Should clients pay for tender and request for proposal submissions?
Monday, April 9, 2018/
In principle, and ideally in practice, clients should pay for tender and request for proposal (RFP) submissions.
Why? Because there is a lot of time, effort, money and intellectual property (IP) that goes into preparing a tender or RFP. This also includes requests for information (RFIs).
The companies requesting these tenders, RFPs and RFIs are freely benefiting from the expertise of suppliers if they are requesting highly-detailed responses, and expecting to pay nothing for this information. With the advent of software these companies can easily compare offerings and strip mine the intellectual property to serve themselves at the suppliers’ expense. Basically they are getting knowledge and expertise for free and this is not a fair exchange of value.
As suppliers, we should be able to choose to put in as little or as much as we like. However, we are often constrained by the parameters of the tender or RFP process.
If we don’t include certain information requested by the prospective client company we cannot participate in the tender process. We are in a bind. Do we submit or not?
If the tender process is grossly weighted in favour of the prospective client company I would say do not submit. However, if your business is heavily weighted to tenders, you could be in trouble.
Especially if the information being requested is our ‘secret sauce’, our processes, our ‘how-to’ or our IP. You be the judge, but I would say no to the tender process upfront because chances are the requesting company is likely to strip mine our response, take it in house, do it themselves or piece it together with the lowest bidders. This happens more than you think. Even if they don’t do it themselves, the insights they gain for free from our submissions are in fact worth something and, I believe, they should pay something for our knowledge and insights.
Tenders have gotten out of hand in many instances, with supplier companies being ‘held to ransom’ by prospective client organisations. Much of what is being requested today is completely unreasonable. I would love us all to protest and not submit anything all — and we are free to do so — but that is rather idealistic as there will always be a supplier that will drop to the lowest common denominator to try and take the deal.
Healthy, effective relationships are the best course of action because they are about a fair exchange of value where both parties respect each other. That holds true for healthy and viable client-supplier relationships. No relationship can function or work well if one of the parties is taken advantage of by the other. I propose that we look at how we can change the dynamics of tender, RFP and proposal submissions. A big call but we have to start somewhere.
This is why one of the core beliefs of the Selling Better Movement is believing in a fair exchange of value.
Selling is about creating a fair exchange of value between buyer and seller; it’s about mutual prosperity.
Selling is about forging healthy viable relationships and recognising these relationships do not remain static and unchanged. They are designed to be stress-tested, to grow and change. They thrive on trust, openness and honesty, and result in new ideas and shared common ground on which to build better outcomes together.
I believe we cannot seek achievement for ourselves and forget about progress and prosperity for our community. Our ambitions must be broad enough to include the aspirations and needs of others for their sake, for our own and for the planet.
There are many ways to pitch and bid for business today, however I propose we become more discerning about what sales opportunities we go after. Discernment is the ability to judge well. The ability to stand up for what is right and be courageous in the face of adversity and ethically compromising situations. This can mean saying no to opportunities that do not serve us, our clients or our communities well.
Nothing is for free, everything costs something.
I propose that there should be a fee paid up front by the requesting client to get a detailed brief. This already happens in some industries like architecture where draft ideas and plans are drawn up and a fee is paid whether the plan is accepted or not. There are marketing agencies and designers of different denominations that have adopted this model as well, but not often enough across most industries.
Smart clients and procurement teams are recognising that engaging with real people to solve complex problems is worth something and should not be subjected to a bidding war. Some supplier companies are now charging for a briefing session, especially where their expertise and IP will be used to help sort out a project. This means that at least you get paid for your initial work up front before you embark on anything more time consuming and expensive.
What can you do?
Where can you start? How can you sell better?
If you cannot get paid up front for your submission then maybe pull back on what you are giving away at that stage. Of late, we have pulled back on putting in detailed proposals and only provide the basic foundations in writing. Especially in the first submissions. This saves time and money and lowers the cost of sale. It also protects our IP. If they want more information or we get to the next stage we can then go into detail, but we do this in person as it allows more control over what we share and it personalises the process which can add more value.
Always assess the viability and probability of any tender
It pays to always assess the viability and probability of any tender, RFP or proposal process before you embark on an expensive tender or proposal submission campaign. Assessing the probability of winning and knowing what you have to do to win it before you really start is a sobering experience.
Remember everybody lives by selling something.