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What\u2019s your sales team\u2019s current RFP close rate? Whether or not it\u2019s as high as you\u2019d like, you may be surprised to hear that Ganesh Shankar of RFPIO states that \u201cthe<\/span> common win rate for RFPs is less than 5%<\/span><\/a>.\u201d<\/span><\/p>\n Following these numbers, for every 20 proposals the average vendor sends, only one will be successful. And with many companies<\/span> investing 20-40 hours into each RFP response<\/span><\/a>, that\u2019s a lot of wasted time and money.<\/span><\/p>\n For example, suppose you have an Inside Technical Sales Rep completing RFPs for your team, and this rep<\/span> earns a salary of 50 thousand dollars annually<\/span><\/a> (roughly equivalent to<\/span> 24 dollars per hour<\/span><\/a>).<\/span><\/p>\n If the average size of your proposals is 25 thousand dollars and you successfully close one proposal out of 20, you\u2019ve gained 25 thousand dollars in net new business. But you\u2019ve also lost an average of 30 hours for each of the other 19 proposals.\u00a0<\/span><\/p>\n At an average hourly rate of 24 dollars, that\u2019s a loss of 13,680 dollars (before taking into account opportunity costs, overhead and other variables).<\/span><\/p>\n Though it\u2019s unlikely you\u2019ll achieve a one-hundred percent closed-won rate, reducing the number of unsuccessful proposals sent saves your company both time and money. <\/span><\/p>\n Here\u2019s a really simple way to improve your RFP close rate: only apply to projects you\u2019re likely to get.<\/span><\/p>\n Imagine a batch of 20 RFPs. In it, maybe five will be a good fit for your company. The other 15 are either bad opportunities or projects you\u2019d have to stretch to complete, in terms of project fit or resources required to submit an RFP.<\/span><\/p>\n Not only have you upped your close rate, you\u2019ve also saved all the time and money you would have wasted on inappropriate proposals. <\/span><\/p>\n Adam Boyd, in a <\/span>LinkedIn Pulse article<\/span><\/a>, describes it this way:<\/span><\/p>\n \u201cNot all RFPs are created equal, and you don\u2019t have an equal shot at winning them all. Know when to say, \u2018This isn\u2019t in our wheelhouse, and is too expensive a use of time to pursue.\u201d<\/p><\/blockquote>\n For example:<\/span> Developing an in-house checklist or scoring system for evaluating RFP opportunities can help you determine where your opt-out point lies. <\/span>Bob Lohfeld<\/span><\/a>, CEO of <\/span>Lohfeld Consulting Group<\/span><\/a>, suggests asking the following <\/span>seven questions<\/span><\/a> to filter RFPs accordingly:<\/span><\/p>\n If you\u2019re concerned about missing out on potentially-good projects, consider the advice of <\/span>Sales Benchmark Index<\/span><\/a>\u2019s Principal, <\/span>John Auer<\/span><\/a>:<\/span><\/p>\n \u201cIn some cases, opting-out can actually be a more effective differentiator than participating in the RFP. \u00a0For example, prospects may show their hand and confess they were looking forward to your proposal. If this is the case, you\u2019ve just learned a valuable piece of information that could very well result in a win.\u201d<\/p><\/blockquote>\n If you don\u2019t receive such a confession, you\u2019ve saved time; but if you do, you\u2019ve gained valuable insight into whether or not the RFP will be an effective time investment. It\u2019s a win-win.<\/span><\/p>\n As you pare down the number of RFPs you\u2019re actually responding to, you can save even more time by developing a <\/span>proposal template<\/span><\/a>. This will minimize the amount of time you spend \u201creinventing the wheel\u201d to develop every response.<\/span><\/p>\n For example, working from a template cuts the average time required to complete and submit a proposal from 30 hours per RFP to 10 hours. This time decrease would increase your RFP productivity rate to 500 dollars per hour (based on the metrics provided at the beginning of the article. <\/span><\/p>\n To calculate your RFP productivity rate, use the formula below:<\/span><\/p>\n Net new business amount \/ (number of RFPs x total hours worked)<\/strong><\/p>\n That said, just because you\u2019re working from an RFP proposal template doesn\u2019t mean your responses have to come across as formulaic. A non-traditional response process can minimize the burden of RFP completion on your team members, while also helping your company stand out from other applicants.<\/span><\/p>\n According to <\/span>Mike Drapeau<\/span><\/a>, Partner at <\/span>Sales Benchmark Index<\/span><\/a>:<\/span><\/p>\n \u201cThink George Costanza. Remember the episode when he did the opposite of everything his instinct was telling him to do and the results were off the charts? That is the approach you should use in developing your RFP strategy. Conventional wisdom is dead wrong.<\/span><\/p><\/blockquote>\n So what does a non-traditional response process look like? Possible ideas include:<\/span><\/p>\n Another non-traditional RFP response option comes from Board Studios, which offers three suggestions for <\/span>incorporating rich media into your RFPs<\/span>:<\/span><\/p>\n Some industries \u2013 tech companies, for example, versus more staid banking and legal services \u2013 may be more receptive to the use of new media than others. But don\u2019t be afraid to experiment by pushing boundaries. Standing out may be enough to get your proposal the close read it wouldn\u2019t otherwise receive.<\/span><\/p>\n Think about how proposals are typically handled in your industry, and then \u2013 like George Costanza \u2013 consider doing the opposite. <\/span><\/p>\n In most cases, you aren\u2019t allowed to contact company representatives to make a personal appeal during the RFP process. That\u2019s why it\u2019s important that you continually invest in expanding your network before the process begins.<\/span><\/p>\n \u201cYou must be actively selling to the buyer in the 12 to 18 months before the RFP is released. If they don\u2019t know you before the RFP, your chances of winning are low.\u201d<\/span><\/i><\/p>\n In practice, this means actively networking with future prospects, using both direct and indirect approaches. Cold calls and an active presence at industry events are important, but you may also find it helpful to use content marketing, social media marketing and other campaigns to build thought leadership around your company. \u00a0<\/span><\/p>\n Stephanie Czajka<\/span><\/a>, Project Manager at the <\/span>Weidert Group<\/span><\/a>, suggests that:<\/span><\/p>\n \u201cThe more you\u2019re already present in prospects\u2019 eyes because of your content, the more your company will be included on buyers\u2019 \u201cshort lists.\u201d In digital terms, you can think about this as a search process. When prospects are looking for answers to their questions related to your business, they\u2019ll query Google, and if your content article shows up, then they\u2019re more likely to read about you, and you\u2019re more likely to be included on their short list.\u201d<\/i><\/p><\/blockquote>\n Further, Czajka argues, transforming your company into a respected thought leader through proper inbound marketing may remove the RFP from the equation entirely. \u201cIn cases where an RFP is optional, the buyer will naturally move to the subjective choice of a trusted advisor or resource.\u201d<\/span><\/p>\n Simply put, if a buyer needs a vendor but decides not to proceed with the RFP process, the thought leadership you\u2019ve built around your brand will make you a natural candidate to fill the spot.<\/span><\/p>\n Specific variables to track include:<\/span><\/p>\n The data you gather here can play a role in improving your close rate, if you use it effectively. <\/span><\/p>\n Suppose you notice that from Q1 to Q2, your number of closed-won projects fell from 30 to 20. If, at the same time, you\u2019ve tracked the total number of hours invested into each proposal and found that it too decreased from 20 hours per RFP to 10 hours, this is a signal that you need to invest more time into your proposal process.<\/span><\/p>\nIn this article you will find a list of suggestions and best practices to help Sales Leaders improve their sales team\u2019s RFP close rates.<\/span><\/h2>\n
Have a \u201cGo\/No-Go\u201d Opt-Out Point<\/span><\/h3>\n
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\n<\/span>Your close rate will be 5 percent and you\u2019ve earned 25 thousand dollars in net new business. You will have invested 600 hours (30 hours per RFP) and 14,440 dollars (24 dollars per hour). Your RFP productivity rate (total new business divided by amount of work hours) is 42 dollars per hour.<\/span>
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\n<\/span>Your close rate will be 20 percent and you\u2019ve earned 25 thousand dollars in net new business. You will have invested 150 hours and 3,600 dollars. Because you were more selective, you RFP\u00a0productivity rate is now $166.67 per hour.<\/span><\/li>\n<\/ul>\n
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Work from a Proposal Template<\/span><\/h3>\n
You won\u2019t be able to anticipate every Q&A you\u2019ll encounter ahead of time. But developing stock copy for your executive summary and adding new Q&A responses to a central document \u2013 which you can draw from again in the future \u2013 can trim huge amounts of time off your RFP process.<\/span><\/p>\n
Use a Non-Traditional Response Process<\/span><\/h3>\n
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Build Relationships Before RFP Responses<\/span><\/h3>\n
Companies need to know who you are before they receive your proposal. According to data gathered by <\/span>The Seibert Group<\/span><\/a>, <\/span>40 percent<\/span> of your success comes down to your pre-RFP sales efforts:<\/span><\/p>\n
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Monitor Your RFP Success Rate<\/span><\/h3>\n
Regardless of which of the above strategies you choose to implement, one of the best things your sales team can do is monitor the metrics surrounding your RFP process.<\/span><\/p>\n
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