I frequently encounter situations with clients who are trying to expand their business into new territories and verticals. The case with one of our B2B clients was particularly dire. Their growth with existing customers was flat, and their sales force had a low win rate with new prospects. In fact, they bid on 200+ new opportunities the previous year, investing millions in requests for proposal (RFP) responses, without any positive results. So, I asked the question: How do you decide whether to respond to an RFP, and how do you craft a pitch that stands out?
Adapt And Motivate A New Customer To Consider Your Offer
Why would you, as a customer, choose a new vendor with whom you have no experience? There are several factors that would make us, as customers, open to a new vendor relationship. Before pursuing new business or investing in an RFP response, make sure your business and pitch demonstrate that you can do the following for prospective customers:
1. Fill A Void Caused By The Status Quo
Factor one occurs when the customer perceives that the incumbent vendor is not living up to performance expectations in areas such as quality, service, support, delivery and so on. In this case, you need to prove how the benefits of making a change to your company outweigh the costs. Make sure to take the risks of switching suppliers into consideration and address them.
2. Deliver “Transformational Value”
The second driver of buyer action exists when you can make a credible promise to provide compelling new value. To overcome the cost and risk factors mentioned above, your value equation should be “transformational” for the prospect. It should also be accompanied by a credible business case that validates the financial impact of the solution.
3. Fit The Customer’s Environment
Customer environments consist of non-quantifiable factors that impact sales opportunities. These can be as critical to success as your ability to prove upside value. Examples include political changes, shifts in regulatory environments and mandates requiring companies to consider new vendors.
As a new supplier looking to capitalize on this environment, you should be able to prove your value and capability. In fact, this is the common thread that goes through each of the three factors above — the need to prove value and capability. The following scenario illustrates how to make a judgement on whether to compete or walk away.
Scenario: The unemployment system in a particular country was managed by two vendors providing the resources and systems. They had a good record of accomplishment, but the newly appointed agency director didn’t see them as efficient. She needed to cut costs while enabling a significant number of unemployed citizens receiving benefits to obtain new employment faster, which would further reduce the agency’s costs. Because the two current vendors were seen as “entrenched,” our client considered walking away, even though they had invested considerable effort and money in responding to two qualifying RFPs.
Fortunately for our client, their solution would have transformed the country’s delivery of unemployment services by automating much of the manual front-end paperwork and enabling citizens to post resumes to relevant prospects in hours rather than days. The cost reduction was significant but the biggest impact was to the agency’s critical metric — “time on the bench” — which measured the length of unemployment for those who were capable of being employed. They wrote the final RFP response to focus on their unique capabilities to address these metrics. They were able to do so and were ultimately awarded the contract because they were able to meet the conditions above.
4. Provide Services According To The Customer’s Timetable
An additional factor that drives decisions is time. Consider the following scenario:
A financial institution had repeated electronic breaches, including theft of customer assets in certain types of accounts. The current anti-fraud system was not working. When they put this project up for a bid, they decided they will choose a vendor who, first, had the capability and, second, could implement a solution in the shortest amount of time possible.
As part of the process, all prospective vendors described their solution, how they would implement it and the associated investment model. One vendor quantified the “risk over time” based on the institution’s history, indicating the cost to the institution for every month they waited. They supported their analysis with credible industry data and illustrated how they have implemented similar solutions for other financial institutions. The vendor was awarded the contract … despite the fact that alternatives (including the incumbent) might be as much as 30% cheaper!
These two examples illustrate the power of detecting relevant cues from the prospective customer and designing your sales response to show value in alignment with the metrics that are most important to the buyer.
To ensure that you address these conditions in a compelling way, consider the following steps when you’re crafting your proposals. First, make sure to re-state the customer’s current condition that they are trying to address, followed by their desired future state and how they can measure your success. Second, explain how your solution will get them to their future state and when it will do so. Make sure you include some references that validate your capability to do the job, as well as unique features that raise you above the competition. Lastly, always refer to their metrics so they can see that an investment with you will deliver the requisite return.
Ultimately, if any of the first three factors exist and you have the capability to deliver value for the customer in time (the fourth factor), your decision to compete should be rewarded.
Note: this article originally appeared Dec, 2019 on Forbes.com. You can view the original post here.