In some industries tenders/RFP’s are not unusual, in others they are the norm, but it seems that the economy has just produced that many more. This sure takes the fun out of selling, and I am not sure it gets the best results for the buyers either.
What got me thinking about this were two different events over the last couple of weeks that really bring into question the need for tenders in the purchase of some things.
I understand in certain instances tenders are the way to go, question of governance for some; in the case of governments or agencies there is the question of transparency. Although often it brings more murkiness, and process doesn’t assure the right decision at all.
The first event that got me thinking was reading about a COO who was relieved because he awarded contracts to vendors with out the tender process. In a rare bit of real journalism, they looked into some of the contracts awarded, and found that not only were they awarded to viable companies, but because prices were negotiated, they found that costs were lower than similar deals that were awarded through tenders. He was fired not because of the result, but for process, or not following it.
Again, I understand the importance of policy and following the rules (even when they are stupid or unnecessary), but isn’t one of the reasons you pay executives the big bucks is to make decisions? While tenders level the playing field, this cuts both ways. While it does allow for (potentially) fair comparisons, input from leading providers without bias, personal or other. But it also opens the door other issues not the least of which is a costly inefficient process that by many accounts doesn’t remove the impact of relationships or bias. The old saying is that RFP’s are written by one of the 3 C’s, Committee, Consultant or Competitor, none of which assure or make a fair selection.
The second instance was closer to home; I had been pointed to a company that was struggling to fill their pipeline consistently and were behind vs. quota. I cold called and made an appointment with the VP of Sales; we had a good conversation, he liked the work we had done with other companies and was man enough to admit they definitely needed help. I recommended a next step, but he told me he would take what I discussed, he would meet with other providers, the go to RFP.
Are you kidding me? I mean I don’t expect to win every time, I don’t expect to impress or meet the need of every decision maker, but this guy is no decision maker. What kind of VP of Sales needs to go to tender to pick a program to help his team to prospect better? I can see if this was HR, but a VP of Sales, maybe his teams are taking their prospecting activities to tender each day. Again, he is paid well to lead, set strategy and ensure execution. Based on what I saw it is n wonder they are in the shape they are in, after all where is the leadership?
Seems to me that the ability to make decisions is becoming a somewhat of a lost art. Leaders, who are paid to lead and make decisions, are more comfortable covering their ass through consensus, or hiding in a crowd. They involve more people than ever in the decision process, some who should not be part of the process to begin with, (more on that soon). Beyond the contradiction in a VP of Sales needing a tender to select a training program, is the fact that it is a no win scenario, if the program works, well the sales consensus committee can take the credit. If it fails, he as the VP of Sales takes the heat and the door. Sounds a lot like politics, nes pas?
What’ in Your Pipeline?
Tibor Shanto
Hi Tibor,
One area where RFP processes struggle is where the clients can’t specify exactly in advance what they want. This often happens when you’re hiring an expert (consultant, lawyer, etc.) to help you out. If you knew exactly what you needed, you wouldn’t need the expert.
RFP processes typically work by developing detailed specifications and rating suppliers vs those specifications. But if the client is in no position to get the specification right, the process falls down.
In these cases, interpersonal, trust based relationships often work much better. If you hire someone you can trust and who will act in your best interests then you can “work things out as you go along”.
If you hire someone only based on whether their proposal meets your (incorrect) specification then there’s a huge risk that you’ll pay a fortune for changes and amendments to the specification as you discover what’s really needed.
Ian
Have you confused a manager with a leader?
The appropriate response would have been to immediately escalate the deicision to the CEO. Since he had to talk to other vendors before creating the RFP, he basically used you, and them as a means of getting educated. If you and the other vendors stressed their differentiators, instead of commonalities, he wouldn’t have gotten a good education.
Through none of this did he make a commitment. He knew what he was doing. You did not.
Maybe marketing should have educated this guy, instead of you. You might look at the touchpoint collection and see if there is a fulfillment chain, or content pathway through your company’s content targeted to economic buyers, rather than geeks, functional unit experts. Your time should be better spend by your company.
Hi David,
Thank you for your comments.
I can tell that you are a modern day sales pro just from the way you made your assumptions and went from there without letting the facts interfere in the least.
No where in my posting did I mention talking to a manager. No where in my post did I mention anything that could be construed as “educating” the VP of Sales in question. If you look at other posts on this blog you will know that my modus operandi is to spend time interviewing the prospect, and recommending that I then meet with significant members of his team. So the only thing he may have learned is that I am good at asking questions and finding out what the scenario is, rather than just rambling on without a solid basis, like some people we know. You are right that he did not make a commitment, but then again neither did I, nor are we going back or playing in the RFP pool.
I am not sure what you mean by your last paragraph, geeks are IT, and we are sales training the only geeks I talk to are at Best Buy. Fulfilment chain, touchpoint, content pathway, nice not sales, not sure what it has to do with the subject at hand.
But as you say, my time is better spent on things elsewhere.
Best,
Tibor
Tibor,
I agree with you. I tell you one more funny thing that is popping up now-a-days if you ever encountered.
Now, there is this team called procurement that takes the decisions on the financial matters. So, you try hard to convince the VP of whatever, on the technical matter, your differentiators etc., etc., sell your stuff and then you are directed towards this procurement guys that know nothing about anything. All they do is to just bargain – Hard bargaining. “Yeah.. you are quoting x is it?. Give me for x/2.. then only I will take it” THey neither have the brains nor the mindset to understand how this X is arrived at. This VP has no authority over the procurement guys as it is supposed to be so-called ‘separation of duties’.