesn’t mean not using the fun stuff! It simply means selecting the right item for the moment, the message and the brand. When it all fits, our products are a highly cost-effective means to influence the recipient to take a desired action.
So we must educate those reading our RFP responses because until attitudes and situations shift, RFPs will remain a popular business tool to contain cost increases. The good news is strong relationships with consistent, ever-improving services, capabilities and cost-cutting can avoid the process or receive an on-going contract.