Jan 29, 2020 • Podcast

How do I sell value in a competitive bid or tender?

It’s difficult, but not impossible, to communicate value in a competitive bid. In this episode, we cover several tips that will help you sell more profitably in bidding scenarios.

Show Notes:

The acronym RFP might stand for Request For Proposal. It really means Request For Price! Think about it…buyers are trying to squeeze every bit of margin out of the deal by putting you into a competitive scenario.

The acronym RFI might stand for Request For Information, but it really means Request For Imitation. Review the last RFI you provided. I’m guessing it sounds, looks, and feels the same as your competition. 

“The bidding process is flawed because it’s based on the buyer’s interpretation of their own needs.” Too often, buyers are unaware of their needs. Or, they don’t fully understand the impact of their decision on other areas of the business.

Before spending too much time on bidding opportunities, ask yourself, “Do we even want this type of business?”

If you’re going to spend your time, energy, and effort on a competitive bid, you are entitled to certain rights. We call this the Seller’s Bill of Rights. Every salesperson has the right to these four things…

A buyer that withholds decision-making criteria is the equivalent of a teacher not telling you how they calculate your grade. You have the right to this information.

Managing a competitive bid or tender is a three-part process: preparation, submission, and the recap. Preparation is key. 

“Instead of a competitive bid, ask the buyer for a negotiated settlement. Ask the buyer, ‘What do you hope to get in a bid that we can’t figure out one on one?'”

What if you decided not to participate in their process? Instead, make the customer an alternative offer. 

“Never let the bidding process stifle your creativity as a value-added salesperson.”


Our show is updated weekly with the questions you ask. So, please, go to the home page, subscribe, share it with your friends, but most importantly, ask the question that you want answered. 

The Q and A Sales Podcast is edited by The Creative Impostor Studios.

Thank you for tuning in. Make it a big day.


Check out this episode!

How do I sell value in a competitive bid or tender?

(Transcribed from podcast)

Today’s question is coming from our website. It’s a common one. I know that many salespeople are dealing with it. It’s very frustrating. The question is, “How do I sell value when I am in a competitive bidding type of sale?” All the salespeople out there… think of your industry. If you’re dealing with RFPs (Request for Proposal), RFQs. If you’re selling equipment, software. If you are selling based on a list of specifications and a scope of work that your customer sends you, you are in a challenging sales environment. We’re going to help you get past that—some of the challenges that you’re going to face when you’re attempting to sell value in this scenario.

Let’s talk about some of the realities. The RFP or RFQ (Request for Proposal or Request for Quote), realistically, it stands for Request for Price. If you get a request from some customer you’ve never worked with, some prospect you’ve never interacted with, and all they want to do is know a little bit more about your products, then they want you to give a price based on the limited information you provide, they’re looking for a price. We need to be aware and be cautious of those types of opportunities. You need to ask yourself, “Is this really the type of business we want to go after? Is it really where I want to focus my time, my energy, and my effort?”

Another closely related cousin to the RFP is the RFI (Request for Information). You think about this acronym. They just want to know a little bit about your company and what you do. What most people end up submitting sounds, looks, and feels the same as everyone else. RFI, in my opinion, stands for Request for Imitation, because what you end up doing is sending in a bunch of information and it ends up looking, sounding, and feeling just like everyone else. You know this. When everything is the same, people focus on price when they make their buying decision.

This bidding process… When you’re trying to sell value, we also have to remember that this bidding process is in some ways flawed. When corporations are trying to create a competitive bidding scenario, they end up building a scope of work or specifications based upon their interpretation of their own needs. What we know about many buyers and decision makers, they will make decisions often unaware of how their decisions affect other departments. Purchasing will make decisions based on price and their priorities, and they will ignore some of the greater needs that other disciplines within the organization have. That’s, oftentimes, why purchasing people are siloed within their organization. That’s one of the basic fundamental flaws of a bidding process. It assumes that the decision makers have a clear understanding of what they really need. Whereas, value-added sellers… most of the value you bring to the table is helping that customer realize needs that maybe they didn’t have before, or maybe identify problems they were unaware of before. That’s just a little bit about that bidding process.

Let’s talk about how you can actually go out there and sell value in this type of environment. The first think you need to do is realize—you, as the salesperson—you have some rights. We call it the Seller’s Bill of Rights. With this bidding scenario, a lot of times companies try to make you feel like you just don’t have much power in that buying process, and that you’re doing them a favor by participating in it. That’s not the case. If you’re going to dedicate your time, energy, and effort, you need to be clear on what your rights are as the seller.

The first right that you have… You have the right to all the information and input that is vital to your bid. That is rule number one, and I would set that expectation before you even commit to responding to a bid. Let’s talk about that a little bit. You have a right to all the information and input vital to your bid. That means that you have the right to meet and discuss and ask questions with not just the purchasing people or the people running the bid, but also other key stake holders. That includes high-level decision makers. It also includes anyone affected by this decision. That could be end users, engineers, technical influencers. It could be a number of key decision makers. You, as the seller, have the right to meet with all of them, discuss their needs, and understand what is important to them. It’s critical that you make that request. How else are you going to get a complete picture of their needs without meeting with them and discussing it? That has to be number-one no negotiating. That is expected.

Also, you have a right to know the criteria being used. You have a right to understand how it is weighted, what’s important, because you need to understand how they define value. You need to understand how you’re going to be graded as a potential partner with them. For example, imagine going into a college course, and you spend all semester working as hard as you can, only to realize that all the things you worked on were not part of your final grade. The teacher never told you how you were going to be graded. It would be ludicrous. You wouldn’t participate in a class like that. Too often, salespeople will walk into this type of bidding environment without understanding the criteria. I would be crystal clear, and I would ask the key decision makers, “What criteria are you going to use? In rank order, what’s going to be most important to you?” You have the right to know that.

You also have a right to know who the competition is. You should know who you’re competing against because that’s going to help you present the best solution to satisfy their needs. In fact, in this area, you might invoke a little bit of empathy and say, “If your organization was in a competitive bidding scenario, you would expect to know who the competitor is as well.” You do have that right.

You have the right to a debrief. Win, lose, or draw, after the competitive bid is over, you have the right to sit down and discuss feedback with those key decision makers. I would make that clear. In that debrief, you’re going to focus on what you need to do different next time, how you compared to the competitor they selected, and why. You have the right to that information.

With that being said, remember, if you’re going to compete in a competitive bidding scenario or competitive tender type of scenario, you have these rights. You need to stick to them. And, they need to be non-negotiable. If the buyer, the decision maker, is not willing to grant you any of these rights, you have to ask yourself, “Is this business that we really want? Do we really need to go after this type of opportunity?”

Let’s dive deeper into our strategy for competitive bids. There’s really a three-part process in bidding: the preparation, the submission, the recap. We’re going to give you a few tips and ideas at each one of these stages.

The first one is in the preparation phase. When you know that either an existing customer or a prospect is going to have you participate in a competitive bid, your goal should be to change how they make that decision. That’s a big ask, I realize—asking them to change the way they decide. But it’s worth asking. When you’re meeting with your decision makers and they do make you aware that you’re going to be in a competitive bid, ask for negotiated settlement instead. When there’s a negotiated settlement, that just means that you’re working together to identify/create the best possible solution. It’s something that you do as a partner for your customer. I would ask the question to your decision maker or the person that’s requesting the bid: “What do you hope to get from a competitive bid that we cannot work together, one on one, to help you get?” Ask them that question and let that sink in. What do you hope to get from a competitive bid that we can’t work out between the both of us? I think what you’ll find out is that their response is going to help you understand what they’re looking for and what their motivation really is. Take note of how they respond and, whether you end up having to go through a bid or you’re able to get that negotiated settlement, you now have a clear sense of what’s important to them and what they’re trying to accomplish.

The next thing… In your preparation phase, determine who the actual buying authority is. Determine who that high-level decision maker is. Even in a competitive bidding scenario, typically, a group of deciders will get together and analyze the different bids, and they will decide as a group. But, within that smaller group, there’s going to be one or two people that are the authority. We’re talking about the buyer authority: the VP level, the C-level executive, business owner, whoever it might be. There’s going to be one, maybe two, people that are really driving the decision. The key is figuring out who those people are. Then, we want to be sure that we’re meeting with them, that we understand what’s important to them. Again, that’s part of our preparation. You need to gain a full understanding of their needs. The only way you can do that is by meeting with all those key decision makers, including the high-level decision makers.

This also means you’re going to need to meet with other people impacted by this decision. That includes the end users—the people using your product, or installing your product, or implementing this type of change. It also means that there are going to be technical influencers involved; there are going to be maybe some marketing implications, so some marketing professionals. Before you submit your bid, you have to ask yourself, “Who is going to be affected by this decision?” Think about your decision, the products and services you’re providing and ask yourself who is going to be impacted the most. Whoever is going to be impacted needs to be involved in the decision making process.

The next thing we can do, have the buyer or the decision makers write the specifications to favor your value-added extras. If you think about it, it’s pretty straightforward. The whole idea is they’re going to create a list of specifications that favor your value-added strengths: what makes you unique, and your key differences. By highlighting those, you are now the benchmark from where everyone else is graded. If you offer something that’s truly unique, that just can’t be found anywhere else, this is going to give you a significant advantage going into the negotiation. Try and get the buyer—the decision maker—to include services, specifications, or value-added strengths that are unique to your company.

Let’s talk about how we deliver that quote (submitting the quote). When we’re putting together our proposal or quote, make it stand out. It has to be unique. If you listened to last week’s podcast, we talked about building in perceived value. One of the things I mentioned was using heavily weighted paper. Weight is associated with value and that’s one of those subtle things you can do. You can also dress up your proposal even further: get it bound, have it covered. Make it look exciting. It needs to be unique. Next thing… I would put a confidentiality clause as the first page of your proposal. Have a cover page, and on that cover page there should be a confidentiality clause saying this is for the sole purpose of XYZ Company. Please do not share this information… etc. Whatever language you use, the key is, we want to keep our decision makers honest. We don’t want them to share our confidential proprietary information with any of our competitors.

When you’re creating your proposal or RFQ, make sure that you lead with the customer’s needs. There should be a section (the first section of your proposal) that highlights the customer’s needs. This needs to be summary of the needs, the pain, the challenges, the problems. Everything they are experiencing. The reason we do this… when a buyer becomes more aware of their needs and the pain and the problems they’re facing, they become more open to different ideas. Also, we’re giving them the impression that we have a clear sense of their needs and what’s important. If your competition isn’t doing this, it gives you a unique advantage. The buyer believes— The perception is that you understand their needs better.

Put together the meat of your proposal (what you’re planning on doing for them). At the back end, we also want to put together a series of guarantees or testimonials. In Value-Added Selling, we call this a proof source. People value proof more than an opinion, and if you can offer the customer some guarantees or warranties, or testimonials from customers that are like them, that’s going to help build in some of that proof as well.

I would also add a section to your proposal called No Charge Items or No Charge Value-added Extras. Amass a list of value-added extras—the little extra things that you do that you do not charge your customer for. This is going to help build in perceived value. Also, when we’re talking about no-charge types of items, the buyer’s going to look at that and say, “I wonder if the competition is going to be able to do some of these things as well?” This will give you an opportunity to differentiate even further. Create some distance between you and all the other alternatives.

Once we submit that proposal, here are a couple of thoughts. Make sure you deliver it in person. That way you can read the non-verbals. The more time that decision maker is invested with you means it’s less time they can spend with the competition. The more time they invest in your proposal and your solution, there’s almost like an endowment effect that takes over where they feel like they start to own it, and they place higher value on it. Get them to commit to that time to deliver it in person.

Get their involvement throughout the proposal. Ask questions to elicit feedback to figure out are they interested/are they not interested. Pick up on some of those subtle cues. Also, explain your price. In last week’s episode, we talked about presenting price. Remember these three words, the price is. That is confident, simple, easy to remember. Also, if you need further clarification on how you came to that price, be able to explain that.

Finally, ask for the commitment. When you’re in front of the buyer, the decision maker, use that two-question approach which we call opinion/commitment. Ask for their opinion, then ask for a commitment. Chances are they’re going to say, “We need to consider our other options,” but, at least it’s going to give you a sense of how they respond. That’s going to help you understand how interested they are or not.

The third part of this bidding process is going to be the recap. Whether you win or lose, it is important that you get feedback from the buyer. I would get that feedback immediately. That way it’s fresh in the buyer’s mind; they have all the information. I would develop a list of questions that you ask the decision maker. It can include everything from what they [competitor] offered compared to what you offered; price range… if you were in the ballpark. They might not tell you the exact price, and I would applaud a buyer that does not, because that is confidential information. But, they might give you a range. They might let you know if you were close – if you were competitive. It’s good to have that information. If they start to ask “Why do you need us to answer all these questions,” just mention that it’s for marketing purposes and to help create more value for future business; that way you know what’s going to be important to them. The key is making sure that you recap with that decision maker.

The other thing… talk to some of the other decision makers that were involved. Follow-up with them, the end users, the influencers. Get to know their thoughts and how everything went. The buyer, the decision maker tells you why they went with the other option. They’ll be able to either validate or build on the information that they give you. The key is just making sure that, when we’re talking to those decision makers, that we understand and let them know that we appreciate the opportunity, but we do need to gather more information.

We gave you some great tips on your sellers’ rights as you go into the bidding process: the four things you need to ask for. We also talked about what you can do as you prepare. Also, what you do during the delivery, and how you actually recap that bid. I wanted to share an additional thought. This came from a client I recently did some work with. They’re in a competitive bidding scenario where they’re putting together their solution, and their solution is being compared to three or four other alternatives. One of the things they will do is make an alternative offer. It’s more of a performance-based type of offer than just a simple here’s our price. Here’s what we can do for you. They’re actually sharing in some of the risk. I thought this was a great way to approach the bidding environment, because this performance-based contract gives you an opportunity to tackle a problem that the customer has, or gives you at least a unique way to solve that problem.

When you think about your bidding scenario, you can still get creative. Don’t limit your creativity to the bidding process that they’ve put into place. Salespeople that operate within the lines are also operating within the same lines that the competition is. I get it. You’ve got to follow bidding procedures to a certain extent. But, never let that bidding procedure stifle your creativity as a value-added salesperson.

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