Gitomer: To bid or not to bid?
Friday, November 22, 2013 7:00 AM
“They get bids for everything and always take the lowest bid.”
“They send out a request for proposal, and I can never speak to the decision maker.”
“We’re becoming a commodity. All they do is take the lowest bid.”
“It’s the government. They have to take the lowest bid.”
Many companies have become smart buyers, but many have become too smart. They’ve refined the buying process so far that they have precluded the words “quality” and “value” from the buying process AND they have taken the words “productivity,” “ease of use” and “morale” out of the delivery process.
The typical request for proposal (RFP) has a bunch of standards about what has to be offered by the vendor, but far too little (or nothing) about what happens after the company takes ownership. They have the “specs” in the RFP, but not the details of use, value, productivity or morale.
The major flaw with the RFP process is that the people conducting the bidding are not the people who use the product or service once the bidding is complete. Nor, for the most part, do they care.
The main goal of bidding is NOT get the best product. The main goal of bidding is get the cheapest price. And often that precludes the best product. It also lowers the profit of the company doing the bidding. Long term, this is not good for the survival of a company.
REALITY: If you follow the customer’s RFP requirements you will lose even if you win. If you win, it’s likely you did so at a severe reduction of price and loss of profit. Not good.
That’s the bad news. Let me give you the good news, and the sales news.
There are several strategies you can employ to get around the bidding process, or legally and ethically change the bidding process. Here are some ideas you can begin to use immediately:
1. Ask for a clause to be put into the RFP stating that all claims must be backed up with customer testimonial videos as proof. Any procurement department should be happy to add this clause into its bidding process. It will assure the department that everything being claimed will come to pass.
2. Request that the people who actually use the product or service you’re selling be more involved in the selection process. Especially as it relates to their actual experience and their projected needs. Keep in mind that procurement and purchasing don’t actually use what they purchase. They just buy. They’re relying on the person or people who made the INTERNAL request, and will often get their input before making a final decision.
3. Make an appointment with the chief financial officer. He or she is most interested in making a profit, not just saving a dollar. Make your case against taking the lowest price and in favor of making a profit.
4. Have an active social media presence that is easily findable, so your reputation is both visible and impressive. The customer will check you out BEFORE you get there, and may use it as part of the decision-making process.
4.5. Gain better insight into the purchase of your products and services. Talk to the person who MAKES the budget, not the person who spends it. Make service response time a mandatory part of the bid. Talk to those responsible for what happens AFTER purchase, not the people buying it. Make certain that third-party proof, in video, is a major part of your proposal.
CAUTION: The bidding process is often tightly controlled by those who execute it. The only people likely to influence change or modification are C-level executives. Get with them as part of your normal selling process.
NOTE WELL: Every company, even the government, has “preferred vendors.” People who have achieved a “higher than equal” status. Become one of them.
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