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Tenders: goldmine or minefield?

As a business coach whose client base includes B2B and trade-based business owners, I’m often asked about the value of winning new work through tenders.

I’ll be honest – for me, the tender process has its limitations.

Done well, tenders can present some solid opportunities to work with larger commercial construction companies and government departments. However, miss the mark and the tender process can become a black hole of wasted time and effort.

Plus, they are not always an ideal way to sell.


The main limitation of the tender approach to selling

The process of responding to tenders is, by nature, quite impersonal. In my role as a business mentor, I coach clients to focus on current best practices when it comes to sales techniques. Building rapport and nurturing relationships is often a far more successful strategy than focusing solely on aspects like features and price.

That said, who wants to miss out on a plum contract simply because they lacked the know-how to prepare and submit a tender document? There’s definitely some value in at least building that skill set so that, if the opportunity arises, you are ready to get set and go.


Common types of tenders you might have the opportunity to respond to

There are typically two main types of tenders:

1. Request for Information or an Expression of Interest (RFI/EOI)
Clients typically use these as a first fence to create a shortlist of applicants for an upcoming contract. It’s an opportunity for you to introduce your business to the client. Your main objective is to capture their interest so that they want to find out more about what you can do for them.

2. Request for Proposal (RFP)
This is a more formal document and what people think of when they hear the word ‘tender’. Since the client expects to use the responses to the tender to make a purchase decision, a formal proposal should include a lot of detailed information on how your company can deliver on the client’s requirements and of course, the costs of your solution.

Is this tender worth chasing?

There are three main sources of tender opportunities: open, closed and single response.

Each has its pros and cons that may influence your decision to apply, as well as how much time and effort to invest in putting together your tender document.

Open tenders
You will often find these listed on websites, such as TenderLink, AusTender or Australian Tenders. The opportunities listed may be with private companies, government departments or local councils. They’re usually a cattle call; lots of companies will respond and there’s very little visibility around who you are competing with for the job.

Pro: Anyone can respond.

Con: Everyone will respond, making your chances of winning realistically quite slim.

My advice as a business coach: Think very carefully before investing too much time in these types of applications. Is it worth the time and effort required? Unless it’s a job that really excites you or a rare opportunity to grow your business by breaking into a new sector, it might not be worth your while.


Closed tenders

This is where companies may only apply in response to an express invitation by the client. Usually only a handful of companies are invited to participate in the process.

Pro: You have a much better chance of winning the business; there is less competition and the client is obviously already interested in what you can do for them. You are also more able to conduct research into both the incumbent and your competition that can improve your odds of moving up the list of applicants.

Con: The greater the opportunity, the more effort is required; it can take hours (even weeks) of hard work to put together a really great tender document. You’ll want to be sure that, overall, the opportunity outweighs the risks of not winning the business.

My advice as a business coach: When allocating your efforts, most of your time should go into information gathering and building relationships within the business, rather than on creating the document itself. By taking this approach, you

  1. could uncover intel that will give you an edge over the competition
  2. may discover reasons why the tender is not worth pursuing, thus saving you a lot of heartache.

 

Single response tenders
This is where you are the only person putting in the tender. Honestly, it’s usually a box-ticking exercise where the client’s internal policy requires them to go through the motions.

Pro: Obviously there’s not a lot of competition involved – you are very likely to win the contract.

Con: None really.

My advice as a business coach:  Be careful not to rest on your laurels. Every time you interact with any existing or potential client you must take the opportunity to wow them with your best effort (even when the work is in the bag).

 

To bid, or not to bid: targeting the right opportunities

How do you know which tenders are worth going after? In addition to the considerations above, my business advice is to ask yourself the following questions:

  • Do you provide what the client wants?
  • Is it your core business?
  • Can you demonstrate that you have done it before and show results?
  • Do you have a relationship with the company?
  • Are the contract terms acceptable?
  • Is this tender for your ideal client?
  • Can you fund the job?

If you are finding yourself saying “yes” to most of these, then you are good to go. If the answers are a bit mixed, think very carefully about whether or not to move forward with your application.

 

Research is the key to tender success

As previously stated, most of your effort should go into getting the lay of the land before preparing and submitting your tender document. I mentor business owners to call upon their detective skills; gather up all the clues until you have a clear picture of what you are dealing with.

Understanding the incumbent

First up, you’ll need to identify who the decision makers and influencers are and what makes them tick. Key players will include:

  • The Driver – your main point of contact when liaising with the company about the tender
  • The Decision Maker – this is not always the same person as The Driver. Since they have the final say, they will require the most of time and attention
  • Higher authority – in some larger organisations, even once the decision has been made, they will need final approval from a CEO, Board etc. This is usually a formality, but until they’ve signed off, hold off on celebrating the win.
  • Box tickers – these are representatives from procurement, finance, IT etc. They are mainly involved to lend their operational expertise to the process and have limited influence on the final decision.


Understanding the bigger picture

Second, you’ll need to understand where the incumbent is currently at:

  • Why are they going out to tender – are they unhappy with their current provider? Do they just want to see what else is out there?
  • Has a shift in business needs led them to seek out something in particular that others haven’t delivered?
  • Where are they falling short in serving their clients? How can you help them fill that gap?

 

Understanding the competition

  • Who are they?
  • What are their advantages and weak spots?
  • How can you position yourself amongst them as a unique solution?

 

How to research

Online research: when gathering intel about all the key people involved, LinkedIn is your friend. You never know what you might discover about what’s important to them (and therefore how you can best frame your offering).

People inside the organisation but not on the panel: often those on the panel are bound not to discuss anything privately with individual applicants. Others within the organisation, however, are not. If you discover that a connection of a connection works at the company and may have useful information, ask for an introduction.

Past employees of the company: similarly, if you know anyone who has previously worked at the company, they may also be able to provide a few insights.  

Suppliers: those who already supply goods or services to the incumbent may be able to give you the inside scoop on working with the company – what they value, who you need to impress etc.

Annual reports: if you are bidding on a tender for a listed company, you can check out their annual report for strategic directives and objectives from the CEO.

Meetings and walkthroughs: make sure you take any opportunity to get on site – you just never know what information you might pick up that you can use to your advantage. Even just knowing who else is applying can give you an edge (on that: remember not to wear your own uniform or branded polo, lest you give the game away).

 

5 tips for successfully navigating the tender process

  • Follow the format and rules outlined by the client – you can always submit a second non-conforming tender if you would like to present options that the client’s format and request doesn’t allow for.
  • Address any criteria as directly and succinctly as you can – don’t pad it out with what you want to say (you can put this information in another section if you wish).
  • Mirror the way the client talks – by using their own language it helps you seem like a good fit. (Check out their website and marketing materials to get a feel for this.)
  • Sell your value – don’t ‘we’ all over your proposal (you should be using the word ‘you’ far more often). Talk about how you can solve their particular business problems. This will be different for everyone, so this is why research is so important.
  • Submit on time – it seems like a small thing, but it doesn’t look good if you drag your heels – what does it say about your customer service delivery?

 

So… are tenders worth the trouble?

When you take into consideration all the work that it takes to prepare and submit a bid – from the recon missions and cyberstalking through to creating the actual document – it seems like a lot of effort to go to for a chance at a win. As a business coach, I am especially wary of recommending this approach to the trade business owners I mentor. I see a lot of negatives – namely that you end up competing mainly on price and there are few opportunities to stack the deck in your favour through relationship building.

Bottom line: if you’re going to do it, do it right. By targeting the right jobs, doing your homework and playing the game by the incumbent’s rules, you stand as much chance of winning as the other players on the board. May the odds be ever in your favour.

 

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