How to Make the Bid or No-Bid Decision When Your Agency Gets an RFP

If I get a blind RFP, that's strike one. The buyer wasn't told to go talk to us. Strike two is "we've never done this before, so we don't have a budget." Strike three is they won't jump on a call. Three strikes and I'm not responding. It's a waste of time.

A couple of agencies I work with rely on RFPs for incoming sales. Others refuse to do RFPs at all, because they never win them.

Why do agencies refuse to answer RFPs?

In the private sector, the reason for the RFP is why those agencies say no to it. That reason is one of two things.

One is to squeeze the current vendor. It's more of a threatening tactic: "We're putting this out to RFP because your prices are getting a little higher than we're comfortable with." Then the current vendor has to compete to keep the business.

Or the buyer is just looking for the cheapest option. They put it out to RFP to see who will bid the lowest, and that's who they're going with. If you're getting triple bid, they're probably just looking for the cheapest person.

And when I say the lowest, sometimes that means a third option. They're going to do it internally, now that they understand how other people would solve the problem.

I've even seen companies reach back out to the agencies that passed: "Other people are refusing to do this RFP too. Could you give us feedback on why?" Well, it's pretty clear: "You're just looking for the cheapest price."

When should an agency say no to an RFP?

Strike one is the blind RFP. My first question is, did they tell you how they found you? If they found you without a referral, it's a blind RFP.

A buyer with no budget, because they've never done this before, is strike two. A small budget is different. If a guy tells me he's got 20 grand, I will try to sell a 20 grand solution. My assumption is that if he can pay 20 grand, he could pay 40 grand.

A buyer who won't get on a call is strike three. It's very challenging if you can't get them on the phone.

I score the odds on any deal, RFP or not, in why winnability beats deal size.

What should you send back when you do respond to an RFP?

An RFP should have all the information I need in the document. When it doesn't, I take my questions and send them right back: "Before we respond to your RFP, we need answers to these questions."

My process for RFPs has been: "Thank you for the RFP. Here's our list of questions. Can we get on a call and discuss them?"

I have a very defined set of questions that gets me where I want to be. How much is this going to cost you if you don't fix this? What if you do nothing? What's the business outcome?

You also have to ask for at least a range on budget.

How should you price an RFP response?

Agencies I've seen doing okay with RFPs are offering options. They're still not where they want to be. But they respond with something more strategic, like: "If we broke this RFP into three phases, you could do each phase for this amount, this amount or this amount."

That lets the buyer spread the costs out. It also gives them more knowledge about what they should do in phase two versus phase three.

Other agencies answer with, "You asked for this and here are the numbers. Do you want to do this or no?" Those offering the phases are having a better time.

When should an agency bid on an RFP?

Agencies I work with that do RFPs tend to take on only very large ones, six figures or more. A buyer who will get on a call has already cleared strike three.

Government and nonprofit work is its own case. If you work with government agencies or nonprofits, they're bidding to the lowest price.

A certification can get you bumped up in the line. I work with a UX research firm that mainly works with government. It's woman-owned, and about 90% of their work comes through RFPs. They tend to win more because of that certification.

Do you need a bid or no-bid process for RFPs?

If you're doing a couple of RFPs a year, it's not that big of a deal. Keep doing what you're doing. A couple a month is different, because deciding whether to respond can take weeks. Distill it down to a go or no-go and it saves a ton of time.

That UX research firm does about three RFPs a week. They already had a rubric for whether or not they'll respond, so I built them a tool that runs that rubric against any RFP instead of them doing it manually. It scores each RFP red, yellow or green. If it's green, they start working on it. Yellow means someone dives in by hand. On a red one, they decide whether to bother diving in or just toss it. That replaces six meetings and blah blah blah.

A bigger bet than one RFP, like a new market or a new service line, gets the five gates in my agency opportunity filter.

What do you do when you lose an RFP to a cheaper bid?

When you lose an RFP to a cheaper bid, here's what I'd tell you: it wasn't a good deal from the beginning, and you probably dodged a bullet.

If somebody else can charge $5 less and win the business, my answer has always been, good for them. I probably don't want to work with the client that chose them.

Put a note on your calendar to reach out to your contact in three to four months: "Hey, I just wanted to check in on how that project's going." I have resurrected projects where people went with the cheaper option. They're like, this isn't feeling good, and they're embarrassed to reach out to the people they said no to.

Can you be a partner if you came in through an RFP?

If you come in as a vendor, through the RFP process, it's hard to position yourself as a trusted partner. According to procurement, you're a vendor, whatever you call yourself.

Being known before the buyer ever writes the RFP is the way out. I wrote about that in attracting clients instead of chasing them.

Key Takeaways

• Pass on an RFP with three strikes: it arrived blind, the buyer has no budget, and the buyer won't get on a call.
• A private-sector RFP means the buyer is either squeezing the current vendor or looking for the cheapest bid.
• When you respond, send back your list of questions and ask for a call. Ask for at least a budget range.
• Offer the work in three phases at three prices.
• Build a go or no-go screen once RFPs arrive a couple of times a month.
• When a buyer picks the cheaper option, put a note on your calendar to check in with your contact in three to four months.