Last week, in our 2nd instalment in our blog series ‘Planning for the RFP storm’, we talked about the types of questions firms should be asking themselves and the pre-work that can be done prior to RFP issue. In this, our final article, I’m going to talk about bid triage – deciding whether or not to respond to an RFP. It’s an unexpectedly sensitive topic.
The agonies that law firms and partners go to decide whether or not to bid for a piece of work or panel place have really surprised me since moving to ‘work for the other side’. What I thought would be a very straight forward commercial decision about profitability, is anything but.
When procurement teams look at who to invite to tender, the decision is largely based on very logical criteria asking themselves:
- Do we think a firm has the capability and geographical/jurisdictional coverage needed?
- Are likely fees at a level we are happy paying?
- Are we happy with the existing law firm relationship (or do we have the appetite for change)?
In my naivety, I assumed that law firms looked at it in a similar way and made an equally logical decision as to whether to bid. However, it turns out that there is a lot more angst involved than I’d ever appreciated. I’ve been genuinely surprised by the level of debate around what the client’s reaction will be to a ‘no-bid’ decision, or to clarification questions designed to help decide whether to bid.
Through fear of upsetting a relationship and losing other work, never being invited to bid again, or worrying that they might be seen as not committed enough, many firms are reluctant to say ‘no’ to an opportunity that has at best, dubious commercial attraction to them.
I’m often asked ‘how do you think they’ll react if we say no’, and I always give the same answer – a well-reasoned, ‘thanks for the opportunity but it’s not right for us at this moment in time’ is perfectly acceptable and won’t upset a current/prospective client. As a procurement professional who’s had to read a lot of poor bids, take it from me that a polite ‘no’ is infinitely preferable to having to read a bid that has little chance of success (commercially or otherwise). I’ve got enough to read without trawling something that you don’t really want to do, or that you’re ‘just having a go at’… It comes through in the response and leaves me cross that you’ve wasted my (and your) time.
I’m much more likely to remember you favourably next time and invite you to bid for something that I think you’re suited to if we’ve had a sensible discussion about why you don’t want this opportunity. I completely understand that some opportunities aren’t commercially attractive, or that you might not have enough resource available for this job. It’s okay to be honest and frank!
I often speak with BD colleagues about how to get away from ‘bidding for everything’ and many agree that a formal bid triage process is really helpful in putting some objectivity and structure around the ‘bid/no-bid decision’. We’ve helped design many of these with varying governance and complexity for our clients, but all have some of the same basic questions detailed below, the answers to which should help inform the decision whether to bid.
1. Is this a prospective new client?
If so, why have you been asked to bid? Do you know someone at the client and they’ve asked you? How senior are they, and are they a decision maker? Is this a ‘bid out of the blue’? Who do you think you’re up against? Are you potentially being used as a fee stalking horse? Do you think you have a realistic chance of winning and why?
2. If this is an existing client, how are fee revenue and profitability trending?
If either/both are decreasing, why? Can you justify maintaining current rates with acceptable profitability or do you need to increase them? What has the client signalled about rates and will an increase lose you this client?
3. Do you have the team capacity and capability to do the work?
Trust me, there are few things more likely to damage a relationship and lose a client than not actually having the capacity or capability to do the work. Clients don’t want to see a major recruitment drive after you win…
4. What’s the potential annual fee revenue for this work?
Sometimes the ‘size of the prize’ makes it worth ‘having a go’ even if you don’t have everything in place to service the work currently – provided you think you can ramp up quickly and do the work profitably.
5. How attractive is this client?
Would winning this client attract others or further a sector growth plan?
If the client is a pain in the proverbial, do you need an exit strategy and could a polite ‘no thanks’ be a way out? It’s perfectly acceptable to ‘deselect a client’ who is difficult to do business with, and concentrate on more attractive propositions. You probably don’t need ‘costly’ 3 ‘trophy clients’ in a sector, especially where the ‘value add’ requirements and cost of service outweigh the fees.
Lest you think that this is far too simplistic and doesn’t take into account the personal and people impacts of not winning work or losing a client, then please be reassured, I absolutely understand the fear and potential implications that go with losing a client.
I get the need to maintain and build up a practice area and/or pipeline of new work, and how this can persuade fee earners to ‘just have a go’ at a bid. It’s a brave person that doesn’t bid for work with a client with whom they have worked for 10 years, even if it isn’t that profitable - what if they walk away? Is it worth winning/retaining work at any cost to maintain the cash-flow and keep people in work? Logically you’d say ‘no’ but I know that there are many complex, emotional reasons for bidding behaviour and that occasionally the answer is ‘yes’.
But I don’t think it should always be yes, and formal governed triage can help identify the definite ‘no’s’.
Steph Hogg, Validatum Head of Procurement, Bid & Tender Consulting
044 (0)7772 761 154