According to Investopedia, RFP (Request for proposal) stands for 'a project funding announcement posted by a business or organization for which companies can place bids to complete the project'.
RFP is a sourcing process. Taking a proactive approach in building RFP strategies is the foundation of its safe and risk-free implementation.
RFP works well when the government, company, or organization has issues with finding the solution for the project they want to work on.
In this case, 3 steps they need to take include:
- publishing an RFP.
In that document, among other things, it is stated that they want someone to propose to them how to solve that particular problem.
Let's break it down🔢 to two parties that are involved in these affairs:
1️⃣ There is a company that seeks solutions. They write requests.
2️⃣ There are vendors who offer solutions. They write proposals.
For example, a major company wants to have a website built for them. They have some specific desires related to the website design, but they don't know what they are looking for exactly. Their team writes a request for a proposal, publishes it, and advertises it.
This is what we need. Can you do it?
If the request fits the expertise level of the business, it creates a response to a request offering its service for solving the advertised problem.
In this article, we will observe this process from both angles, that is from:
- the RFP issuer
- the vendor.
How to issue an effective Request for Proposal (RFP)
Issuing an RFP has two main goals:
- Finding the best technical solutions for the upcoming project.
- Finding the most favorable bid.
👓Issuing an RFP is a time-consuming process.
For mid-sized legal entities (government, organization, company), it takes two to three months frame to write an effective RFP.
It explains why over 80% of companies use some kind of technology tools, such as:
- proposal templates
- knowledge libraries
- graphic services.
If well written, it's worth the effort as it entitles businesses to collect better offers from the vendors and determine the best solution for their problem.
Besides, with a well-managed and written RFP, the company can expect to find the most cost effective solution.
Now, it's time we discuss helpful strategies for writing an effective RFP.
Appoint the Issuing RFP Team
This is the first step to improving the conversion rate on your RFP. A good team is a pillar of winning RFPs.
This small community of people puts your desires into a comprehensive, well-written, and proofed document. With this move, you ensured that this potentially overwhelming job could become attainable.
Who are the key players 🧔👩🏿👨🏽🦰🧑🏻👱🏻♀️ you must have in your team?
- The Project Manager. Her role is to be a captain of the team. She observes everything that other team members are doing, but also advises them on improving the request. Overall, it is a person in charge of the whole project.
- Subject Matter Expert. The company should hire an expert familiar with all the details related to your desired product or service. Subject Matter Expert knows the topic. With her help, all of the other members will have an easier job to do. Her knowledge is most useful for the author and the executive reviewer.
- Financial Advisor. It is a crucial figure whose role is budgeting the RFP.
- Legal Department. They will prepare a legal document to define the obligations of parties. Terms and conditions are significant factors in making the project easier by removing those bidders who cannot meet them.
- Author. The terminology used in RFP writing is a specific one. It has to be precise, concise, and easy to understand. The author specialized in that field will make the proposal writing easier for vendors. After you receive their proposals, you will have an easier job in shortlisting.
- Graphic Designer. The document has to be visually appealing.
- Executive Reviewer. There should be an independent figure who will review the whole document. You are looking for someone with experience and expertise in RFP's.
Set goals and determine your requirements
The main thing that repels potential vendors is when an RFP is unclear. Business needs to know what exactly they are looking for. Yes, vendors are here to propose you a solution, but only in case:
- The project requirements are strongly defined.
- There is a specific deadline
- The budget is estimated and set.
The main reason to strictly define your deadline is because of your time management.
Since time-related metrics and budget are crucial factors for both companies and vendors, to ease the pressure of deadlines and give your time management a healthy boost, you need to choose reliable time tracking solutions.
For example, you will spend one day on meeting and initial negotiations with vendors. Then, you have to allocate time to review and answer their questions. Another deadline you have to consider is a project deadline. Allocating resources and budgeting will be also directly related to time tracking domain.
Write the RFP
After your requirements and goals are defined, the team is ready to write. Now comes the moment when the author shows her skills. All of the information has to be well sorted for producing relevant documents.
Communication is key to this process. All team members, from the Project Manager to Executive Reviewer, should be collaborative with the author.
Include criteria selection
You should set upon criteria selection sooner than later. Build your expectations around vendors' technical ability, financial ability, and their past performance. If you miss asking the right questions, there is an increased chance of confusion.
A well-written RFP gives a detailed insight into what the client demands; hence, the contractors can choose to bid accordingly.
Launch the RFP
The document is well written, visually appealing, and reviewed twice. It's time to launch it.
This is the moment where your advertising skills play a significant role. You have to spread your RFP to as many addresses as possible, so you attract as many vendors as you can.
Questions from vendors
Evidently, there is no such thing as a perfect RFP. It is almost impossible to launch an RFP that has everything covered, which is confirmed by 77% of proposal professionals.
Having a dialogue is valuable, both for the company and vendors. Vendors may require additional detail on the deadline, a budget, or some technical aspects of the request.
Collect and review RFP's
Qualifying one-third of proposals is a success in terms of conversion rate. After you collect proposals, it's time to review them. To ensure RFP scoring, a standard 1-5 scale is recommended. It simplifies the evaluation and brings selection results faster.
After you review all of the proposals you received, it's time to shortlist your candidates. Now you can be thorough in evaluation of vendors' offers.
At this stage, you start to negotiate with vendors that have the best score. This is why you need a qualified Project Manager and SME. Depending on the negotiation skills, you can expect alterations in pricing and terms of delivery.
Even if it looks like a formal part of the process, it doesn't have to be like that. This should be a small ceremony, a celebration of the end of a painful process.
The best way to do so is to invite the winner to your office to sign the contract. With that act, you make the business bond between you and your vendor.
How to write an effective RFP response?
For this section, we will assume that RFP is well-written. The tips mentioned in the previous section have been followed, and the request for proposal is out now.
What practical steps and strategies will benefit you in producing an effective RFP response, read on below.
Identify your RFP Response Team
If you want to write a winning response, you need to determine whether you have the right team and resources for the job, before going into a detailed assessment of your potential customer.
- Project (Proposal) Manager. It's a person in charge of the process at all coming stages, from planning to completion.
- Subject Matter Expert. Someone needs to be the link between the Project Manager, the Author and the Executive Reviewer for consulting on detail, checking and upgrading the response.
- Author. What distinguishes the winning from the non-winning response is the way it is written. The winning response consists of a combination of feasible requirements, customized terminology, knowledge of the topic it deals with, as well as the description of the previous experience in the same or similar projects along with references.
- Financial Advisor. When it comes to budgeting, your chances of earning more are higher if you have a reliable and certified negotiator.
- Executive Reviewer. Mistakes are often found even in the best-written responses. They might pave way to failure. Not to risk months of elaborate work, ask an expert for a constructive review.
Assess customer fit
The first thing your team has to take into consideration is whether the opportunity is right for your business and how much are you familiar with the industry and services that are required by the RFP.
Recent research shows that almost three-quarters of RFP response teams use some form of go/no-go process to assess their customer fit before investing any further resources into a proposal.
Considering that, it is highly recommended that your proposal team adopts or develops some variety of their own go/no-go decision framework.
Consider the competition
This step organically grows from the previous one. Getting familiar with certain industries requires top industry's leaders globally and locally.
Carefully read the RFP. You may notice references to specific product features, services or terminology that your competitor is known for. Ask yourself what might be a warning of a predetermined choice by the prospect. Don't exclude the worst scenario of a competitor’s involvement in creating the requirements. It will help identify the projects worthy of your time.
Discuss and form a timeline
A formed timeline is a must-have in effective team and task management for producing a well-written response. Set short-term and long-term goals for your response writing.
Also, try to deliver your request prior to the deadline. That gives you a chance to stay ahead of your competition. In case you can deliver before the deadline stated in the request, that already means that your experience and qualifications will be fitting the project.
In most cases, for effective RFP, it is necessary to have a live conference or a call for questions to prevent roadblocks and facilitate the writing process.
Think in advance if you have some questions about the deadline, budget clarity, etc. Issuers usually have prepared answers, or will be open for discussions.
Make it about them. Issuers need a problem-solving response. The following checklist can be helpful in accomplishing the writing goals:
- Describe the offered solutions and pinpoint why they are the best fit for the issuers' business.
- Be careful not to overpromise.
- Demonstrate your expertise in this field.
- Cover the whole process.
- Consider finances.
- Elaborate a budget that suits them.
- Make it easy to read by reviewing and polishing your response.
- Exclude useless facts.
- Keep your focus on relevant things.
Include detailed references
Here you have to assume that the issuer doesn't have a clue on who you are. It would pay off to take the following steps:
- Describe your role
- Include all facts in relevance to the proposal
- Make your statement using related statistics.
- Tell about your experience.
What does it bring to you and your team?
One of the final things left to determine is figuring out how valuable winning this RFP is for your business. Weigh your time against the opportunity, which will help you determine which RFPs to pursue in the future.
Rick Seidl is a digital marketing specialist with a bachelor’s degree in Digital Media and Communications, based in Portland, Oregon.
With a burning passion for digital marketing, social media, small business development, and establishing its presence in a digital world, currently quenching his thirst through writing about digital marketing and business strategies for DigitalStrategyOne.