How
to Increase Your Win Rate and Decrease Your Costs
The standard
small to mid-range technology company expends
over 15% of all customer facing pre-sales time in responding to RFPs. Most
of these companies do not have a centralized bid response team, so the workload
falls upon the field sales engineers to balance RFP work against what they view
as “real and worthwhile” sales activity.
Simple mathematics shows that
there are only two ways to improve your RFP win rate. Firstly, by responding to
fewer, more qualified, RFPs; and secondly, by increasing the quality of your
responses. So how, when leads are rare, when customer relationships are
precious and when revenue is everything, do you inject some discipline into the
RFP response process yet still maintain the morale of the field sales
engineering team?
Respond to Fewer RFP Documents.
Just because
you receive an RFP doesn’t mean that you have
to respond to it. You could be column fodder or the request may be outside
your sweet spot.
1.
Fire
your worst customers. Almost
every company has customers who send them multiple RFPs every year, yet you
derive zero revenue from them. A previous employer of mine had a ‘strategic’
customer who sent us 11 RFPs in a 26-month period – and we won exactly zero. Time
for a tough conversation with that customer instead.
2.
Score
the RFP. Figure out
a way to assign a score to each incoming RFP, corresponding to how likely you
are to win it. A sample scorecard can be found here. This isn’t a win percentage,
but it gives you a way to compare RFPs and prioritize, and also to correlate
your score against eventual outcome.
3.
Set
the bar higher. Set up an
RFP intake process and ask the account team (sales and presales) to justify why
there should be a response. Do not make this complex and bureaucratic – it needs to be just enough to put some skin in the game. I am
sure you could look at 25% of the RFPs you completed last year and throw them
out because you knew you wouldn’t win. Presales leaders around the world
routinely quote me estimates of those 25-33% guaranteed “no-win” responses. I’m
not making it up!
4.
Use
the Sales Process. Any sales
process is the best friend of the Sales Engineering community as it injects
discipline into the opportunity. Agree with your SFA/CRM guru at what point in
the cycle an opportunity needs to be at, before you respond to it. Hint: it needs to at least be at the
Qualified stage.
5.
Put
in a System. Any
system! One company instituted a “three strikes” process to restrict the
unlimited resource checkbook attitude of sales. Each manager was allowed three
RFP losses in a year. A win reset the count to zero. After three strikes, the
account team had to present a full justification up to the Regional VP to
obtain the OK to proceed.
Improve the Quality
Once you
have decided to respond, take a good look at your finished product. Pass a
couple of RFPs to someone in Marketing and Technical Writing and ask for their
honest feedback. Then think carefully about roles, responsibilities and
execution. You will notice that I do not recommend purchasing an automated RFP
response tool – they can save a lot of duplication, but require considerable
upfront effort and ongoing maintenance to make them viable.
1.
So
exactly who is responsible? My belief is that the account
manager is ultimately responsible for the RFP, as she owns the customer
relationship. There may be a centralized response team if you are an Oracle or
SAP, or the work may fall upon local field sales engineers, or there may a local
project manager running the response. Yet ultimately, the salesperson owns the
final product and delivery.
2.
Paint
the boilerplate. Customers
do read the boilerplate about company history, corporate support, headcount,
financials etc. Take care over it and have it professionally written, formatted
and updated every quarter. Boilerplate should still actively sell your solution
and your company.
3.
Build
a ‘rigged’ RFP. I am constantly
amazed by the number of technology vendors who do not have a pre-written RFP
stacked with highly favorable questions they can provide to a customer when
asked. Unless you have ever written an RFP yourself, you have no idea how
tedious and mind numbing it can be to collect requirements and write the
document. Offering someone a short cut, even if they only take a few questions,
can help out both sides. Just make sure the questions are reasonable and
defendable. Twenty years ago, customers would accept pre-written RFPs, now they
just accept a few suggestions. It’s much harder to “write” or “wire” an RFP –
but be prepared just in case.
4.
Think
about alternate responses. Sometimes
you will receive an RFP asking for a solution outside of your sweet spot, yet
with a little tweaking and vision, you can suggest an alternative way to
accomplish the end goal. Tell the customer that, and write up/document your
alternate response. At worst, you will lose anyway; at best, you will disrupt
the process and cause them to rethink their strategy. I’ve seen the technical
and business agenda reset on multiple occasions using this approach.
5.
The
executive summary and the delivery. The executive summary is your shortcut to the recommender and/or
decision makers within the customer. Treat that one page the same way you would
a meeting with that individual. This is 100%, undeniably the responsibility of
the account manager. Even better, ask for a meeting to deliver the RFP and
present its highlights as to why your company is uniquely qualified to win the
business.
Measure the Results
After
expending all this effort and incurring the costs, you should track and measure
the results. Over 50% of technology companies surveyed while researching the Mastering Technical Sales book indicated they didn’t track
any of this information. So how do you know if you’re any good? More
importantly, how do you know if you’re getting better?
1.
Define
the win-rate. Make an early decision on defining your win
rate. Some RFPs are cancelled before a contract is awarded, others are
postponed etc. Use a simple rule: Win Rate = Number of RFPs awarded / Number of
RFP responses. No special cases, exceptions or asterisks.
2.
Why
did we lose (or win)? You will
lose some RFPs – it happens. Learn from the experience and ask the customer why
you lost so that you can improve the next time. Don’t accept weak and vague
answers such as “too expensive” or “not enough functionality”. Drill down into
the details – although be warned it is tough for most sales teams to explore a
perceived failure.
3.
Publish
a league table. Based upon
your own business model, publish a league table every month showing wins,
losses, responses , costs and revenue by individual rep, sales manager or
product line – whichever way makes sense for you. The important fact is publicizing
what is working and what is not.
4.
Track your costs.
Track both the direct and indirect costs for every response. Direct
costs are time and materials for the RFP. Include any time spent by marketing,
support or engineering in answering questions on your behalf. Indirect costs
are the opportunity costs lost by completing the RFP. For example, if you are
an SE supporting two reps with a combined quota of $6m, your time is worth
$24,000 of quota achievement a day (6,000,000/250).
Summary
Make the RFP
response a part of your sales process and apply Solution Selling to it, just as
you would any other sales interaction. Throw out your bad customers and your
“no-win” RFPs and do not be suckered into “we
have to respond just for the sake of the account relationship”. Put into
place a RFP intake mechanism if you don’t already have one, and then measure
and report on key metrics. Never let RFP
stand for Really Fast Paperwork.
