Every RFP represents an opportunity. However, the unfortunate reality is that not every proposal results in new business. So, naturally the question comes up: to bid or not to bid?
The RFP process requires an enormous amount of time, consideration and resources. Naturally, it would be best if those efforts were only expended on responding to RFPs that your business is certain to win. Unfortunately, there’s no way to ensure you win every RFP you respond to, but you can quickly improve your win rate with a thoughtful bid/no-bid analysis.
In this post we’ll discuss why carefully deciding to bid or not to bid is so important. Then, we’ll share three processes to help you make a confident decision as well as key bid/no-bid questions to ask and a downloadable checklist. Finally, we’ll explore what comes after you’ve completed your analysis and provide a no bid letter template as well as proposal resources.
The process of evaluating whether to bid or not to bid goes by many names but is primarily referred to as the bid/no-bid or RFP go/no-go decision. Simply put, the RFP go/no-go process is a way to consider various factors that will influence the viability and prioritization of a project.
Responding to RFPs can win new business and help your organization grow, so why not just respond to all of them? Creating a winning proposal takes a lot of thought and time. So, creating a proposal for every RFP will inevitably result in wasted resources, a low win rate and an overworked, undervalued proposal team. In fact, a recent survey by Mairi Morrison with Strategic Proposals revealed that 62 percent of proposal professionals feel that their workload and volume of work are their greatest stressors.
A more selective and precise go/no-go process could significantly relieve the burden on proposal teams and prevent burnout. Bob Lohfeld, the CEO of Lohfeld Consulting Group has more than 30 years of experience in proposal management. In a Washington Technology article Lohfeld discusses the importance of RFP go or no-go decisions and believes they are the best way to improve your win rate saying:
“It is far quicker than hiring better people, improving poor proposal processes or investing in capture and proposal technology. In fact, making better bid decisions brings about an immediate improvement in win rate and, as an added bonus, lowers your annual cost of proposal development.”
Conquering the fear of missing out
Certainly, working strategically, improving your win percentage and reducing the cost of creating proposals is always important. However, making smart bid decisions becomes absolutely crucial when faced with a heavy workload. Despite this, many businesses seem to suffer from the fear of missing out when it comes to RFPs. Consequently, they chase opportunities that aren’t a good fit. Lohfeld reframes the decision to bid or not to bid like this:
“Contrary to popular belief, the key to making good bid decisions is not picking the deals in your pipeline that you are going to win, but instead, it is discarding the deals that you are going to lose.”
If you knew you were going to lose, you wouldn’t waste your time preparing a proposal. Similarly, the bid/no-bid process is about weeding out unlikely deals in favor of those that are a better fit. Furthermore, it allows you to use your available resources to your best advantage.
How to establish an RFP evaluation process
From business to business the RFP evaluation process will be different. However, this guide will help you create a go/no-go analysis that’s as simple or complex as your business requires. Certainly, the more objective you can be, the more accurate your decisions will become.
3 strategies for conducting bid/no-bid analysis
Basic: The core five bid/no-bid questions
The simplest and most straightforward way to determine if you should bid or not is to answer these five questions. Each question focuses on a factor that should be considered before proceeding.
Big picture: Does this opportunity align with your business’s long-term goals?
Capability: Is your business equipped to fulfill the RFP requirements?
Competition: Do you know who you’re competing against and can you win?
If you answer each question with a confident ‘yes’ then, go for it and happy bidding. On the other hand, if there are too many ‘no’ responses or caveats that start ‘yes, but…’ or ‘yes, if…’ the opportunity may not be a fit.
This basic approach is a great place to start for those new to bid/no-bid decisions. In addition, it works well for small- or medium-sized businesses where sales executives are responsible for proposal management. Another benefit of this short-form evaluation is that it can easily be conducted during a meeting with stakeholders if necessary.
Intermediate: True or false checklist
For those looking for a slightly more formal bid or no-bid analysis, the true/false checklist may be a good option. This form is still quick and easy to use, but considers the core five factors listed above in more detail. In addition, it can be customized to include the criteria that’s most important to your business.
To gather your custom criteria:
Examine past proposals and identify common indicators of those you’ve won as well as those you’ve lost
Ask for feedback from subject matter experts, business development and stakeholders — they may be aware of other factors you should consider
Define strengths and weaknesses that would heavily influence your likelihood of winning
Now, to add your criteria to the checklist, simply phrase it as a true or false statement where true is the ideal answer. To keep the evaluation speedy, I recommend using no more than 20 true or false statements in your checklist. Once you’ve filled it out, tally up your affirmative answers and evaluate the recommendation to bid or not to bid. Generally, if there are more than 80 percent true statements, you’re in a strong position to bid.
This analysis strategy works well for businesses that have one or two dedicated proposal coordinators. It provides clear guidance and justification that will help to get everyone on the same page.
Math and data lovers, look no further than the bid/no-bid decision matrix for all of your analysis needs. The decision matrix approach uses a number of factors, rated on a scale to make a bid or no-bid determination. In some cases, each question or factor can also be weighted based on its importance to the business.
While this approach can get a little complicated, it’s helpful to teams who have more than one person’s perspective to consider in the go/no-go process. Because the outcome is a number, multiple people can rate the opportunity and the results can be averaged for a final outcome.
The go/no-go matrix created by the Society for Marketing Professional Services (SMPS) is highly-detailed. For instance, each question is scored on a scale from zero to 10. In addition, within the sections there’s a detailed description of what each score means. Not only that, but the worksheet also allows you to complete the scoring from your competitor’s perspective and see how you stack up. Certainly, this will give you a good idea of your chances of winning.
A note about these tools
Remember, these checklists and worksheets are tools to help you make informed decisions. As such, they should evolve as your business needs and goals change. Regularly update the criteria as you identify trends and better understand what works.
Next steps: Propose or decline to bid
Now, you have your decision. What’s next? If you don’t plan to bid, you should notify the customer of your decision. Conversely, if you decided to bid you can move forward to the next step in your proposal timeline. Either way, we’ve got you covered.
How to decline to bid
We get it. This is awkward. No one likes rejection and it feels like a role reversal to tell a potential customer that their RFP wasn’t a fit. At the same time, you want to be sure you maintain a good relationship for any future opportunities. So, here’s how you do it.
Write a no-bid letter
Communication is one of the most important things in a customer relationship. Accordingly, the decline to bid letter lets the procurement team know what to expect from your business. It is especially helpful for the issuer to know if you’re participating when the RFP has a small vendor pool. At the same time, the notice gives the customer the opportunity to follow up with you (and potentially offer helpful insight) before the RFP closes. In addition, sending the update will also save your inbox from unnecessary clutter as the RFP process moves forward and the customer sends new information to vendors still in the running.
When writing your letter, remember:
Be as brief as possible
Offer insight about your decision, but stay positive
Provide your contact information for future opportunities
If you have an existing relationship with the customer, follow up with a phone call as well