Is any bane of the value-focused seller more potent than the black-and-white request for proposal (RFP)? Often...
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voluminous and frequently little more than a glorified checklist with a bottom-line dollar focus, the RFP can stymie the best intentions of a sales organization trying to emphasize competitive advantage and long-term customer benefits.
"Most of the RFPs you see today are way too focused on product and price," said Jason McNamara, CMO at marketing platform developer Alterian. The net result is a price war revolving around product breadth, rather than depth, quality, and customer engagement. Try not to take this personally, chalk it up to insensitivity, or blame the proposal's author. After all, the people writing proposals asking about product and price are simply doing their jobs -- they have been asked to bring their organizations a certain product or service within a prescribed budget.
"When a blind proposal comes to your desk, you are probably talking at the wrong level of the organization [about value]," said Andrew Boyd, chief research officer at Aberdeen. Strategic value needs to be presented to strategic stakeholders, typically the upper-management sponsors of a major project.
One of the reasons strategic value presentations don't happen on that level is that clients design RFPs to elicit inherently commoditized responses. Commodities are easy to compare and substitute -- the exact scenario a prospective vendor wishes to avoid. However, Alterian's McNamara advises resisting the urge to simply ignore the prospect's questions and jump into a value pitch. This can alienate the client, who formulated the questions and expects answers. Instead companies should emphasize their experience and partner relationships, which can make their firms the standout choice to fulfill the opportunity.
"The people and partners you choose to do business with are absolutely critical to the success of your business," McNamara said. "It's still about who you know, and what they know, and making sure your RFP process accounts for that."
Also, firms should be certain that their sales forces are equipped to properly negotiate on value. The terrible truth is that some sales organizations simply do not provide their representatives with the right tools and information to compete outside the boundaries of price and product criteria.
"It comes down to how effective you are at mapping your products and services to the prospect's business challenges, and that requires a deep understanding of the competitive landscape, both your position versus your competitors and the needs of the prospects," Aberdeen's Boyd said. "You need sales information enablers -- analytics, competitive intelligence, and forums for salespeople to share their knowledge."
Many of the RFPs online marketing consultancy Web Associates receives ask for a bid for website redesign, with specific, narrow functionality targets and the reuse of many existing assets. Rather than submit a bargain-basement bid for a touch-up, senior strategist Doug Klein said the company has done better -- and more valuable -- business by presenting a response focused on the long-term goals of the client company.
"We start out by looking at their industry space and seeing if they are positioned well against their competition or an emerging [player]," he said. "We know that if we just take their [Web] property and redesign it as it is, the project will become outdated before it even launches."
RFP respondents looking to break the mold on product and price also need to be sure that they are offering incentives to their sales forces that motivate them to sell on long-term value. "Some organizations talk about net client value increase or lifetime value, but they still pay their salespeople based on revenue or short-term bookings," Boyd said. "They have to pay based on their goals."
Bernice Grossman, president of DMRS Group, a consultancy that helps companies conduct needs assessments and write RFPs, said that most sensible RFPs leave plenty of room to discuss long-term value. "You don't ever close the door without hearing what somebody has to say, and [prospects] don't want to play such hardball as to cut somebody off at the knees," Grossman said. "At the end of answering all of my questions, you absolutely can tell me about your value adds. But the perspective of the buyer is that first you have to tell me what I want to know."
Of course, every company has the right to stay out of a price war by simply refusing to engage in a proposal process that leaves no room for discussing long-term value. "The reality is that the answers can only be as good as the questions, and customers need to be open to the idea of discussing things with vendors," Boyd said.
Grossman agreed that answering an RFP with a consultative tone can be a plus. "Helping prospects define what they want is itself a big value add."
Reprinted with permission from 1to1 Media. (c) 2006 Carlson MarketingWorldwide.