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Saturday, November 08, 2008

Proposal development costs (one solution)

For AEC businesses, one of the biggest marketing costs is the challenging and expensive business of preparing responses to RFPs and tender opportunities. Much time and work must be put into the process, especially for complex projects -- where estimating and budgeting errors would result in horrendous losses if you bid too low.

Of course the best way to get around this problem is to respond only to RFPs where you are sure (or at least likely) to win: This is especially important in situations where the game is wired in and set up in favor of one business or another.

Really successful marketers take things a step further -- they get their clients to pay for their proposal preparation. In other words, not only do they wire things in their favour, but they actually receive cash to get started.

This happens when the trust between you and your client are high enough that your client, appreciating the effort involved, and really wanting you to succeed, is willing to help out. You don't of course abuse this respect: The money you charge is at the low end of your billing spectrum and you may expect just hard cost recovery.

But even if you need to go out of pocket in your proposal preparation, I would advocate strongly you spend more on fewer proposals -- make the ones you really want to win so incredibly good, and well researched, that you will get to the short-list, and then, prepare properly for the final presentation, even if you know you have a natural edge or 'in' (and these are frankly, with few exceptions, the only proposals I would bother submitting.)

Recently, we enjoyed the experience of preparing a winning proposal. Our team took time to prepare an exceptionally detailed graphic presentation. The day arrived for formal presentations, and we arrived early. The chair of the committee greeted us warmly outside the meeting room, saying he was happy to see us, considering that some of the other people scheduled to present seemed to be late or absent.

Sitting in the reception area, we watched as two other candidates for the competition arrived, and then went into the meeting room to make their presentation. I found the experience of watching the 'others' go into the lions den somewhat saddening -- did they not know who would win this one? (Though the other candidates may have suspected something was 'up' -- our team had three people ready to go into the room, they were walking in alone.)

Our turn came up, and we made our proposal clear, and then equally made it clear that we weren't going to 'buy' the job -- either by over promising sales totals, or by guaranteeing significant revenue sharing with the prospective clients.

I knew things were working well when, after our presentation (the last of the day), the entire committee applauded. (Sheesh, this is a somewhat technical proposal, not a concert performance, but I suppose we got the technique right.) Not surprisingly, an hour later, we received the acceptance call, and the project is now well under way (and significantly ahead of projections.)

The point here is that you really need to think carefully about how you go about participating and responding to RFP situations -- pull out the stops, and do a great job (and spend money) on the ones where you know you should win because of your connections, relationships, and inside knowledge, or when you know the competition is truly fair and no one has an edge. (It sometimes happens that way, if rarely). If you have the inside track and a good idea where the proposal process itself may be of value to your client, I wouldn't be afraid to ask for compensation, at least for cost recovery, in setting things up.) Then, you may find that, your marketing process becomes cost neutral or in the best of circumstances a revenue source.

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