Why do we keep losing tenders?
Most companies that ask themselves the “why do we keep losing tenders?” question usually already have a pretty good idea of the answer. But – bizarrely – they keep on doing the same things anyway, and so keep on losing with their tenders, time after time.
When I became responsible for the success of the tenders at a healthcare provider we won just one out of the first 10 we submitted. That win rate was totally unacceptable, but we were prepared to learn … and learn we did.
After those first 10 our win rate went to a rock solid one in every three. Since around 15 vendors tendered for every opportunity that we were involved in, our Board was satisfied with 1:3. We would, of course, have liked to have won everything we went for. But, realistically, you are never going to be that successful. In any case, your business would likely blow up under the strain of service delivery.
So why do so many companies tolerate win rates of 1:5 or worse? Perhaps there are two elements here:
1. How much does it cost to tender?
The first reason for not evolving and continuing to lose tenders, which is highly pervasive in the market, is a profound ignorance of the total cost of tendering.
We strongly recommend that every business seeking to grow and win substantial new revenues by tendering is all over this number (because it will act as a bucket of ice cold water in the face. At first you will be shocked and then you will want to take speedy action to ease the pain).
Our outsourcing healthcare bids cost us £80,000 to £100,000 per bid against a total average contract value of around £6m pounds.
This equates to 1.3 – 1.7% of the contract value. So, even once we were winning one in three tenders it was costing us over £250,000 to secure £6m in revenue because we still lost two out of three. Therefore, our fully loaded cost of tendering was around 4% of the value of the deal that was successfully landed).
At first, we couldn’t believe these sorts of numbers ourselves, but when you factor in the time of everyone directly and indirectly involved in the tender, the bid effort is enormous; often over one man year’s worth of time (which necessarily includes the time of the MD, FD, CEO and other senior people if you are going to be serious about winning tenders).
2. We all live in hope
The second reason for continuing “same old, same old” is more to do with human nature and optimism. Isn’t is easier to sometimes stay deep inside our comfort zone and follow processes and methods that we are already familiar with rather than undertake potentially drastic changes?
Well, yes. In a sense, it can be easier to do same old, same old – but think of all the time and human effort that is being wasted. In the medium term, it will be easier to make the necessary changes and get your approach to tendering properly sorted. Plus, your business is going to be much more successful with the requisite changes in place.
So, what changes should you be considering?
Pick your battles very carefully – be ready to qualify out
The very, very hardest change is to sometimes make decisions that mean that you do nothing in connection with a major tender opportunity!
Too many Sales leaders get very excited whenever there’s an opportunity to tender. But before mobilising the team and spending tens or even hundreds of thousands on a tender exercise, get your cleverest people together to calmly assess the real chance of success.
There are many reasons why you should walk away right now for you next “big tender opportunity”, including a lack of relationship with the prospect, inability to deliver the required service or product, other pressing business priorities etc.
Ensure that you have your best people in the Bid vs No Bid review and use a formal tool to critically score your chances. Then it’s easy to decide whether you are going for this one or not.
Your tender documents look rubbish
The tender response may well be obliged to follow a prescribed sequence and cover huge amounts of technical detail. But are you falling into the trap of giving the immediate impression that your tender response is wordy and hard to read?
First impressions do count. If your document looks boring or bland or is too hard to read, your wonderful tender might get only a cursory treatment … even if the content is actually brilliant. In just the last few years, brilliant content is no longer enough. It must be beautifully served up too.
Your tender documents are rubbish
But how good is the content? Are you answering the RFP’s (Request for Proposal’s) questions directly and succinctly?
Cutting and pasting standard content from earlier bids might save your bid team time, but is this approach going to delight your readers and prospective customers? Err, no.
Break away from “cut and paste” and work to a new method that means that you are rigorously and directly addressing the needs of your prospect.
It’s not a proper team effort
The numbers above might have shocked you. Do your own analysis to understand precisely your own cost of tender. Then, if you are still a long way from our numbers (which tie in nicely with standard, reported tender costs) there might be another avenue to consider …
… are you relying too heavily of a small number of “bid heroes” – a dedicated Bid Manager and a Sales guy who flog themselves for weeks to get the bid over the line just in the nick of time?
These are the people that frequently fall sick once the bid is out of their hair – if you are lucky. If you are unlucky they’ll succumb to exhaustion sometime before the deadline and you will have to cover for them by pulling in resources that know nothing of the tender and have no appetite to get involved either.
Successful bids have clearly-named bid leaders and managers, but it’s always a team effort, with the winning team consisting of the appropriate domain experts, operational personnel and senior executives.
An orchestra would never ask the conductor to play the instruments too. So why should we expect the Bid Manager to do all or the lion’s share of the work?
This is where having a defined bid process with clear lines of responsibility and ownership comes in. Equipped with the appropriate systems and tools backing it, a streamlined, pragmatic tender process can really sing and dance for you.
And you might even find that staff sickness and absenteeism in the bid team improves as a consequence!
The Executive Summary fails to compel (or is non-existent)
If putting in a Bid vs. No Bid mechanism is the hardest thing to do (because the first step to improving win rates is the hardest one to take), the easiest way to make a massive and beneficial impact is to get your Executive Summary well-honed. (Anyone who has had any exposure to creating top-class proposals will know this already).
Use a concise and visually attractive Executive Summary to clearly state your agreed Win Themes using simple, audience-centric language.
Show your solution in the form of a simplified diagram. For those prepared to tackle your tender in full a strong Executive Summary sets the scene beautifully. For those who won’t / don’t read beyond Executive Summaries you have delivered the essence of your proposal very succinctly – and this will be much-appreciated by those with limited concentration spans!
Is that it?
No, but these are some of the fundamental building blocks that will make a substantial difference. You will want the best people in the mix, effective Account Managers, a brilliant presentation and team of convincing presenters for when you get shortlisted, but these are the real basics – the things to concentrate on first if you want to improve your tender win rates.
You may well be able to do some or all of this internally. If not, there are plenty of experts out there who will be delighted to help engineer beneficial change and support you in your business goals.
Could we help?
Quantum works with Sales and Marketing departments to develop more impactful and successful winning tenders and sales proposals.
If you would like to explore any if the ideas raising in this article we’d love to hear from you.