RFP process and steps: The ultimate guide to streamline your process
While incredibly important, the RFP process is often complex and time-consuming. But with the right approach and resources, you can speed up the process and feel more confident managing RFPs. In this article, we’ll dive into the critical steps in the RFP process and provide tips to help you succeed.
What is a request for proposal (RFP)?
An RFP is a formal request in which the issuer asks vendors to submit proposals demonstrating how a product or service they offer can address one or more of the issuer’s key business needs. RFPs have played a crucial role in business for many years. They allow issuers to vet the offerings of various vendors and allow vendors to demonstrate their solutions’ unique benefits.
According to Investopedia:
“The request sets out specifications describing the solution it seeks and evaluation criteria disclosing how proposals are graded. Requests for proposals may include a statement of work describing tasks to be performed by the winning bidder and a timeline for providing finished work.”
RFP Roles and Responsibilities
Whether you are issuing an RFP or responding to one, requests for proposals require tremendous coordination. Various stakeholders must work together to ensure they have accurate and up-to-date information. By defining and documenting key roles and responsibilities, you can ensure your organization develops an effective RFP process.
RFP issuers reach out to vendors with the initial request, monitor responses, and evaluate the responses based on the needs and opinions of several key stakeholders.
Issuers may also leverage tools like dynamic, digital Vendor Profiles that centralize vendor information to help shortlist faster or Client Discovery, which enables consultants to capture client needs for the RFPs they issue on their behalf.
Key stakeholders include:
- Consultant – The consultant is responsible for understanding the needs of their client and properly explaining those needs within the RFP. They are also responsible for finding vendors to submit proposals and helping assess their qualifications.
- Procurement professional – The procurement professional coordinates the creation of the RFP. They must work with several internal team members to determine exactly what the organizational pain is and what solutions they’re most open to.
- CFO – The CFO will evaluate costs and return on investment (ROI) to determine whether a solution is financially viable.
RFP responders, on the other hand, have to read and understand what is often a daunting amount of questions, retrieve information needed to answer those questions from internal subject matter experts (SMEs), and organize all the information.
Key stakeholders include:
- Marketing manager – The marketing manager will determine whether the RFP issuer is a good fit. They need to consider whether their organization’s solution addresses the prospect’s needs, as well as the likelihood that they will ultimately win the deal. They will also handle communications with the prospect.
- Proposal manager – The proposal manager is responsible for coordination. They must ensure all questions are answered and provide the detail needed to address the RFP issuer’s key concerns.
- SMEs – SMEs provide highly specialized knowledge. In many instances, neither the marketing manager nor the proposal manager will know the answer to certain questions, in which case the SME will provide the information needed.
For a more detailed break down of the suggested roles and responsibilities of RFP responders, check out our article on how to define roles and expectations.
6 key steps involved in the RFP process
The RFP document informs vendors about the problems the issuer hopes to address. It’s in the issuer’s best interest to make this document as clear as possible in order to ensure vendors respond appropriately.
An article in Forbes suggests RFP documents should detail four elements to provide vendors with the information they need to deliver effective responses. While the author takes the perspective of an advertising agency, the advice is helpful to everyone who issues RFPs.
The first element is detailing the purpose of the RFP. “Are you seeking a long-term partner, a vendor to redesign your website and then step away, or an agency for a single initiative? Set expectations from the beginning about what type of relationship you are seeking.”
The second is explaining exactly what the issuer wants to achieve. This is helpful because “respondents can explain how they will help you reach your goals if they are provided upfront.”
Third, the article suggests stating how vendors will be evaluated. “This gives respondents an indication of what your organization finds most valuable and ensures that key points are not neglected.”
Finally, the article suggests providing a wish list — these are things that would be nice to have but are not necessarily requirements. This allows vendors to highlight these items if they offer them, while not discouraging responses from those that don’t.
The RFP document will also feature questions for vendors to respond to. It’s helpful to keep the number of questions as low as possible, to increase the on-time completion rate and prevent helpful vendors from declining to respond.
Key questions to ask in an RFP include:
- Do you offer a trial? Free trials can give issuers a clear picture of what the vendor has to offer with no risk to their organization.
- Who are your competitors? Asking this question can help issuers determine a vendor’s integrity. It lets issuers know whether the vendors are honest about who their competitors are and why they lose to them. It can also help issuers determine if there are other options they should explore.
- What is your implementation process like? When purchasing software, setting it up correctly is crucial to maximizing its effectiveness. RFP issuers should determine how long the process will take and how involved the vendor will be.
- What kind of training do you offer? The more complex the solution, the more important this question is. If you don’t understand how to use all the solution’s features and functionality, you may miss out on key benefits. Issuers should inquire about the scope of training vendors offer, as well as the formats (online, in-person, etc.).
- How do you handle customer support? Almost all software users encounter an issue at some point in time. Issuers should determine how long vendors take to respond to customer support requests, as well as how they can submit those requests (by phone, email, live chat, etc.).
- Can you provide references, reviews, and/or case studies? In the absence of a trial, there’s no better way to determine the effectiveness of a solution than by learning about the experiences of those who already use it.
Finally, RFP issuers should ask questions related to their industry. It’s important to determine whether a vendor understands the challenges you face and can speak your language.
When vendors receive an RFP, it’s crucial that they respond effectively. 70 percent of RFP responses are rejected by the client. Vendors that want a greater success rate must put in the time and effort to understand the issuer’s needs and tailor their RFP response to address key concerns.
That’s where the discovery process comes in.
According to HubSpot, the discovery phase “uncovers the client’s needs, challenges and desired results” allowing vendors to “assist the client in discovering what they really want” and “shape their perception of the best way to reach their goals.”
Put simply: client discovery allows vendors to get to the heart of the pain the client is trying to address, empowering a more effective RFP response.
So, how exactly should vendors uncover the information they need?
One proposal guide suggests conducting the following steps to ensure a successful client discovery:
- Review Client’s Intake Questionnaire
- Review Client’s Site
- Do a Google search [of] both the client and the market space
- Review their current site and marketing materials
- Review their competitors’ sites
- Do a basic brand analysis
The more in-depth this process is, the more likely is it that the vendor will effectively address the RFP issuer’s key concerns. In general, this process should at least allow the vendor to identify high-level client goals, gather client requirements, prioritize critical factors, and set timelines.
After vendors have completed their client discovery and submitted their proposals, the RFP issuer can begin a preliminary evaluation. During this stage, the issuer will identify a subset of vendors who are most likely to address their needs. This subset is known as a shortlist.
To create a shortlist, RFP issuers should view each proposal carefully, then:
- Compare critical factors to vendor strengths
- Knock out vendors who cannot compete
- Identify differentiation factors for an in-depth comparison
Entrepreneur Magazine recommends asking the following questions to identify which vendors to add to your shortlist:
- How old is the vendor’s organization/establishment?
- Do they have the capacity to take care of your requirements as the business grows?
- Do you know anyone who has availed their services and can provide recommendations for them?
- Are they on any approved supplier lists from trade associations or government? If applicable.
- Do they also work or have worked with your competition or others in the same industry?
Once the RFP issuer has determined which vendors made the shortlist, they can begin a more in-depth evaluation to identify which vendor will ultimately win the bid by:
- Engaging the shortlisted vendors
- Asking follow-up questions that focus on critical factors
- Setting scoring criteria
- Keeping communication lines open with vendors
At this stage, it’s important for issuers to differentiate between the remaining vendors’ offerings, while maintaining leverage. According to Computerworld:
“Vendors still in consideration can be commended for their efforts thus far, as a goodwill gesture. But they must also be told that there’s still competition and that they must sharpen their pencils. Your essential customer objectives at this point are to maintain flexibility, establish some negotiating power and keep your options open. A misstep here can lose you some leverage.”
For RFP responders, the key is to show how their offerings differ from the rest of the competition. By this point, the issuers’ needs and concerns should be clear, providing an opportunity for targeted messaging.
At this stage, the RFP issuer should have a thorough understanding of what each vendor has to offer. Now, it’s time to decide which solution will best address their needs.
To properly evaluate vendors, the issuer should compare each vendor side by side. This often involves a strategic scoring process, such as weighted scoring — where sections or individual questions which represent the areas of biggest concern are valued most heavily.
After scoring the vendors, issuers should have an internal review of the scoring where they select their final vendor or schedule follow-up demos.
Once the issuer selects a vendor, it’s time to document the decision, as well as the go-forward process. This should include:
- Feeding RFP results to the legal department
- Drafting a statement of work (SOW) from responses gathered
- Including performance metrics and review process in contract
The SOW should be as detailed as possible as it defines how the RFP issuer and selected vendor will work together. This is why it’s important to include performance metrics and the method of review. These key elements ultimately inform the vendor of what’s expected of them and protect the RFP issuer in the event that the agreed upon expectations are not met.
The process of creating and signing any contract should be handled with extreme care, as they are crucial should any litigation become necessary. According to one law firm, a strong contract serves five purposes:
- Having contract terms well defined will eliminate misunderstandings at a later date
- A strong contract reinforces commitment
- Contracts help you plan financially
- Contracts limit and define your liability
- Contracts can serve as valuable reference documents