Responding to invitations to tender can be a costly business, irrespective of whether you can win, but especially if you lose. So does it make sense to do it, ask Gary Williams and John Monks.
How much does a typical response to tender or involvement in a pitch cost your firm? Have you ever calculated the cost of the fee-earner and support services hours that were used? What was the opportunity cost? And how much did all the materials that went into the response cost? If you added all this together, we are sure that you’ll be surprised at how costly responding to invitations to tender can be, irrespective of whether you win or lose.
Today’s pitches can run into tens of thousands of pounds and sometimes for no return. Clients need more convincing, they place greater demands on the information they need and the process they go through to form their decision. When an accountancy firm wins, it seems worth it. When they don’t, there has been a huge waste of resource and the experience is demotivating to all involved. Yet, it is rare to decline an invitation to tender.
Over the years, we have seen that responding to every tender invitation does not necessarily win the profitable business that secures long-term fee income and growth targets. From our experience, accountancy firms are less likely to win a pitch if they:
- Have little or no prior knowledge of the client or their business.
- Don’t understand the decision-making process.
- Haven’t developed a relationship with all the decision-makers and their influencers (this may include procurement professionals).
- Have little knowledge of the incumbent and competing adviser’s strengths and weaknesses.
So how does a firm still achieve its business growth ambitions? Shouldn’t all new business opportunities be pursued? We think not. With finite business development time and resources available, accountancy firms need to invest energy where it will generate the greatest return. They need to go for those invitations where they have the greatest chance of winning.
Decide who you want to work with
Accountancy firms do have control over whom they work with. If you asked all your fee-earners today which 5 clients they’d love to work for, we are sure they would tell you. The reasons behind these choices may vary – the prospective clients might be selected because:
- They’d generate the type of work that the accountant wants to do.
- They’d bring the level of fees the fee-earner needs.
- They are in an industry sector they like or specialise in.
- They would be a ‘name’ that would attract others.
On the one hand, this exercise gives you a list of potential clients on which to focus your firm’s efforts. It also presents a list of clients your people really want to win, are genuinely interested in, possibly have some prior knowledge about and are keen to help secure them as a client. Such motives will not only put you ahead of the game, they will be positive qualities that the client will pick up on.
In numerous research studies, clients have said that they favour those accountancy firms that show a genuine interest in them and are able to think beyond their technical requirements. The best firms, from their perspective, find solutions for their broader commercial issues and needs. It is these firms they want to build relationships with. And behind the majority of invitation to tender successes, is a relationship that has been built months (if not years) before. So, consider whom you really, really want to have in your firm’s client portfolio and then plan to build relationships with each one. The time and energy spent in building each relationship will not be wasted. It will help put you in pole position when the client has a requirement.
Develop an action plan and build relationships
At this point in time, however, it is unlikely that a prospective client has your firm on their ‘radar’. To change this, devise activities, which will motivate them to want to get into dialogue with your people. The more relevant these activities are to their world, the more interested they will be in your approach. The best approaches are built on a strong understanding of the client’s organisation, the issues facing it in the industry and the key people the accountancy firm needs to convince. This information is available from many sources (such as published information, sources within your own firm, other suppliers, and even people within the prospect). It helps accountancy firms create very tailored and highly specific forms of communications, events and materials, which the client’s feels relates directly to them.
Once a client is motivated to want talk, it is important that initial meetings are used primarily to expand and confirm your knowledge of their world. It’s not wise to go in trying to sell specific services.
Relationships are built on trust and trust develops over time. It comes from a client recognising that yes, this firm is competent in its areas of expertise and credible in its track record, but they’re also compatible bunch who we’d be comfortable working with. Those accountants that spend their initial meetings and dialogue getting to know the client further have a greater success rate than those who start explaining their firm’s credentials. These initial meetings can generate insight that will give your firm a competitive advantage in a pitch situation. Not only will your people come to understand what solution is being sought, but also how it needs to be packaged and sold to the client so they find it easy to choose you.
And now might not be the time for them to buy, so keep in touch. Ensure they keep your firm on their radar and continue to provide or send them things that will help or that they’ll value. Give them a call from time to time to catch up and update your understanding of their latest developments.
The incumbent adviser
A common weakness of firms when building new client relationships or undertaking a new business pitch is to ignore the strengths and weaknesses of the incumbent adviser. There may be a host of reasons why a client is entertaining the approaches of alternative advisers. Without knowing the quality of the relationship of the incumbent adviser, your firm cannot positively distinguish itself in the client’s eyes. So find out who they use and use your research to evaluate what the client values about their current adviser.
And when the client does have a requirement and invites you to pitch, well done. The work, however, doesn’t stop here. You will need to use all the information you’ve gleaned so far to find and present a solution, which really differentiates your firm. The more successful accountancy firms continue to meet with the client to improve their understanding of all the requirements and hidden agendas. This ensures their proposal is relevant; it highlights the value the client will gain from working with them and demonstrates the firm’s genuine interest in their business.
Accountancy firms invest much time and energy in responding to pitches they will not win. Success is so often linked to the quality of the relationship built before an invitation to tender has been sent out to firms. So when an invitation lands on your desk consider:
- Do we have a relationship with this organisation?
- Do we have an in depth understanding of them?
- Have we spoken to the key people?
- Do we understand what they are personally looking for?
- Do we have a strong competitive edge in this area?
- Will they let us meet them?
If the majority of answers to these questions are no, your efforts might be better spent elsewhere. Consider whether you would choose your firm to win? To bid or not to bid? Ask yourself the question.