Why Requests for Proposals Are Unhealthy (For Salespeople and Buyers)

There it sits, the big stack of paper that is the Request for Proposal. So much promise, so little hope of winning. You want to spend the time responding to the one hundred and fourteen questions, but you are not sure it is worth your time and energy.

Whether you respond or not, here are some of the reasons the request for proposal process is unhealthy.

Commoditization

The request for proposal process, regardless of protestations to the contrary, assumes that all products and services are commodities, or should be. It assumes that all products and services are pretty much equal, and that by questions of their potential vendors they can choose the best of a bunch of similar offerings. It reduces differentiation, even if it pretends to ask for differentiation. By treating products and services like commodities, it is focused on you selling price.

The same questions are asked of all the competing companies. The same presentation format is requested. When questions are asked, all of the answers are shared with all participants, in order to maintain a level playing field. Then, after forcing all participants into the same box, they say something like, “you all look and sound exactly alike.”

The last thing anyone really wants or needs is a level playing field. As a sales organization, you want an unfair advantage. As a buyer, you want a partner who is differentiated and who deserves and earns an unfair advantage.

Discounting Value Creation

The request for proposal process makes the mistake of discounting the most valuable part of both the buying process and the sales process, the discovery and exploration of needs.

The mistake made here is that, as much as buyers say they don’t want a pitch, they demand, of all things, a pitch.

The request for proposal process asks questions of the companies competing, while providing almost no opportunity for a real understanding of needs. There may be some written needs and requirements, but written statements do not provide the kind of understanding that enables an effective change initiative.

The request for proposal process also includes far too few people in the process. The stakeholders two and three levels deep within the organization are where the real knowledge of what it will take to make change exists.

The process greatly discounts the power of relationships in creating and managing change and producing results, but those relationships are what are essential to actually producing results.

Relationships are not only a benefit for the seller. They are as beneficial—or more—for the buyer.

Relationships create trust. Relationships create understanding. Relationships are what grease the skids, what moves the obstacles, and what eliminates the constraints that prevent real change and the better results that the requests for proposal is supposed to improve.

Respond. Go ahead. Just know that you have to work to overcome a poor buying process, or face competing as an undifferentiated commodity who is selling with both hands tied behind their backs.

Questions

  1. What makes the RFP process so attractive to buyers?

  2. How do you overcomes the challenges to value creation that accompany the RFP process?

  3. What can you do to make buying process more effective for you and your buyer?


For more on increasing your sales effectiveness, subscribe to the RSS Feed for The Sales Blog and my Email Newsletter. Follow me on Twitter, connect to me on LinkedIn, or friend me on Facebook. If I can help you or your sales organization, check out my coaching and consulting firm, B2B Sales Coach & Consultancy, email me, or call me at (614) 212-4729.

Read my interview with Tom Peters (Part One and Part Two).

Read my Blogs.com featured guest post on the Top Ten Sales blogs.

Read my monthly post on Sales Bloggers Union.

Comments

comments

  • Pingback: Tweets that mention Why Requests for Proposals Are Unhealthy (For Salespeople and Buyers) -- Topsy.com

  • @PWEdgar

    Great post Anthony,

    I think you are spot on, but it doesn’t change the fact that a large number of our prospective customers see this as a valuable process. Couple thoughts come to mind – the higher up you go in the organization first, the lower your chances of being forced into an RFP situation. Second, when we inevitably are faced with one is it possible to combine the relationship part with the RFP part to get the best of both?

    Buyers like it because it tricks them into thinking that they can now see clearly the differentiators in a fair and logically comparative way, they want to compare “apples to apples” – because, today more than ever, they feel they already know what they need in many cases, in others they are just following a broken process.

    I see it as our role to facilitate change, to participate in educating our prospective customers in a better way. I sincerely believe my prospective customer should trust me and listen to my advice, and it is my goal to get to a point in the relationship where I can express ideas they are open to receiving and acting on. I think you drive value creation in this case by being a facilitator of the change they need, and help guide their thoughts towards it. I would even be willing to sit down and discuss the competition in an honest way, highlighting relative strengths etc and showing where our solution comes out the strongest. I don’t want to convince them I have the best solution, only that I might have, and I want to work to confirm that or concede that I don’t.

    You can’t always get away from an RFP, but you can sure try using it as a tool to facilitate conversation and change.

  • http://thestuffihave.com/blog Dave

    We use RFPs – not exclusively, but for major implementations, I think they work fine for an initial screening. I guess it depends on how thoughtful of an RFP process an organization has.

    #1 – we convey our vision and a roadmap. Sometimes the roadmap is fleshed out and sometimes it’s sketchy – but the responses to the RFP should speak to that.

    So we start by explaining what we’re trying to do and how we expect to get there.

    Now – how do vendors respond to that? Here’s what I’ve seen:
    1 – Phone it in. As if they don’t have time to take it seriously. Maybe it’ll stick if they throw it – .. I read into this that they’re probably not capable of delivering either – but they’ll figure that out if they get to the next step.
    2 – Miss the mark. No understanding of the vision, no research applied. It’s OK to ask questions as part of this process.
    3 – Show potential. Show that they understand the vision, share in the enthusiasm, want to be a partner. They may not be capable or mature enough for the job. But I’ll talk to them every time. And I may call them later for other work or to refer them to other jobs.
    4 – Show a level of expertise. These are often shortlisted, but don’t always win. It still comes down to the partnership conversations. Capability is important, but shared vision is critical.

    So – I take your main points about building relationships, and I agree.. But I do find value in the RFP as a filter.

    Perhaps a good response to an RFP is to ask the client to meet to talk about their vision. If they’re not willing or not able, you probably don’t want that contract anyway.

  • http://www.salestrainingdrivers.com Michael

    In addition, although trying to establish an “apples to apples” comparison, there is usually an incumbent that has somehow influcned how the RFP is written either through direct involvement or indirectly through ideas, buzzwords, and concepts they’ve drilled into they buyers mind.

    For the incumbent, getting ahead of the RFP process by building relationships (as mentioned above) and/or aligning your sales cycle to the buyer’s buying cycle is key. (Note to incumbents: If the buyer goes to an RFP process you are likely doing something wrong.)

    For the non-incumbents who don’t have ready access to the buyer’s decision makers they must do what they can to show creativity in a rigid process in order to get in the door and how that their responses gets them to the next round.