Perfecting the RFP
Mastering the fine art of preparing a request for proposal.
Inc. Magazine, March 2005
By Thomas Strand
When it comes to selling to corporate America, there's good news and
bad news for small and midsize companies. The good news is that today's
corporate buyers are less likely to select vendors based on prior relationships
or reputation alone -- meaning that more suitors are allowed into the
dance. The bad news is that the dance has become a lot more formal.
Where there's formality in corporate purchasing, the request for proposal,
or RFP, can't be far behind. RFPs have long been used by government
agencies seeking vendors. But in today's era of strict corporate governance
standards, RFPs are being issued more frequently for private-sector
contracts, as well. The internal control guidelines set by the Sarbanes-Oxley
Act, in particular, have put the kibosh on single-source,relationship-based
purchasing contracts. "The RFP process has become the standard
gatekeeping model for any contract of any significant size," says
Steve Banis, principal at Ross McManus, an Albany, N.Y., business consultant.
As anyone who has responded to an RFP knows, the process can be exhausting,
and a 33% success rate is considered excellent. There are three main
challenges to any RFP response: getting invited to take part in the
first place; gathering the data to answer the issuer's questions; and
writing, packaging, and presenting the proposal itself.
Unlike government contracts, private-sector RFPs don't have to be publicly
listed. The only way to hear about them is to spend a lot of time networking
with people who will tell you when they arise, says Rebecca Hefter,
vice president of training at Novations, a Boston-based corporate training
firm that responds to about a dozen RFPs each quarter. "Our most
successful proposals are for clients we know well enough to discuss
the contents of the RFP with beforehand," she says.
Once you're in the game, research is key. In January 2004, Yamamoto
Moss, a Minneapolis marketing firm, responded to an RFP issued by a
major financial services firm for a contract worth about $250,000. In
response to a general question about the issues facing the brokerage
industry, one of its staffers spent several days at a local firm observing
brokers. "It went a long way toward winning us the business,"
says Shelly Regan, the firm's president. The client has since turned
into Yamamoto Moss' largest.
Before cobbling together a proposal -- which usually runs from 20 to
50 pages with a three- or four-page executive summary -- expect to spend
long hours debating, writing, and proofreading. It can get expensive.
A response can take several weeks to complete (a typical RFP comes with
a deadline of between four and eight weeks). That's a lot of potential
billable time left on the table.
Forget the handshake deal. Today more contracts require a
formal application
Vermont Electric Power Co., a public utility in Rutland, Vt., issued
more than a dozen RFPs in 2004. What does the agency look for when evaluating
the responses? "A company has to have completed a project similar
in scope," says Dean LaForest, a senior planning engineer. "It
also doesn't hurt to have a human being who can come in and be able
to answer questions and address issues." Indeed, while the paperwork
involved in responding to RFPs can be daunting, many competitions hinge
on the presentation phase, in which potential vendors must back up their
rhetoric by showcasing their teams in a high-pressure boardroom environment.
That adds up to a lot of pressure -- enough to make one long for the
simpler days of the handshake deal. But for those firms that don't bump
into the right people often enough, an RFP can be a great equalizer.
"Almost all of our big clients were gotten through the RFP process,"
says Novations' Hefter. "If you want to do big projects with companywide
application, you have to be able to succeed at RFPs."
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