Should You Respond to an RFP?

Should You Respond to an RFP?

Most companies will receive Request for Proposals (RFPs), but most do not ask the question “Should you respond to an RFP?”   RFPs can be a valuable opportunity to showcase your solutions and land new clients.

RFP responses can take a huge amount of time and effort from many people across your company.  Therefore, the decision to respond to an RFP requires a specific decision point.  If you just respond to each and every RFP request you could spend enormous amounts of time with nothing to show for it as a result.  This article will explore the key considerations for companies deciding whether or not to respond to an RFP.

Reasons to Respond to an RFP

If you have a well structured process for responding to RFPs, you have built tooling to speed up the process and you have clear decision points then responding to RFPs can be a clear business advantage.  Here are some other reasons to respond to them:

  • Increased Visibility: RFPs can be a great way to increase your visibility as well as to introduce your company to new potential clients who are actively seeking solutions in your area of expertise.  Getting onto the radar of procurement teams in your market segment will give you access to a new range of potential customers.
  • Credibility Boost: A well-crafted RFP response demonstrates your company’s professionalism and understanding of the client’s needs.  However, this requires you to take the time to understand the customer’s needs.
  • Competitive Advantage: The RFP process allows you to directly compare your offerings to those of your competitors and to demonstrate the competitive advantages that you would bring to the customer.  This needs to be backed up with the opportunity to present those advantages.
  • Strategic Partnerships: RFPs can lead to long-term partnerships with key clients in your target market.  It can also help to build strategic partnerships with resellers and distribution companies in your market that may be introduced as part of the RFP.

 

Reasons to Decline an RFP

Unsolicited RFPs immediately raise the question “Should you respond to an RFP?”  In my opinion the biggest reason to decline to respond is a lack of access to the RFP team.  If the customer does not want to speak to you then this indicates a lack of willingness to expand their understanding of the potential solutions.  It also means that you are just on a list of companies that the procurement team wants to compare against to satisfy their own procurement rules.  Don’t waste your time on them…

Here are some more reasons to decline to answer:  

  • Poor Fit: If the project requirements don’t align with your company’s core competencies or target market, it’s best to decline.  You need to have an RFP review meeting and make the call soon after receiving the RFP.
  • Unrealistic Timeline: Carefully assess the deadline for submission. If the timeframe is too tight to prepare a high-quality response, it may be best to pass rather than reassign resources from other key opportunities.
  • Unclear Requirements: A poorly written RFP with unclear or ambiguous requirements can be a red flag. Responding could lead to wasted time and frustration.
  • High Cost of Response: Consider the resources required to prepare a comprehensive response. If the potential return on investment (ROI) is low, it may not be worthwhile.  You should always be recording metrics around RFP responses and so you know what you are comparing to.
  • Unsolicited RFPs:  To expand what has been covered above, you should take the time to gather metrics on how you have performed on unsolicited RFPs.  Most companies will see win rates of less than 10% and often below 5%.  You are better off spending your time on business that you can control and win.

 

Making the Decision

There will be a number of decision points in the RFP response process.  The first should be a formal go/no-go decision soon after you receive the RFP.  Should you respond to an RFP?  You should carefully analyse the following factors:

  • Alignment with your company goals and strategies
  • Your expertise in relation to the project requirements
  • Available resources to dedicate to the proposal
  • The potential value of the contract
  • The clarity and feasibility of the RFP timeline
  • The reputation of the issuing organisation

 

There will be another decision point after the initial pass of answering the questions and building the initial solution design for the response.  You should review if this design and associated costs fit within the potential budget for the customer.  This is also the time that you should be assessing any potential risks with responding to the RFP and winning the bid.

The final decision point is the decision to submit the response.  The formal response document should have been fact-checked and proof-read by multiple people and approved by the various department representatives.  The Account Executive will then have the authority to submit the response.

Other Points to Consider

For most companies where RFPs are a key part of the sales process, investing in an automated RFP response system will generate significant benefits.  These systems build libraries of answers to typical questions and the AI backend will recommend answers to help shorten the response cycle and cost.

These systems mean that other departments that are involved in answering RFPs e.g. Legal, Revenue Operations and Marketing can also create standard answers that only need to be reviewed once the RFP response is in the final draft.

It should be noted that there is then additive cost in maintaining the library and reviewing the answers to ensure that they are up to date with company and product changes.  However, this can be part mitigated by adding elements into the product release cycles.

Additional tips for the RFP process

  • Make sure that you read the RFP thoroughly and understand all the requirements.  This is especially true in countries where an RFP response forms a legal contract
  • Respond only to RFPs that are a good fit for your company.
  • Develop a clear and concise proposal that highlights your strengths.
  • Focus on the value proposition you bring to the client.

 

Finally, don’t just submit the RFP response and hope that the purchase order comes flying in a few weeks later.  Make sure that you follow-up with an outstanding RFP Presentation and ensure that any questions are answered quickly and accurately.  The Account Executive needs to make sure that they are constantly in touch with the RFP team to help them make a positive decision.

By carefully considering these factors, tech companies can make informed decisions about which RFPs to pursue. Investing time and resources into responding to well-aligned RFPs can be a strategic move that leads to new business opportunities and long-term client relationships. However, declining an RFP that is not a good fit can save valuable time and resources that can be better spent on core business activities.

 

Link to YouTube Channel : http://www.youtube.com/@ThePresalesCoachUK

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