What if we told you that the best way to become more productive while driving more revenue is to do less? What if we told you that the best way to win more request for proposal (RFP) bids is to say “no?”
We realize that the corporate mantra over the last couple of years has been “Do more with less,” so we understand why doing less might not sound like the most sage career advice. But read on. You’ll see why responding to every RFP bid opportunity that comes your way is bad for business and your state of mind.
You’ll also learn how taking a strategic approach to RFP bids can help you generate better responses and become more successful. Of course, we’ll also show you how to do this through a thoughtful and data-driven bid/no-bid analysis process.
What’s inside
- Why an RFP bid/no bid analysis is a must
- Consider these factors when deciding whether to bid on an RFP
- Tools to help you decide on whether to bid
- After the RFP bid decision: next steps
- The Responsive approach to RFP bid/no-bid analysis
Why an RFP bid/no-bid analysis is a must
It’s tempting to see every RFP as a business opportunity, especially since around $11 trillion of business comes from RFPs every year. Because of worldwide inflation and overall economic uncertainty, B2B buyers, also under pressure to do more with less, are becoming increasingly selective. Buyers ask about everything from pricing and deliverables to security and compliance.
For buyers, choosing to do business with another company comes with risks. Vendor choice has ramifications that extend to their customers and beyond. Entering into a business arrangement with a vendor that provides subpar products or services, is non-compliant with industry regulations, has incompatible values, or is financially unstable affects their ability to service their customers and may even damage their reputation.
Considering these factors, it’s easy to understand why RFPs are becoming longer and more time-consuming. But the ramifications on proposal teams are severe. Completing an RFP is a laborious process, involving multiple, often distributed, stakeholders. And many, if not most, organizations lack the needed resources. With a greater number of longer, more complex RFPs to respond to, proposal teams are operating under immense pressure.
Given buyers’ increasingly specific needs, responding only when your organization is the right match is vital to operating with a strategic response process and to making everyone’s jobs less stressful — and, dare we say, more enjoyable. By not chasing opportunities you’re less likely to win, you free up time to craft the best response possible to the most high-value RFPs that come in the door.
Not only does an intelligent RFP bid/no-bid process help ensure that each response you issue is relevant and viable, it also gives you the time needed to polish, perfect, and dramatically improve your win rate.
Consider these factors when deciding whether to bid on an RFP
While the bid/no-bid process (also known as the go/no-go process) is far less work than diving into every RFP you receive, it still requires a deliberate, objective and data-driven approach. No two RFPs are the same, even if they come from the same issuer.
There are multiple factors you need to assess during the bid/no-bid process to determine whether it will be a good business decision to pursue an RFP.
Profitability
Can you deliver on customer needs and still earn a profit? Would the time spent on the RFP bid diminish the profitability? Consult with product subject matter experts (SMEs) to help determine pricing and calculate preparation costs using data from previous similar responses.
- When to bid: If the RFP promises a high profit margin and aligns with your company’s financial goals, it’s a strong candidate for bidding.
- When to pass: If the costs of preparing and executing the proposal outweigh the potential profits, it’s better to pass.
Competition
Can any of your competitors offer the product or service at a lower cost than you without compromising on quality? Do you have a unique value proposition? Consistent competitive research should be a part of every sales and marketing strategy. Engage sales and marketing SMEs to provide competitive insight.
- When to bid: If your organization has a strong competitive advantage or unique value proposition that stands out, consider bidding.
- When to Pass: If the competition is too fierce and your chances of winning are slim, it might be a good idea to pass.
Long-term strategy
Because you’re potentially entering into a long-term relationship, it’s vital that the prospect’s needs fit your priorities not only today, but also months or years into the future. They also need to align with your organization’s long-term business strategy.
For example, your company may be on the verge of sunsetting its existing pricing structure. While today’s pricing structure might be within the customer’s budget, tomorrow’s may not. Talk to your company’s COO, revenue/growth leaders. or similar SMEs to confirm long-term viability.
- When to Bid: If the project supports your long-term strategic direction, contributes to growth, and strengthens your market position, it’s worth pursuing.
- When to Pass: If the project distracts from your core objectives or requires capabilities outside your strategic focus, it’s better to pass.
Resourcing
Do you have the time and resources to complete the RFP bid within the customer’s timeline? Can you meet their deliverables? Do you have the resources for onboarding and support?
- When to bid: If you are capable of fulfilling and supporting the project without compromising other priorities, it may be worth responding.
- When to pass: If the project requires resources you may not have or you can’t complete it on time, you should probably skip this one.
History
Have you responded to similar RFPs in the past? What is your track record with similar RFPs? Do you have experience with the buyer? Note that incumbents (or current vendors) are not necessarily shoe-ins.
- When to bid: If you’ve succeeded in the past with similar RFPs and have no reason to red-flag the vendor, it may be worth your while.
- When to pass: If you know in advance that the vendor isn’t a fit or if you haven’t won similar bids, passing might be your best option.
Tools to help you decide on whether to bid
Now that you know some of the criteria that might influence your bid/no-bid decision, what should you do next to be sure you’re making an objective evaluation?
Response professionals rely on two simple tools: a bid/no-bid checklist gets right to the heart of things and a decision matrix assigns value to each response.
Bid/no-bid checklist
A bid/no-bid checklist is a relatively simple, customizable true/false checklist that gives you a high-level view of requirements and your ability to meet them. For example, a bid/no-bid checklist may ask whether the opportunity aligns with your company’s strategic goals or whether there is a good profit margin. For each question, select whether it’s true or false that you’d be able to meet the requirement.
Customize your checklist to meet your business goals. Consider the five core RFP bid factors listed above when creating it. Questions can range from whether the project is strategically important and aligns with core business values to your company’s ability to deliver.
Gather your custom criteria by:
- Identifying common themes to RFPs you’ve won and those you’ve lost
- Talking to SMEs, those in business development, and other stakeholders to get their feedback
- Determining the opportunities and obstacles to winning
Decision matrix
When you’re ready to take a more nuanced data-driven approach, we recommend creating a decision matrix. Rather than simple true or false answers, a decision matrix rates your organization’s ability and desire to fulfill the customer’s needs.
If you have multiple stakeholders, each can enter their scores. After that, you can tally them up to determine the average score of each question and for the document as a whole.
For example, each of the questions on your decision matrix might have three options:
- Unfavorable
- Neutral
- Favorable
You may also add options before and after neutral. It’s worth mentioning that decision matrices are somewhat more subjective than bid/no-bid checklists, so some stakeholder answers may require clarity, especially if there is disagreement.
After the RFP bid decision: next steps
Regardless of your decision, it’s good form to let the buyer know whether you determine that the opportunity aligns with your capabilities and business goals. Send an intent-to-bid letter for opportunities you would like to pursue and a decline-to-bid letter for those that are less than optimal.
Sending a decline-to-bid letter
Even if you choose not to bid, you’ll want to keep the door open for future opportunities by sending a letter announcing your intentions. It also shows professionalism and respect for the buyer’s time.
The letter doesn’t have to be complicated. Remember to:
- Be respectful, tactful and brief — No one wants to read several pages explaining your decision
- Offer some insight — One or two high-level reasons will help buyers decide whether you might be a good fit for their next project
- Provide your contact information — Procurement professionals generally appreciate having a direct contact on file for the future
- Follow up by phone — But only if you have an existing relationship with the buyer
The letter should include:
- The name of your company
- Name of the proposal contact
- The name or reference number of the RFP
- Two or three paragraphs politely explaining why you’re declining
- Your sign-off and signature
Sending an intent-to-bid letter
An intent-to-bid letter lets the customer know to expect your response. The letter helps buyers track the RFP bid process and reminds them to look for it. It’s not a requirement, but it helps you stand out from the crowd and demonstrates your respect for the buyer.
Intent-to-bid letters don’t need much detail; that comes with your response. The letter should include:
- The name of your company
- Name of the proposal contact
- The name or reference number of the RFP you’re responding to
- A clear statement of your intention to submit a proposal
- Your sign-off and signature
The Responsive approach to RFP bid/no-bid analysis
No two RFPs are the same and business priorities and obligations frequently change. A standardized and efficient bid/no-bid process requires little manual effort. With a Strategic Response Management solution like Responsive, you can automate much of the RFP bid/no-bid analysis with a slate of AI-powered functionalities.
Responsive automates the decision-making process with the intelligent data-driven power of AI. Incorporating AI into your bid/no-bid process is a game-changer for any organization looking to stay competitive. AI tools can sift through your historical data to offer precise insights on which bids to pursue, enabling your team to focus on opportunities that are perfectly aligned with your company’s strengths and strategic objectives. By letting AI handle the heavy lifting of data analysis, your team can dedicate more time to developing compelling, winning proposals.
AI can evaluate the specific requirements and risks of a project and compare them to your company’s existing resources and capabilities. This early detection of potential roadblocks means your team can choose not to pursue an opportunity or proactively plan and address these challenges, leading to higher success rates. Embracing AI in the bid/no-bid process not only enhances decision-making but also gives your organization a strategic edge in a competitive market.
Here are a few of the ways the Responsive Platform simplifies the bid/no-bid analysis process is:
- Requirements Analysis — Requirements Analysis leverages AI to quickly summarize even the most complex RFPs into an easy-to-comprehend list of key data points. It also conducts complex fit analyses in mere seconds and creates an action plan with just a few clicks if you choose to pursue the opportunity.
- Real-time collaboration tools — Bid/no-bid decision-making is a team effort. Unfortunately, distributed workforces and swamped collaborators can create bottlenecks. With multilingual in-app @mentions, you can solicit feedback directly and in real-time from even the busiest SMEs and other key stakeholders. Smoother collaboration means a much quicker bid/no-bid process.
- Comprehensive data analysis — Gauge potential by evaluating opportunities against past wins and losses. Data analytics compare your current opportunity to success rates with various types of projects, verticals, company sizes, response rates and more to help you better predict your success potential.
Final thoughts
Today’s hypercompetitive marketplace calls for a selective business approach. A well-implemented RFP bid/no-bid process lets you focus your time and your company’s resources on perfecting winning strategies.
Let us know if you’d like to learn more about how Responsive can help you zero-in on the best opportunities.
