| submitting tenders that get you the job is a key ingredient for securing your firm’s survival |
| SMEs often compete against larger firms when submitting a tender – but how can one win against the big boys and girls? |
| we tell you about one or two mistakes we made on-the-road to getting better at selling |
Some people argue that every employee is part of the firm’s sales team.For an SME (small and medium enterprise), this is particularly true since nobody can hide from the customer. If a micro firm (less than 10 employees according to the European Commission) is invited to tender for a contract, it might be that all staff is involved in one way or another.But we all know tenders or bidding for a job requires a lot of work and success is, most certainly, never a certainty. Below we list three examples that illustrate the challenge quite nicely. We wrap it up with a seven-point checklist that can help improve one’s chances for winning.
CASE 1
Recently I talked to one of my colleagues who is a VAT (value-added tax) expert and partner in a small and highly successful accounting firm. He told me about a very recent case, whereby his firm had submitted a tender and lost against a competitor due to price.
The sad thing was that he had probably spent more time on the proposal than the winning firm. Why? Well to be fair to the client the VAT expert had included information in the tender regarding legislative changes coming into force during 2008. How these would require additional work was pointed out in the tender. In turn, this enabled the client to see what work would have to be done to assure legal compliance in a few months time.
The competitor had chosen to submit a low-ball bid offering the work for what the client wanted. This bid neither addressed the legal ramifications nor outlined the additional work that would be needed in a few months to be legally compliant (i.e. why it needed more than just fixing the small problem to avoid regulatory problems).
Is the client paying less by taking the lower bid? Probably not, in fact it could be more. Once the work is finished, the winning firm will have to point out to the client that additional work is needed to meet new regulation that will have just come into force.
The sad part is that even though the low-bidder did not tell the whole story, he got the contract and, most importantly, subsequent changes that need to be done due to regulatory developments will most likely come his way as well.
CASE 2
This one concerns ourselves where we bid for providing risk compliance services to an SME. We submitted an extensive proposal outlining the risks and challenges that, thanks to our work, the client would be able to handle properly and more cost effectively.
All this was supposed to help the firm achieve better risk management, legal compliance and, most importantly, advance internal controls to improve corporate governance.
Similar to Case 1 outlined above, we were not the only one bidding. In fact, we were competing against one of the Big Four professional services companies (Deloitte, KPMG, PWC and Ernst and Young). The big guys bid exactly for what the client had asked for:
– help improve data protection and privacy regulation to guard against data security breaches
With a little line saying something like … actual costs are billed according to hours spent on these tasks by our expert team….
Who won the bid. The big four professional services company.
Unfortunately, just last week the client told us that the total bill has gotten much higher than in the original tender submitted by the Big Four firm. As well, the experts have now pointed out some of the weaknesses and problems that we previously outlined in our tender. Additional work needs to be paid for regarding the removal of these risks.
The above illustrates that what we thought was our strength, submitting a comprehensive tender, was in fact our weakness. We went too much into detail and may have scared off the client.
CASE 3
Case 2 illustrates that there is an apparent dilemma between being honest and outlining the full picture, or else, being focused on the problem at hand and not telling the whole story. But this apparent conflict or ethical dilemma can be mitigated by being truthful and honest, while still improving one’s chances for getting the contract.
We tried to apply this in another situation where we had to submit. Here, we included the potential client in the discussion and let them help us formulate the problem inventory describing what needed to be done. Yes, this does take more time.
In turn, we provided the client with a short synopsis 0f these issues as identified by the client with our support and advice.
Thereafter we offered the client a so-called ‘subscription-based’ service deal, whereby we provided for X days each month the services required and agreed upon between the client and us as the supplier.
The price was attractive enough (monthly charge) that the client felt comfortable with the deal and, most importantly, each month a small problem would be resolved such as developing a better policy (e.g., security, data breach or privacy), while the next month would bring the policy implementation and thereafter its administration. Hence, the client could see the improvements but also discover that effective risk management is a process and not a one shot activity.
What happend is that we are much busier than we bargained for. The client has learned during this process and has asked for additional work to be provided in smaller projects or functions to be outsourced to us. Today, our billing is about 150% as high per month as we asked for when submitting the winning bid.
As importantly, we are moving toward the 200% that we originally had thought we should bid for and would have under CASE 2 above (but than maybe not getting the contract).
The difference is that instead of us telling the client what is needed in the tender, the client decides which additional things are needed and when he wants these issues resolved. As importantly, without the work we have done so far, the client may not have understood why the additional services are required. Hence, only what one understands to be a problem is one willing to pay for to get it resolved.
DOES THIS TEACH US ANYTHING?
| characteristics of a successful tender – how to bid for and get the job | |
| 1 | the customer has to define the problem or at least participate in defining the problem |
| 2 | prepare a bid that limits itself to addressing the identified problem only |
| 3 | prepare a bid with a price that delivers a band-aid or solution to the identified problem under #2 above (outsourcing of a task = fix the problem identified) |
| 4 | Sometimes, # 2 above can be addressed with a service-type agreement (e.g., we provide service x for a monthly fee for one year), nonetheless, this requires that the client is willing toa outsource a tasks and/orb outsource a function |
| 5 | Ask client to give regular feedback whilst writing the tender – helps sharpen to focusing on solving the problem, also results in vested interest by the client |
| 6 | follow up…… discuss submitted draft proposal with client …. improve before submitting final version |
| 7 | avoid giving a cost ceiling (takes X to do the job) unless you deliver 10 cars or widgets — for services you might discover things after having started doing the job that require more time than you budgeted for originally |
Big four professional services companies do know that sometimes one has to provide a tentative ceiling (point 7 above). Nonetheless, in those cases the Big Four try to get the client to agree to a formulation that stipulates that the actual price is based on the hours spent performing the tasks one tendered for.Once a draft or synopsis has been informally submitted to the client, one has to follow-up in order to get feedback before submitting the final version. Hence, the content of the tender needs to be discussed with the client and revised accordingly. Here, listening means focusing on those things the client understands.
Whilst finalising a tender, one must understand which problems or risks the client feels must be addressed, resolved and/or fixed. A tender that offers the resolving of issues that are, first, understood and second, identified as being critical by the client will help you getting the contract.
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