Statistically, incumbent providers are difficult to unseat, particularly if the solution is complex and involves multiple layers of integration with the incumbent firm. As a result, it can be an unwise decision to use valuable resources to respond to a bid in which the prospective client is very happy with the existing provider. Broad studies produced by Shipley and Associates and presented by the Association of Proposal Mangement Professionals (APMP) indicate that incumbents in this case have an 80 percent chance of maintaining the business.
However, if there are major issues with the current service being provided, competing providers have an increased chance to unseat the current provider. This is especially true if the competing provider has built relationships with the key decision makers and influencers within the prospect’s firm, and has pre-positioned a better solution that can meet the new client’s needs–at the right price.
I encourage my clients to bid wisely, and make the best use of their time and human resources. There are occasions when not bidding is the best approach, and resource time can be more effectively invested into Capture Planning, or the sales cycle leading up to bidding.
A useful tool for organizations to revisit at least annually is a bid evaluation template. This is designed to help organizations make effective decisions on whether or not to bid on complex projects or RFPs/RFQs. This tool that can be useful when different business divisions within the same organizations have conflicting ideas about the bid decision. I use a template that provides organizations a clear approach to making a decision that will use internal resources, including time, wisely. Please contact us if you have questions, or if I can help.
I’d love your feedback on how your firm manages the bid decision process. What tools are you using?
