People are often shocked to hear I stopped participating in electronic RFPs for new business about two years ago. If it is unsolicited or where I don’t have access to the human beings making the decisions, I won’t participate. Occasionally, I’m forced to participate in one because of an existing business relationship.
It took a pretty direct conversation with Frank Visgatis, Co-Founder of CustomerCentric Selling, to realize how much time I had wasted chasing unsolicited RFPs.
I may represent the most qualified firm for the work but in the effort companies have made to rationalize vendors with electronic procurement, forced stack rankings and onerous vendor qualifications, they have also eliminated your ability to inject specific and meaningful expertise into the buying process.
Consider your own procurement process or one you have just participated in as a vendor.
What percentage of the questions were around “facts” about the business; number of employees, total revenue, sustainability efforts, OSHA compliance, etc? Based on the last few I participated in, this was more than 90% of the information requested. Who is checking all these facts for validity anyway?
How many questions revolved around “proof?” Proving expertise, capability and consistency are key to selecting partners. Proof is usually demonstrated or experienced. I have yet to see a software program or standardized form glean “proof” effectively.
Secondly, what is your win percentage in these RFPs? No padding… no excuses… what is the real number? Chances are your batting average is pretty poor. Now ask yourself how much time each RFP consumes of your organization’s time. In my own case, it was around 12 hours of sales, 2 hours of operations and 1 hour of accounting/ legal for an average and efficient RFP.
Lastly, what was your opportunity cost- the cost of chasing an unqualified RFP instead of opportunities where you could actually interact with your potential client?
I actually spent a layover figuring this out on the back of an envelope. Once I totaled it all up, it came out to $2,200 per hour.
Assuming 12 hours per RFP, that translates into $26,400. If you really want to give yourself the cold sweats, multiply that by the number of RFPs you “participated” in last year. Chances are that grand total is a gut-wrenching number.
Take heart though, there are ways to qualify your opportunities and improve your conversion percentage. At Redhawk Consulting, we work with clients that have successful sales operations but are straining their organizations to hit their numbers. In future posts, I will discuss some ways to qualify opportunities. If you have some of your own techniques to share, send them to me at matt.hottle@redhawkresults.com.