Requests For Proposal: End the Madness!
By Elizabeth Gooding on January 19th, 2011
Many of my posts originate in my head as rants, are subsequently doused with antacid (and some form of sedative) and thoroughly edited down to civilized business speak. Today I think perhaps I should just “let ‘er rip!”
Let’s face it, most participants in the RFP process (from either the Issuer’s or the Responder’s perspective) don’t profit from it. You would think that the Issuer would always benefit but, in fact, they usually only achieve cost savings in trade for:
- A slow and expensive buying process that takes focus away from day-to-day operations and revenue generation;
- A “new” solution that typically mimics what they currently have (state of the art 1980’s solution) at a lower cost than they are currently paying;
- Damaging relationships with current vendors, and potential new vendors through a, let’s just say it, dehumanizing process of on demand hoop-jumping.
Except in very rare cases of extremely well-crafted and needs-driven RFPs (those where a new solution or approach to a problem is being investigated, where current service levels are unacceptable or where there are major opportunities to consolidate vendor relationships) the sole beneficiaries of the RFP process are the procurement professionals themselves. The way most procurement operations are incented causes them to treat every possible purchasing relationship as a commodity and drive it into a box that can have an SKU and a price code slapped on it. And when you think you’re in the box buying business – everything starts to look like a box. This process also does not take into account how much it cost to build “the box” in the first place or how much it will take (in time and distraction as well as dollars) to build “the box” somewhere else.
And another pet peeve …
I can’t tell you how many times recently I’ve read that print is a commodity. Paper may be a commodity – but print is not paper. Print is a process – particularly any kind of variable print. Personally, I like to buy the best, most innovative, most reliable process I can get. “Print” may look like a bank statement or a personalized direct mail piece when it hits the mail – but, I prefer to work with a company that has a robust customer-self service and reporting portal and a top-notch postal management solution rather than one that lets me burn incense and pray while trucking my mail to a comingler in another State. But, maybe that’s just me.
Issuers reading this are saying to themselves “but wait – I have to save money. I have to squeeze X% out of all my vendors every 3 years.” Quite frankly, if that is your only goal, the RFP is probably the least effective way to get it. If you’ve been doing a sizable amount of business with a vendor for at least 2 years, that vendor should be able to come up with at least 6 ways to save you money. In many cases, saving you money may lower their revenue but actually boost their profit. I often see suppliers trying to save their customers money and they can’t get anyone’s attention. I’ve had to row that boat myself a time or two. If you’re thinking about issuing an RFP – make sure you really understand what you’re trying to accomplish and consider whether the RFP is the best way to achieve your goals.
Many suppliers have strong opinions on the RFP topic. John McMahon, VP at Madden Communications had this to say:
“If a current client takes you to an RFP and you’ve been unable to sell your way around that, face the facts and understand you’ve already lost. Don’t respond. If you compete on price you’re already dead. RFPs force you to compete on price – you should be dragged kicking and screaming into the RFP process.”
I don’t agree that you shouldn’t respond to ANY RFP from an existing client – but, I do agree that you should be kicking and screaming first. Sadly, due to the formerly referenced box jockeys, your client may be REQUIRED to go to RFP no matter how much they like you. So, what’s a poor supplier to do? Here’s my top 10:
- Be measurable and get measured! Work with your client to develop a weighted scorecard for the services you provide and get them to complete it quarterly.
- Meet with your client every quarter to review the scorecard and discuss ideas for improvement (even if you have a perfect score.)
- If your scorecard is not perfect, make sure to respond in writing with a timeline and approaches to remedy any problems – or to document that you have already taken corrective action.
- Get acknowledgement of corrections from the client and the speed with which corrections were made.
- Don’t be afraid to talk to clients about service issues that stem from their side. However, you should also come to the table with proposed solutions (and documentation.)
- Be proactive! Come to the client frequently with ideas for improving processes, cutting costs or delivering better reporting or invoicing detail.
- Communicate broadly. Use personalized emails, blog posts and/or direct mail to let many people at the account know about regulatory changes, tips and tricks for using tools, or sources of information (like TheDigitalNirvana right?) that will help them do their jobs better.
- If you have a significant improvement to offer, consider doing the work at a discount or for free in exchange for a contract extension of 6 months or a year. Don’t ask for too much – but keep nudging the ball a little further out and tighten up the relationship more and more through value.
- Make sure your client knows about all of your capabilities. I’m not talking about feeds and speeds, I’m talking about services. Clients tend to remember the last thing you did for them and forget about everything else.
- When you talk to your clients about services – don’t talk about what you do – talk about how you can help them. You may not sell more print – but you may take on more of the process from the customer. That will embed you firmly in the client’s organization and dramatically increase your value.
With a little effort, any company can do what I’ve listed above. If you do, your client may still issue an RFP – but you will be in a much better position to win it if they do. Face it – you don’t win with existing clients through sales. You win through service.