Many firms in recent years have seen involvement in new business pitches run into several thousands of pounds, sometimes for no return. This is both a huge waste of resources and de-motivating to all involved, writes John Monks.
Before you read this article any further, we would like you to make a little calculation. Consider a recent invitation to tender that your firm was involved in but was unsuccessful. Calculate the cost of fee earners’ hours involved in the whole pitch process. Now add the support service staff’s time that used. Add in the opportunity cost – what you could have been doing instead. Add in the cost of all the materials that went into responding to the pitch. Put it all together for the total cost of that new business pitch. How much did it amount to?
In recent years, as the legal market has become more competitive, many firms have seen involvement in new business pitches run into several thousands of pounds, sometimes for no return. This is both a huge waste of resources and de-motivating to all involved. Yet it is rare for a firm to decline an invitation to tender.
Responding to every tender invitation will not necessarily win the profitable business that secures long-term fee income and growth targets. Quantity will never replace quality.
Often, when working with law firms, we ask ‘how many of your colleagues are working right now on bids that they believe they have little chance of winning?’ Invariably, the number is greater than it should be. Why is this and why does the answer not come back as zero?
Some professionals tell us they panic when an invitation to tender lands on their desks. This is either because they lack confidence about their future fee income or feel pressure to expand their client base. Some, on the other hand, are simply blinded by the potential fee size. But few firms actually know why they have been selected to pitch. It may be because of their excellent standing in the marketplace; it may be to make up the numbers. If the latter is the case, is this the best use of finite resources?
Another factor that stops firms from declining an invitation to pitch is the fear of creating a bad impression – they need to be seen as a player. To be a player they should give it their best shot, but without sufficient knowledge about the prospect and the time and energy to do an excellent job, they risk being an ‘also ran’. This will still result in wasted time and fees and may also ruin future chances when they really do want this client.
If you choose to respond to a tender it should be a conscious business decision. Even if you do not think you will win this tender, you should believe that it will create a positive business impression of your firm, which in the long run will help you develop a stronger relationship with this prospect.
From our experience, legal firms are less likely to win a bid if they have little or no prior knowledge of the client or their business;
- if they fail to understand the decision-making process;
- if they have not developed a relationship with all the decision-makers and their influencers (this may include procurement professionals) and
- if they fail to get to know the incumbent adviser and their strengths and weaknesses.
In its research into the FTSE 100 companies’ perceptions of the UK legal profession in 2002, Nisus Consulting reports of “telling comments about firms not doing enough research to get behind the respondents’ needs or even their briefs. (There was a)…. Lack of understanding on what the client was looking for and the decision criteria on which the client would make the appointment” (Source: A more meaningful partnership – A study of the FTSE 100 companies’ perceptions of the UK legal profession, by Nisus Consulting). So where does this leave us?
Firms do not have control over who they work with. Start by considering your firm’s objectives and define which clients will help you achieve them. These clients may bring the type of work that the firms wants to do, the level of fees you need, the industry sector you want to proliferate and the profile of the clients you want.
This analysis enables you to avoid wasting resources. It decides which clients need to be kept (and protected from competitor advances), which need pruning and how many new clients are needed and who they are. A word of warning here – be realistic about what value your firm could bring to these clients in the long-term. Do not fall into the trap of overpromising and underdelivering.
It is unlikely that your chosen prospect has you on their ‘radar’. To change this, formulate a plan that defines the tasks, responsibilities and deadlines which will form a relationship with this prospect. The ultimate aim is that the prospect has you at the forefront of their mind when they need an adviser for a particular issue.
Information needs to be gathered to understand the:
- prospect’s business and competition and increase your awareness of the current business issues that will affect the client,
- key industry developments that will impact on their business and
- key people you need to convince is a key area to address.
Relevant information will come from many sources, such as published information, sources within your own firm, other suppliers and even people within the prospect.
There will be many people and influencers in the decision-making process and you need to understand them all. This means identifying the people who will be consulted in the process, the people who have specialist knowledge and will, therefore, have an input and any others whose influence could sway the decision.
Again, excellent information gathering skills will help enormously, as will having as many ‘allies’ as possible feeding you accurate information at the right time.
To effectively influence the right people, you need a campaign planned at the start of your approach and modified as your understanding of the prospect improves. The campaign may involve sending targeted information to the prospect, inviting them to relevant events or introductory meetings. Whatever the activities, they should be focused on any allies already in place, as well as developing more of the right allies as quickly as possible.
A common weakness of firms when 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 firm is considering alternative advisers. Without knowing the quality of the relationship of the incumbent adviser, your firm cannot positively distinguish itself in the eyes of the prospect.
So you have built a relationship and have been invited to pitch. Great news – but do not rest on your laurels. Make sure you look at your submission from the prospect’s eyes. Would you give your firm the job? Also continue to meet with them to improve your understanding of their real needs and wants. This will ensure your proposal is relevant, it highlights the value they will gain from working with you and demonstrates your genuine interest in their business.
Fee earners and support services in law firms should devote more of their time and effort on bids they have a real chance of winning. Success is often linked to the quality of the relationship built before an invitation to tender has been sent out to firms. Would you choose your firm to win? To bid or not to bid? Ask yourself the question.
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