Tenders; knowing went to hold and when to fold
17 October 2017
Old marketing jungle saying, “never bid until you have seen the whites of their eyes.”
JWPM has worked on hundreds of bids, tenders, proposals and submissions over the last 23 years. Ranging from local government tree cutting tenders to billion-dollar defence projects.
Often, the first question we get asked is “What’s your success rate?”
We answer truthfully, “It varies.”
Because (despite our best efforts) success depends on many factors, most of which are in place long before we came along to work on the tender.
Factors that play into the mix include:
- The effectiveness of pre-positioning efforts by the company prior to tender release (business development/relationship management efforts).
- The alignment of the company value proposition with customer needs, and relative to competitors.
- How well a company’s Pricing meets the customer’s Cost-Value equation
- A company’s reputation and track-record; and
- Organisational resourcing to meet project needs.
- How well you can answer the qualification questions (with fact, not beautifully drafted fiction).
A well written and convincing bid is no substitute for a well-run and customer-focused organisation that offers value for money. Put them together, however, and your chances are greatly improved.
We can’t guarantee that your bid will be successful…. but...
We can guarantee that:
- bid requirements have been thoroughly analysed
- the company value proposition and bid win themes are clear
- the bid response is compliant
- individual responses adequately address tender questions
- engagement with internal subject matter experts to ensure accurate technical content
- identification of any gaps
- creative and professional layout, presentation and branding that ensures readership
- We will get it completed on time.
Putting you well on the track to success.
Proceed with caution with any agency that declares an extraordinarily high bid success rate.
Knowing when to hold and when to fold
One of the most important factors in tender success is "to tender or not to tender - that's the critical question."
Some time back, JWPM was asked for advice by a large manufacturer on how to improve their success rate.
Their hit rate was around 5% (no, seriously!!)
They were selling a custom engineered product. To prepare a bid required three-days of design and development, costing and proposal writing.
Consequently, their design and estimating department looked like the crowd scene from Ben-Hur.
After some investigation and analysis, it was determined that they had no strategy and very poor tactics…
- They rarely visited their customers
- They rarely called their customer to clarify specifications
- They bid on anything that moved
- They were focused on price (margins were ridiculously thin)
- Their tenders were somewhat primitive - a fax header sheet, "Dear Robert, thank you for inviting XYZ to submit for the design, build and delivery of...", plus 100 pages of drawings, schedules, and T&C's (don't forget the T&C's, in case we actually win one).
On the plus side, they pumped out a lot of tenders.
Their underlying assumptions were…
- Everyone knows us, we always get asked to tender
- Everyone knows who we are, there’s no point meeting with the customer, they just fax us their specifications
- We must respond to all bid requests because they might get offended and stop asking us.
- It's all about price; they know our product, they just want the lowest price.
After further analysis, customer research and market investigation, we observed and advised…
- Your product is “high-end”, it is a bullet proof well engineered solution suited to mission critical applications where failure is not an option. You have an enviable reputation for building fail-safe equipment – only bid when the client needs a robust solution.
- Don’t offer a bid when the application can easily be met by commodity off-the-shelf modular solutions (you can’t win, your product is too bespoke, hand built and costly).
- Don’t bid when the customer is simply a building contractor who only needs the equipment to last through the 12-month warranty period. Bid when the customer is the end-user and must live with his/her procurement decision [and the consequences, should it fail].
- Don’t offer a bid if you don’t meet with them first.
This last guideline needs explanation.
The reason why you need to meet with the customer before you start work on the bid is…
Avoid being cannon fodder
Too often tenderers are simply making-up the numbers or are being used to keep the preferred tenderer honest.
Most organisations when buying anything significant have (at least) a “get three quotes” policy.
But often, they have preference for a particular supplier – the so-called “preferred tenderer.”
Requesting a meeting to discuss the requirements is a good test to see if they are serious. Sometimes they will outright decline the meeting...
“That won’t be necessary, everything that you need is in the specification, call us or email if you need anything clarified.”
It’s human nature “why waste time meeting with a tenderer who you don’t intend using?”
Understand their true requirements
If they are serious, meeting face-to-face serves a very important purpose; you want to really understand their needs. Often customers either don’t understand their need and therefore have specified something unsuitable, or aren’t good at putting it in writing. Either way, meeting face-to-face gives you the opportunity to gain valuable insight. This valuable insight enables you to tailor your bid to solve their real problem and/or develop a superior non-conforming alternative.
This approach is so powerful, I have witnessed a supplier talk a company out of competitive tendering because the supplier convinced them (truthfully) that they were the only company capable of meeting their need.
(...they negotiated a contract instead).
In addition, meeting face-to-face provides the opportunity to...
- Feel the vibe: "Am I getting warm fuzzies from talking to these people, or am I getting the feeling that they are just going through the motions?"
- Understand their buying team: If you are being asked to tender then more than one person will be involved in making the decision. People assessing bids usually fall into one of four categories: The End User, The Procurement people, The Technical Buyer and The Financial Buyer. Understanding who these people are, their attitude toward the procurement project (and you) and the degree of influence that they have over the outcome can really change both your decision to proceed with the tender and your bidding strategy.
- Decision making criteria: These are sometimes listed in the tender specification, but all too often they aren't included or are just a standard template. Talking face-to-face gives you the opportunity to tease out what is really important to them.
- Internal politics: The back-story behind the tender provides important information; encouraging the customer to explain context can provide some important insights. This is also a good method to uncover any corporate politics that might affect the tender decision. More than one tender has been issued (putting many people through a lot of pain) when not everyone on the customer side was convinced that the purchase was required. This can be a stunning revelation (particularly if you have invested a day and an airfare, to attend the meeting).
Build the relationship
My client had forgotten the number one maxim of b2b selling – relationships.
Pure logic (the fall-back position of accountants and engineers) would suggest that relationships have nothing to do with tendering “all they are interested in is the best price.”
But, more sophisticated b2b operators (including the more successful accountants and engineers) understand that the relationship is everything.
And it comes down to trust and the grief factor.
All projects and purchase decisions have an element of risk. When the project runs into problems “can I pick up the phone and sort this out?”
The grief factor is also critical; some customers and some suppliers are a pain in the arse to deal with. Building the relationship isn’t about falling in love, it’s about making a human judgement “can I work with these people?”
You won’t develop that relationship without meeting face-to-face (and if possible, spending some quality time together at a venue that serves alcoholic beverages).
Relationship building is what enables the really successful companies to consistently win more than their fair share of the bids. How? Because they are coached and guided toward winning. But, good luck trying to prove it. There, I've said it.
Old marketing jungle saying, “never bid until you have seen the whites of their eyes.”
These simple guidelines increased our client’s success rate to roughly 60% (albeit, of a somewhat smaller pool of projects. However, revenue and net profit were much improved. They went from considering closing the division to investing in new plant and equipment to keep up with demand).
Number one rule of tendering “Know when to hold and when to fold.”
(I also call it "The John West rule of tendering. - It's the bids that you reject, that make the bids you go for, the best.")