As I was researching this topic for this post, I came across this interesting quote by Ian Lurie.
As agency veterans ourselves, we created Proposify to alleviate probably the biggest pain point within any agency: proposal writing. Responding to an RFP brings proposal writing pain to a whole new level.
When Kyle and I first started our agency many years ago, we made sure we were on all the tender lists, spending hundreds of dollars a month on sites like MERX.
As the business development partner, I was always striving to ‘fill the funnel’ and while there are dozens of ways to generate quality leads, I felt responding to RFPs was a great way to generate business.
I felt confident we could win at least one deal a month to more than justify the expense. Here’s the truth: we never won a single project responding to an RFP through MERX or any other tender sites.
After our first year, we continued our growth by being proactive in developing the business in other ways (which I will explain in a future post). After wasting money on tender sites, we drew a line in the sand and decided to only respond to RFPs that fell into one of two categories:
- RFPs we were specifically invited to respond to
- Local RFPs that were a perfect match to our skill set (and even then we were often hesitant)
In my opinion and based on years of experience, I feel the RFP system is not built for freelancers or small agencies. It only benefits big companies and government institutions. For many industries, responding to and winning RFPs is mission critical.
Avi Dan contributed a post last February entitled, Why the RFP is a Waste of Time. The article speaks to the creators of RFPs, the organizations looking to contract agencies. Mr. Dan says:
“The RFP as we know it is an inferior tool for evaluating agencies. It’s obsolete. It might give a rough idea of an agency’s past accomplishments, and these can inform somewhat of what’s ahead. However, you’re not hiring an agency’s past, you’re hiring its future.”
Don’t let the blind lead the blind.
Ignore the blind RFP, the one that arrives unsolicited without any way to connect with the stakeholders. Your goal in developing new business should be to establish long lasting, meaningful relationships. Having actual conversations is the only way to determine if you and your perspective client are a good fit for each other.
Don’t ask, “How low can we go?”
If an RFP specifically states that the decision will be based the lowest bid, STAY AWAY! We used to get calls from companies whose websites were either never finished or collapsed by originally hiring agencies that provided the cheapest solution. Those agencies probably bid super low to win the job then ended up realizing just how much money they were losing trying to live up to unrealistic expectations.
Don’t take the bait.
Try to sniff out the RFPs that are really just fishing expeditions. Some organizations have no intention of awarding a contract and are only using an RFP as a vehicle to satisfy a legal requirement or just gather intel on the industry. These RFPs are huge time (and money!) wasters and will leave you feeling used and abused.
Don’t fudge the budget.
RFPs can play coy when it comes to budget. Back to point #1 and #2, if the budget is not included in the RFP, and the potential client is not willing to have a conversation to discuss even a budget range, don’t bother responding. Without knowing even a range, you will either shoot too high to cover your ass for the inevitable scope creep, or you will come in too low and lose money.
As an agency, time is your biggest asset. You have to track both production time and customer acquisition costs, which basically boils down to ‘time is money’. Unsolicited RFPs can be time suckers, and as we all know the best business leads come from personal referrals and repeat business from existing clients.
I will leave you with this warning: If you do get an RFP from an existing client, it means you made a mistake by missing an opportunity to proactively help your client and create value. Bottom line is you are late to the party. Usually once they publish an RFP, they are 50-70% through their buying process and you’ll have to re-win their trust.
Make sure you are nurturing your relationships so that you’re on the inside track when it comes to new business.