Purchasing Business Development Services by RFP

Recently we’ve been involved in a flurry of RFP’s.  And this got me thinking about whether it’s a good idea to buy business development services via an RFP. Here are some broad principles:

  • If you’re buying a commodity then an RFP is a good idea.
  • If you’re buying expertise then an RFP is not a good idea.
  •  If you’re buying knowhow and knowledge then an RFP is a bad idea.
  • If you’re buying systems and integration capabilities then an RFP may be a good idea.  It may also be a bad idea.  Depends.
  • If you’re buying all of the above then an RFP is a real bad way to make a good decision.

Let’s examine the process.  Usually an RFP is designed to get prospective “vendors” to provide in writing comprehensive information about the company.  While this is an opportunity to shine, that really depends on their ability to write responses to an RFP.  It does not demonstrate an ability to deliver a great solution.  (Too wit there is now a whole industry of so called experts who make a living helping companies write RFP responses.)

Can an RFP provide insight into the vendor’s ability to deliver a solution?  Yes it can – but side by side comparisons of all the participants – when you’re buying complex solutions – is not going to give you this insight.  The only way to garner a comprehensive understanding of the company’s solutions and expertise is to get under the hood.  You need to understand the players … the environment … the systems etc.  You need to understand how these systems flow … and how they integrate.    And how the synergistic effect of the combined set of solutions comes together for your benefit.  You simply cannot get this from an RFP.  And you will not get this from the well prepared follow up presentations that usually follow.

In truth many companies simply issue RFP’s to protect their backsides.  The protagonists have usually already decided who they want … and are going through this process in order to be able to say they were fair.  In fact one can usually see who is going to win simply by looking at the questions and layout of the RFP.  Why?  Because the RFP is many times written and developed by the “probable” vendor.  Not the issuer of the RFP.

Is this fair game?  I suppose so.  It just depends on whose side of the equation you are on.  If you’re the friend of the decision maker who is issuing the RFP then you’re in the pound seats.  If say you’re the incumbent who is shortly to be unseated, then this is a patently unfair process.  And generally speaking a waste of time for all.  You might as well save everyone the trouble and make a decision.

So what is the best strategy? 

If you really think that other vendors can provide better solutions then you need to test.  Testing is the only way to make sure you’re getting the best bang for your buck.  Give the prospect companies a piece of the action and see who can beat the incumbent.  If they do – then you’re basing your decision on actual results.  Not fancy copy in an RFP.  Or pretty pictures in a well made presentation.  If the incumbent still beats them, then no harm no foul.  And you’ve saved your backside (and your company) from making a poor decision.

Testing however, needs to be done realistically.  You cannot compare apples with oranges.  You can only do side by side comparisons if the criteria for measurement are the same for all participants.  You must look at all elements that ultimately are important to the success of the effort.  This could cover issues such as developing a rating system for every opportunity identified (as rated by the sales force).  Or the conversion rates from “leads” to “opportunities”.  Or cost per new customer acquired which is the ultimate meaningful metric.  (I have written an article entitled What costs less costs more that deals with this topic in more detai.

eti Sales Support has never shied away from a contest.  We’ll be more than happy to be compared side by side with any competitor.  Any time! 

Michael Falkson

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