Is a Request For Proposal (RFP) a valuable offer to buy, or an attempt by the buyer to commoditize your offering? An October New York Times article about artificial intelligence software for restaurant order flow management contained an interesting comment: “Just last week, [founder Joseph] Gagnon [said] the company received its first ‘request for a proposal’, an overture from a possible buyer of its products. ‘That we got an RFP tells me I made it’, he exults.”
How does a negotiator feel about it? Mr. Gagnon is counting his chicken orders too soon. In many commercial transactions, an RFP is a method of commoditizing buyers, so that all appear to provide the same function / feature / benefit / solution, and price is the only differentiator. Unless Mr. Gagnon shaped the RFP specifically to match his, and only his, offering it is now a price war between the set of vendors that can offer the solution. In fact, RFPs often intentionally omit differentiating factors between vendor solutions. The result is predictable. One firm that called K&R for consulting services to improve their sales negotiation success had responded to 193 RFPs in the prior calendar year – and won none of them.
The answer to our opening question in this news item: When the RFP they publish was “pre-written” by you, it is an offer to buy. If not, it is probably an attempt to commoditize your solution. (TD)