The trouble with RFPs

In Strategy, Digital Marketing

The pitching process can be a dog and pony show that rewards the novice and punishes the experienced. Often, the agency with the slickest presentation and pitch-person wins. But slick presentations aren’t good at solving business problems.

We’ve been very selective about responding to RFPs since 2014, when I first read the Win Without Pitching manifesto. The premise of the book boils down to “develop a marketable expertise in a narrow industry vertical, and don’t give it away for free”. Before reading the book, it was normal for us to spend 40 hours writing a proposal or response to an RFP. After reading the book, we cut our proposals to 5-6 pages. Our conversion rate didn’t change, and we’ve operated this way since. The thing that changed was that our work happened after we were engaged rather than before. This allowed our team to start with a proper discovery and planning process.

A race to the bottom

One problem with the RFP selection process is that it tends to favor the lowest bidder. If RFPs were working in the best interest of the organization, they would be weighted to gauge the effectiveness of the solution. Vendors know this, so they minimize risk, ignore the unknowns, and assume the buyer’s proposed solution is the correct one. When the buyer chooses the lowest bidder, it increases uncertainty, diminishes unknowns, and results in higher costs and delays in the long run. A proper investment must be made up front in order to get good results and be cost-efficient over the long run.

The RFP selection process also prioritizes quantity over quality of submissions; it emphasizes volume of responses over finding the best partner. Worst of all, it treats design and creative services as a commodity.

Wasting time

While it may seem like RFPs save the buyer time, they require a significant amount of the responding agencies’ respective time – a cost that ultimately gets passed on to the buyer.

Cal Harrison sums it up well. “Recently 38 architecture firms were forced to spend approximately $20,000 each (mostly spent doing detailed pricing) to each write a proposal to try and win a project that would pay one winner $50,000 in fees. That meant that in total, those 38 firms spent $760,000 writing proposals so that one firm could win a $50,000 project. And over time that $760,000 is going to be billed right back to the end user.”

Is the buyer the expert?

RFPs rely on a diagnosis by the buyer for which they have no expertise. It puts people not qualified into making crucial decisions about their organization. By nature they tend to be overly prescriptive; it requires a solution before a proper diagnosis. This is like a patient shopping for medication or surgery without first talking to a doctor. It could very well be that the buyers’ problem or pain point requires a solution that differs or is more effective from the one being prescribed.

And most companies use a template as a starting point to build RFPs and only modify the outputs and scenarios. A 50 page document may feel impressive, it does very little in serving the interests of the organization.

Why they persist

RFPs are thought to bring fairness to the pitching process by opening the bidding process and providing everyone with the same opportunity. It also gives the buyer a vehicle to solicit many bids with minimal effort. And people do things the way they were always done, the way their predecessors do. This is normal. But the RFP process is not a good tool in determining fit, scope, or delivering the intended outcome. I would argue the downsides fatally outweigh the upside or convenience of the process.

Change happens when we figure out a better way to do things. Sometimes the way we’ve done things is no longer effective. This is where we are now with RFPs. So for buyers out there, I implore you to look at other ways of assessing the fit and qualifications of vendors. And vendors (especially you, digital agencies) – stop responding to RFPs!

 

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