Flattered to be asked to respond to an RFP? You shouldn’t be. Here’s why they are bad for your organization.
When a possible client concerns a Request for Proposal (RFP), it can be tempting to throw your hat in the ring. But responding can dilute your brand, undermine your credibility, shave your margin and ultimately devalue your company when it is time to sell. Right here are seven motives to take a pass the subsequent time you&rsquore invited to respond to an RFP:
1. Tendered business doesn&rsquot stick
Even if you win the work, the identical rules that forced the company to tender the RFP in the very first location will kick in again and force them to host another beauty contest subsequent time, no matter how very good a job your company does.
The worth of your business is linked to how repeatable your model is. Acquirers take into account RFP-won organization as risky and they&rsquoll probably discount the revenue as &ldquoone off.&rdquo By doing RFP function, you&rsquore running on a hamster wheel alternatively of constructing value.
2. RFPs dilute your differentiation
Responding implies you are agreeing to be shoved into a box with a bunch of half-rate competitors who compete on value. You&rsquore better than that.
3. RFPs cut your margins
The RFP is structured so that the buyer designs the specifications of the job and then you explain how cheaply you can provide their specs. The purchaser is attempting to get the really ideal value employing an apples-to-apples comparison. Do you want to compete on cost? If so, don&rsquot anticipate to sell your enterprise.
four. They choose the rules, not you
The function of an entrepreneur is to conceive of what the industry does not know it demands. Nobody believed we would need to have a thousand songs in our pocket, but Steve Jobs wasn&rsquot reacting to consumers&rsquo requests. He was leading them to something far better. By responding to an RFP, you let the buyer determine how you do your job. Excellent businesses lead their customers–they don&rsquot comply with them.
5. They&rsquore rigged
Most RFPs are sent out so the choice maker can say they tendered it. Buyers feed secret information, hints and suggestions to the company they want to win, and a lot more typically than not, the selection is made in someone else&rsquos favor just before you even submit your proposal.
6. RFPs send the incorrect message to your folks
When you decide to respond to an RFP, your staff will scramble around pricing the job, writing prose and giving away your intellectual property. They&rsquoll wonder why you don&rsquot have the stones to stick to your enterprise model and why you are prepared to let a consumer manipulate you like a marionette.
7. RFPs undermine your company’s sellability
We recently did some evaluation of the customers of www.SellabilityScore.com and discovered that organizations with a distinctive solution or service were much more probably to get an offer from an acquirer than these businesses promoting a commodity. Acquirers like buying firms with a defendable, long-term advantage that gives them pricing authority.
But what if your sector relies on RFPs for perform? Then modify the definition of what you do from getting in the XYZ sector to getting the globe&rsquos very best maker of whatever product or service you sell. Next time you get an RFP, reply with one thing like this:
Thanks for contemplating us for your essential new project.
Here at ABC Widgets, we offer you the planet&rsquos finest widgets employing our advanced seven-step widget making process. It&rsquos a unique system that that enables us to develop widgets that preserve our consumers coming back for far more.
If you&rsquod like to discuss how our distinctive widget making approach could advantage your project, we would be pleased to meet with you.
Four things will take place when you send this note:
1. You&rsquoll spend all of 30 seconds writing it and you won&rsquot waste one more moment on the &ldquoopportunity.&rdquo You&rsquoll go back to serving actual customers who truly spend funds with you and care about what makes you special.
2. Your staff will be emboldened &ndash proud to function for a company with a vision and the courage to stick to it
three. You&rsquoll elevate your status in the thoughts of the purchaser. They&rsquoll comprehend you know far better than to respond to their commoditization get in touch with. They might not respond to your provide to meet, but they&rsquoll be curious to see what you have under the hood.
four. The buyer will probably choose an additional vendor who will be an unimaginative bottom-feeding company desperate for perform. And the customer will get what they paid for: low cost output from a low-cost company. Chances are subsequent time they&rsquoll skip the RFP procedure and call the one company who told them where to stick their RFP.