An RFP lands in your inbox. It’s from a company you would love to do business with. Your pipeline for the next two quarters isn’t as strong as it could be, and several of your biggest opportunities seem to be stuck in the dreaded “no decision” limbo.
You’re now faced with three choices about what to do next.
- Choose to respond, with maximum effort.
- Choose to respond, with minimal effort.
- Kindly decline and delete it from your inbox.
Whether it’s an RFP (“request for proposal/price”) or an RFQ (“request for quote”), a key deciding factor here is whether or not you were expecting to receive it. (For simplicity’s sake, we’ll consider RFPs and RFQs as interchangeable.) If it’s a cold request, you’re often better off ignoring it. However, if you really want to respond, we have some advice about how to do so in a way that might increase your chance of winning the business.
Why the Deck is Stacked Against You
First, let’s be clear about the nature of unexpected RFPs. When you receive one out of the blue, it’s highly likely that the company already knows the vendor they want to work with, and have been in talks with that vendor for weeks or months. They simply have an internal policy that requires them to solicit competitive bids before they make a major purchase, which means you’ve been contacted as a matter of protocol. If that is the case, there’s only a slim chance you’re going to win any business from it—regardless of how long you spend working on it or how well you respond.
Speaking of time and effort, did we mention that filling out these requests is no picnic? If you’re lucky, it will be about five pages long, but we’ve seen them get up to 50 pages or more. Frequently you’ll need to contact at least a few other people in your company to get the information you need. In the end, an RFP can take dozens of hours and sometimes weeks to complete.
Where’s the Value?
Because requests for proposal largely solicit information about features and benefits, they circumvent any opportunity to open a dialogue about the ways in which your solution can offer value, and what that value might be worth. RFPs are intended to “level the playing field,” which means you’ll have little chance to differentiate your solution from competitors.
It also means companies will end up using requests for proposal as points of leverage to negotiate lower prices. If you think you’ll improve your chances of winning the deal by low-balling your price, think again.
Here’s what will usually happen instead: The company will take the proposals with the lowest prices and circle back with the vendor they’d like to do business with. They’ll say, “These other two vendors say they can provide a similar solution for $10,000 less than your price. If you can lower your price by that amount, we’ll purchase from you.”
At that point, the preferred vendor will simply lower their price and thus accelerate the natural decline of overall market prices (economics dictates that all prices drop over time). Which means you’ll soon have to lower your price as well.
Advice for Responding to RFPs
Let’s say, despite all this, you still want to submit a response. If that’s the case, the first thing you should do is to ask for a meeting and explain that you’d like a chance to better understand the prospect’s business challenges and how you might help solve them. If they’re willing to pursue this value-discovery process with you, then maybe you can gain a better foothold and increase your chances of winning the business.
If the prospect declines your request for a meeting, then you’re likely column fodder. If you’d still like to respond, don’t spend days or weeks crafting intricate answers; fill out the form in the simplest way possible, and leave room to indicate some ways you believe you can provide value—beyond the scope of what the RFP can imagine. And then price on the high side rather than the low side.
The next time you receive an unexpected B2B RFP, think long and hard about whether or not you want to respond. Your time is probably better spent on prospecting, figuring out ways to increase your average deal size, or working on your golf swing.