In the competitive world of B2B transactions, the Request for Proposal (RFP) process is a crucial battleground. Many firms operate under the assumption that the more RFPs they respond to, the higher their chances of success. However, this approach might not always be the most effective. Let’s delve into why being selective in responding to RFPs can sometimes be a smarter strategy.
The cost of responding to every RFP
When it comes to tackling RFPs, many businesses underestimate the real investment required. It’s not just about crafting a quick response, it’s about dedicating significant time and effort to each proposal. On average, companies tackle around 175 requests annually, dedicating approximately 30 hours to each one.
This time commitment isn’t trivial. It’s a substantial investment of a company’s most valuable resources — its people and their time. When teams are tied up in responding to RFPs, they’re not working on other critical tasks. They could be talking to customers, engaging in other sales activities, or responding to another RFP that have a higher probability of success.
Therefore, it’s crucial for companies to consider whether the RFPs they’re responding to are really worth the effort. Are these opportunities aligned with the company’s strengths and strategic goals? If not, the time spent on these proposals could be a hidden cost to the business, one that affects not just immediate resources but also long-term growth and profitability.
Understanding the substantial investment required for each RFP response sets the stage for an even more critical consideration — the risk of wasting these valuable resources on proposals with little chance of success.
The risk of wasted resources
When a business decides to respond to an RFP, it’s not just committing time and effort, it’s also investing hope and expectations in a potential new deal. However, not every RFP is a viable opportunity. Some RFPs might be beyond the company’s scope, highly competitive, or not a good match for the company’s offerings. When businesses fail to discern these cases, they risk pouring their resources into a bottomless pit.
The true cost of this misguided effort goes beyond just the immediate resources spent on the RFP. It represents a missed opportunity — the chance to have used those resources on more promising pursuits. Every hour spent on an unattainable RFP is an hour not spent on nurturing leads, developing relationships with potential clients, or focusing on RFPs that have a real chance of turning into profitable contracts.
Moreover, the impact of chasing unwinnable RFPs can ripple through the organization. It can lead to employee burnout, as teams work tirelessly on proposals that yield no results. It can also create a cycle of frustration and demotivation when efforts repeatedly fail to convert into business wins.
To avoid these pitfalls, companies need to be more strategic in their approach. They should evaluate each RFP critically, assessing whether it aligns with their strengths, capabilities, and strategic goals. This evaluation should be rigorous, looking beyond just the surface requirements of the RFP to understand the broader context — the competition, the client’s history and preferences, and the realistic chances of success.
The downside of a ‘Shotgun’ approach
The ‘shotgun’ approach, where a company responds to as many RFPs as possible in the hopes of securing a few wins, might seem like a sound strategy at first glance. However, this approach is fraught with inefficiencies and missed opportunities.
One of the main issues with this approach is the lack of selectivity. By not filtering RFPs based on their alignment with the company’s strengths and strategic goals, businesses run the risk of spreading their efforts too thinly across a wide range of proposals. This method often leads to lower-quality responses, as teams don’t have the time or resources to tailor each proposal to the specific needs and preferences of the client.
Furthermore, responding to every RFP without a strategic filter can result in chasing after projects that are either not a good fit for the company’s expertise or are highly unlikely to be won. This can lead to a cycle of low win rates and frustration, as the company continually expends effort on proposals that have little chance of success.
A more strategic approach, on the other hand, focuses on quality over quantity. By being selective and responding only to RFPs that are a good fit, companies can dedicate more time and resources to crafting high-quality, personalized proposals. This not only increases the chances of winning the RFP but also helps to build stronger relationships with clients, as they recognize the effort and attention to detail that the company has put into understanding their needs. But how do we decide which RFPs to pursue?
Strategic decision making: The Go/NoGo Process
The Go/NoGo process is a critical tool for companies looking to optimize their RFP response strategy. It’s a systematic approach that helps businesses decide whether or not to pursue an RFP based on a set of predefined criteria. This method ensures that companies focus their efforts on RFPs that align with their strengths, resources, and business objectives.
To implement the Go/NoGo process, companies should start by establishing a set of clear, objective criteria. These criteria might include factors such as:
- Alignment with the company’s expertise and capabilities: Does the RFP require skills or knowledge that the company excels in?
- The potential for a profitable outcome: Is the project likely to be profitable, taking into account the costs and resources required?
- Existing relationships with the client: Does the company have a prior relationship or positive history with the client, which might increase the chances of winning the RFP?
- Strategic fit: Does the project align with the company’s long-term goals and strategic direction?
By evaluating each RFP against these criteria, companies can quickly determine which opportunities are worth pursuing. This not only saves time and resources but also increases the likelihood of success. When a company focuses on RFPs that are a good fit, it can dedicate more attention to creating high-quality, tailored proposals that resonate with the client.
The Go/NoGo process also helps companies avoid the common trap of responding to RFPs based on gut feeling or overly optimistic assessments. By relying on objective criteria, companies can make more rational, informed decisions about which RFPs to pursue.
In addition to improving the efficiency and effectiveness of the RFP response process, the Go/NoGo approach also has a positive impact on team morale and motivation. When teams work on projects that are well-aligned with their expertise and have a higher chance of success (i.e. high win rate), they are more engaged and motivated, leading to better performance and job satisfaction.
While the Go/NoGo process provides a solid foundation for strategic RFP response, Steerlab takes this approach a step further by offering an innovative and technology-driven approach to help respond more strategically and effectively, increasing your chances of winning.
Steerlab is an AI-first solution that supercharges your response to vendor questionnaires helping you respond faster, respond better and respond to win.
In addition to automating 80% of your responses and elevating your response quality, Steerlab offers a suite of tools designed to help you win more deals:
- Gap analysis: The platform conducts a thorough gap analysis between the RFP requirements and the company’s value proposition. This helps businesses identify areas where they can differentiate themselves and tailor their responses to better meet the client’s needs.
- Automated Go/NoGo process: Building on the traditional Go/NoGo approach, Steerlab automates this decision-making process. The platform evaluates RFPs against predefined criteria, enabling businesses to quickly identify the most promising opportunities.
- Biased RFP sniffer: Steerlab has the ability to detect biased RFPs, which may have been influenced or co-written by competitors. This tool helps businesses avoid wasting time on RFPs that are unlikely to be won due to unfair competitive advantages.
Are you ready to change the way your business responds to RFPs?
Visit Steerlab.ai to learn more or contact us at founders@steerlab.ai.
