RFPs a history and Reasons to Avoid

RFPs – What they are and brief history

A Request for Proposal (RFP) is a formal document that organizations use to solicit bids, proposals, or offers from potential suppliers, vendors, or service providers. It outlines the specific requirements, needs, and objectives of a project or initiative and invites interested parties to submit their proposals for consideration. RFPs are commonly used in various industries, including government procurement, construction, technology, consulting, and services like SaaS (Software as a Service).

The history of RFPs dates back several decades and is closely tied to the evolution of procurement processes and the need for standardized and transparent methods of selecting vendors. Here’s how RFPs came about:

1. Emergence of Formal Procurement Practices: In the mid-20th century, as organizations and governments began to conduct more complex and large-scale projects, the need for structured procurement processes became evident. Traditional methods of selection were often informal and lacked transparency.
2. Complexity of Projects: As projects grew in scale and complexity, the criteria for selecting suppliers became more intricate. Organizations needed a systematic way to communicate their requirements to potential vendors and assess the suitability of their proposals.
3. Standardization and Transparency: RFPs were developed to standardize the procurement process, ensure transparency, and promote fair competition among vendors. By clearly articulating the organization’s needs and evaluation criteria, RFPs aimed to eliminate favouritism and bias.
4. Government Procurement: Governments played a significant role in popularizing RFPs. Public procurement required a structured approach to ensure that taxpayer money was spent efficiently and that the best value was obtained.
5. Technology and Globalization: With the advent of technology and globalization, organizations needed a way to engage with potential suppliers beyond their local regions. RFPs provided a formal means to reach a wider pool of vendors and evaluate their offerings objectively.
6. Diverse Industries Adoption: Over time, RFPs found applications in various industries beyond traditional procurement, including technology, software, and services like SaaS. As organizations sought specialized solutions, RFPs became a way to assess capabilities and compatibility.

Today, RFPs remain a staple in procurement and sourcing strategies for both public and private sector organizations. They serve to communicate requirements, facilitate vendor evaluation, and drive competitive pricing. Supposedly they have their advantages in promoting fairness and transparency, in 40 years combined industry experience we have yet to see this. RFPs come with challenges, such as biases and resource-intensive processes. As a result, some organizations and industries are exploring alternative methods of vendor selection that provide a more collaborative and flexible approach.

Why the best avoids RFPs

From our experience, we have seen that decent salespeople typically will always avoid Request for Proposals (RFPs) in their sales strategy – especially when they receive an RFP without having any inside knowledge of what is happening with the customer. While RFPs can be a legitimate means of procurement, they rarely, if ever, align with the sales approach preferred by skilled sales professionals. Here are some reasons why decent salespeople (and SaaS and Cloud businesses) choose to avoid or minimize engagement with RFPs:

1. YOU HAVE ALREADY LOST: Decent salespeople are often aware that when they receive an RFP (without having prior knowledge of it’s creation), it can indicates that the customer has already made preliminary vendor selections or has a very, very, very, very, very strong preference. In such cases, regardless of the quality of their pitch or proposal, the odds of winning the business may be significantly reduced – in being impossible. This understanding encourages sales professionals to focus their efforts on opportunities where they can have a more meaningful impact on the decision-making process and where their expertise and relationship-building skills can shine.

2. Limited Opportunity to Build Relationships: RFPs tend to be transactional and focused on meeting specific criteria. Skilled salespeople understand the value of building relationships with clients, which may be hindered by the structured and formal nature of RFP processes.
3. Competing Solely on Price: RFPs often emphasize pricing and feature checklists, placing greater emphasis on competing based on the lowest price rather than on the value and benefits of the solution. This can undermine the salesperson’s ability to communicate the unique value proposition of their offering.
4. Reduced Flexibility and Creativity: RFPs typically have predefined requirements, leaving little room for salespeople to tailor solutions to the client’s specific needs or suggest innovative approaches that might not fit neatly within the RFP’s framework.
5. Resource-Intensive Process: Responding to RFPs requires a significant investment of time and resources. Decent salespeople may prefer to allocate their efforts towards more strategic and promising opportunities that offer higher chances of success.
6. Risk of Biased Evaluation: RFP evaluations may not always accurately reflect the true value of a solution or vendor. Skilled salespeople may be wary of investing in a process where their proposal could be subject to biases or factors beyond their control.
7. Time Sensitivity: RFP processes can be lengthy, leading to delays in decision-making. For salespeople, time is of the essence, and they may prioritize opportunities that have a faster sales cycle.
8. Focus on Long-Term Relationships: Decent salespeople often aim to establish long-term relationships with clients, built on trust and mutual understanding. RFPs may not always facilitate the kind of dialogue and rapport necessary for nurturing such relationships.
9. Preference for Consultative Selling: Skilled salespeople often prefer a consultative approach, where they can engage in meaningful discussions with clients to truly understand their challenges and needs. RFPs may not provide the ideal environment for this consultative process.
10. Incompatibility with Solution Complexity: Some solutions, especially those that are complex or innovative, may not be effectively communicated or evaluated through the rigid structure of an RFP.
11. Emphasis on Solution, not Partnership: Decent salespeople may value the opportunity to present themselves as partners rather than just vendors. RFPs may not always allow for conveying this partnership mindset effectively.

In summary we advise organisations to steer clear of Request for Proposals (RFPs) due to concerns centred around the customer having already chosen their vendor of choice. It’s more effective to preserve strategic focus and relationship-building prowess for engagements that can yield results. The RFP is typically a flawed mechanism emphasizing competing solely on price and feature checkboxes without proving context of need and will undermine a salesperson’s ability to communicate the distinctive value their solution brings. The inherent inflexibility of RFPs stifles the creative and consultative approach favoured by adept salespeople. Their inclination towards understanding clients’ nuanced challenges and tailoring solutions is at odds with the standardized, predefined nature of RFPs. It’s better to engage in meaningful dialogue, fostering lasting client relationships built on trust and mutual understanding instead of tying up resource and wasting time on RFPs.