We do not do RFPs. We do not enter them. We do not defend the account if a client RFP’s us – even if it’s a “due diligence” review. RFP’s are a waste of an agency’s time. They are most definitely a waste of a client’s time.

I write this post at the risk of sounding bitter, but actually, I am filled with a sense of empowerment over our new business policy. It’s liberating. I calculate our company will save ~3,000 hours of staff time and at least $80,000 in travel each year by not participating in the coin flip called RFP’s.

As I review all the business RMI has landed over these nine years and as I look at our best clients, only one significant piece of business was won in an RFP and another one retained. In both cases, we lost those clients within 30 months in subsequent RFP’s after all the client’s marketing staff changed over.

Any client can review its agency without a formal selection process. They just have to pick up the phone and ask a competing agency to come give a “capabilities” pitch.  Doing this does not publicly harm the incumbent and it doesn’t place a crazy presentation burden on a dozen agencies pitching.  A client can have these conversations at tradeshows, on site, and off site with ease. That is to say, it can do so discretely.

A formal RFP is different. A public RFP says to the world “we’re not sure we have the right partner.” This immediately disrupts the incumbent and puts them on defense in the relationship. Partners trust each other. An RFP is a statement of distrust.

I entered eight RFP’s last year and lost them all.  We were frequently told we were the best at paid search but other agencies “had “other capabilities”, “were bigger”, and very often “have done projects for us before.” Maybe they were just saying we made a good showing to make the phone call easier. If you won a lot of RFP’s last year then you think I am just a bad presenter. You may be right. But I don’t care.

I could give you a dozen stories where we were invited in to what was promised to be an objective process only to find out that it was not objective.

Here below are the common things I see:

5 Dirty Truths About RFP’s

#1. An RFP is often a company’s way of pretending it’s not political, or (gulp) that a winner hasn’t already been picked.  Rather than starting with participants saying “let’s find a good vendor”, the deciders usually start with some preference. That preference is based on brand impression or having a friend at an agency.  This is what makes up “politics” – when colleagues want different solutions, but business etiquette mandates they hide their preference and suggest a non-biased decision process.  This means that an RFP is used to eliminate competing preferences and make everyone feel as though they were “heard.”

#2. RFP’s are used to teach and include junior employees. Great mangement is getting the right person to do a job then getting out of their way.  Instead, most corporations would rather assign some pre-determined process to a junior executive without actually granting decision-making authority. This grows bureaucracies and matrices where consensus is valued as the dominant way to make a decision. What’s the truth?  The truth is that there is always one senior the senior executive in the room who is going to have his way because it’s his butt and bonus on the line. Yet, to establish an air of “inclusiveness” and to keep junior staff from feeling like they have no say, an RFP committee is launched. After a month or two of “objective” data gathering and inquiry of the candidates, the selection is narrowed. Then the senior executive begins to weigh in with his opinion of who should win.  Here’s a great example:

One SVP at a large travel services company consoled me after an exhaustive, six month review, “your team was the smartest, the most prepared and had the only buttoned up transition plan of all the agencies.” She then told me that her CMO boss had lunch regularly with the founder of a competitor so the decision was out of her hands. Kudos to the competitor. They deserved the business by building a relationship. The fraud is that we were induced to spend 800 hours of staff time and $20k in travel and pitch costs for that one and it was a foregone conclusion before the RFP documents hit the mail!

#3. RFP’s commodify the participants instead of highlighting their unique value. Joe Southworth of The Complex Sale points out that RFP’s ask vendors to answer the exact same three dozen questions in a formatted document which makes all vendors look alike.  The actual RFP device is rarely even read by the committee.  This experience below illustrates it perfectly:

I once entered an RFP that had 108 questions. It was sent to 25 agencies and us, as the incumbent.  That means over 2,700 answers were generated. Since it took me about 100 hours of time to wade through the questions, I figure collectively, 2,500 hours of agency time was wasted on round one.  I later heard from the RFP organizer client that she could “not possibly read them all” and after the first few, “everybody started to sound alike”.

#4. RFP managers don’t know who truly has the power to decide. Historically, we asked who and how the decision will be made on the RFP. The answers always come back either-

a.)       “We have a selection committee who will vote.”

Or

b.)   ”I’ll be making the decision.”

Both answers are always wrong. A person who has decision making authority is never the one administering an RFP. The boss who ordered the RFP will decide.  Being removed one to two steps from the actual decision maker makes it impossible for the entrants to get a clear understanding of the actual problems the prospective client needs solved. Frequently you’re asked firm-o-graphic questions in order to size you up. The person asking them almost always has very tactical, specific problems they need solved.

The boss has strategic problems. Without having a direct access to the real decision maker, it’s impossible to determine how to solve the problem.  What’s worse is the employee calling you to participate often doesn’t even know they aren’t permitted to decide.

#5. The biggest agency usually wins. Add it all up. If there is not a pre-determined winner, then all the candidates start to look alike and the client then has to decide how to decide – which means they go with the “safe” bet.  The truism “nobody ever got fired for hiring IBM” is a testament to bad management.  Large companies are operated to preserve their run rate and avoid risk. They don’t play to win as much as they play “not to lose.” This means to protect their career, corporate executives choose the biggest vendor. The decision becomes defensible. In the agency world, this is why Madison Avenue gets to charge a lot more than independent agencies. They represent a safer bet in the client’s mind and their fees seem justifiable. Here’s my own experience with trying to retain our largest client last year:

We started working with this large, national retailer on a paid search project in 2003. Over five years, we grew online revenues 25X and efficiency 42%. The problem was the client churned through 4 CMOs in that time. That means that the current marketing management had no idea of our history and our accomplishments. They just knew that an RFP seemed like the right management tool as they assessed all their advertising efforts.

 

I tried not to pitch it. I wrote a letter to the CMO explaining my skepticism at being invited and that clearly, the client was signaling it wanted a big agency. The five contenders were us, a local Atlanta independent shop and four of the large agency holding companies. Obviously they wanted the comfort of working with a large holding company shop.

 

“No no no” they assured me. “No winner has been picked. You should stay in and pitch us.”

 

2,000 staff hours and five months later they awarded the business to a NY conglomerate who already handled other media activities.

 

The new CMO and his team couldn’t possibly appreciate the details of how we had grown the program for the company. He believed this “big single agency is easier and should be cheaper.”

 

The fact is that an RFP did not determine the choice. Neither did our own historical success with the client. The choice was predetermined. The CMO had a vision that all marketing should go to one company. He should have saved all the RFP agencies and his staff the time and hassle and just made his selection.

 

Fast forward 18 months later.  The NY agency is now fired and the client has chosen several new vendors. If you consider the onerous and confusing transition process to move the management of tens of millions of dollars in media buying and planning, the RFP process did a terrible disservice to the client.  OH, incidentally, the CMO was fired too.

 

What Really Matters in the Vendor Selection

In order to win an RFP, you must fit the mental image of the solution that the decision maker has in his or her mind. No one other than that vendor will win. Sometimes that’s a trusted hip-pocket vendor. Sometimes it’s a referral. Very often it’s just the biggest, shiniest vendor.  The problem is that an RFP process is never designed to share that vision. It’s designed to hide that vision behind a political, managerial goal of following a process.

So, what should you do?  That’s a great question and here’s how I would answer it:

Incumbent Vendors - Resign the business and commit to a smooth transition and setting the new vendor up for success. Be gracious but protect your resources and time and morale. Don’t participate. You’ll be better off in the long run.

Invitees to the RFP - Pass. Unless you are the insider having lunch with the CMO your response is merely a foil to justify a winner. Recognize how the process is geared and that it is not ever objective. Think about the hours you could invest in networking, visiting existing clients to get more business or projects you could start doing pro bono to ingratiate yourself with a another prospective client. As a last resort, offer to do a capabilities pitch if the prospective client will come to you.  If they won’t do that then pass.

Clients - First, be honest with yourself. Be honest about what you want and go find someone to give that to you. Quit asking agencies to compete and give away their advice and work for free to put “skin in the game” just for the honor of pitching you. Pay agencies for their time to pitch you and put your own skin in the game. More to the point, if you have concerns over your current vendor, just tell them honestly and give them a chance to correct the issue. If they can’t, then just give them notice and move on. Stop wasting your own time too!

As a parting thought  consider this. What if, as an agency, I instituted a policy that every 3 years, “RMI will do a due diligence review of its clients”  I’d write a letter saying -

Dear Client,

 

We love you. You’ve done a great job but we’re going to bring in five of your competitors to make sure we have the best, most innovative client out there. We may get higher fees. We might get more projects to work on, but we’ll probably stay with you. This is just company policy. Rest assured the process will be fair and objective and even if we stay with you, we may be able to bring good ideas back from your competitors that you can use.

 

Sincerely,
RMI

You’d fire me that day. It’s offensive and demonstrates that the relationship is not a partnership. I’d be hiding behind procurement-speak, while trying to better deal you in some way.

If we’re the incumbent and we have done a good job, the client should continue to partner with us. If we have not done a good job, they should fire us and move on.

RFP’s are at best, a biased management exercise and at worst, a predetermined fraud.  Either way, I can no longer waste my precious staff time entering these lotteries.

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27 Responses to Why We Quit Participating in RFP’s

  1. David says:

    Hi Ken,

    I understand your frustration, and it’s not the first time I’ve read an article like yours lamenting RFPs and vowing never to participate again. But in rebuttal, I believe RFPs are a valuable tool and opportunity.

    While I and my firm have a vested interest in RFPs in that we run the RFP Database, we do find them to be one of the most democratic, meritorious, and pragmatic approaches to procurement and purchasing. We win a full 1/3 of the RFPs that we choose to bid on and are the leading source of new business for our company. They’re not a full proof solution, and often times they are run poorly, but that’s exactly why we recommend that you be selective in the RFPs you respond to.

    Best,

    -David

  2. Ken,
    You and I have discussed this many many times and I’ve already began heeding your advice. As you know, we’ve been burned many times in an RFP process for the exact reasons that you stated in this post.

    One larger pitch recently might have just been the end of RFPs for me all together. I know for a fact that we had the right team, right solution and right approach to a project. It was between us and a large agency at the end. They of course picked them (due to reason number #5 above) but went with our solution. Now they are encountering issues on knowing HOW to implement it. My guess is… they’ll come back. Question is… do I want them?

    You are dead on accurate (as usual).

    Stephanie

  3. [...] This post was mentioned on Twitter by Stephanie Beckham, Ken Robbins. Ken Robbins said: RMI averages 51% growth annually over 10 years. Here's our approach to RFPs- http://bit.ly/fKmWmV [...]

  4. Deborah says:

    A fabulous blog Ken! I couldn’t agree more and I’m glad someone has the balls to speak the truth for our industry! Woot.

  5. David says:

    At least once a week I read an article about how a firm is swearing off RFPs once and for all, decrying the process, and telling everyone that RFPs are dead. It amazes me as, for my firm, RFPs are our largest source of new business, and we land approximately 25-35% of them. And it’s not just us. Lots of companies that I talk to understand the risk, choose to make smart decisions in selecting RFPs to bid on, and win them. Sure, I have a vested interest in that my company owns and operates the RFP Database, but we’re also a small consultancy with little in the way of advertising and sales, and RFPs present an immediate opportunity that, if we identify the opportunity correctly, can be very lucrative.

    • Ken says:

      I’d never say that RFPs are dead. Thery are SOP for larger companies. And David you’re a better man than I with that win rate. With that positive point of view about the opportunity, your ear is probably very attuned to listen for the right ones and not go after the bad ones. I’ve become tone deaf to them and now we focus out new business efforts in other areas (and are prospering as a result!)

  6. Chris Hopf says:

    It is clear your thoughts are based on your experience Ken. Thanks for taking the time to share . . . there are and will be many who will wish they had this perspective to consider, sooner than finding such later.

    As is the case with many things in life, many won’t learn from others (in this case from you) and will ultimately need to come to similar conclusions through their own experiences (pursuing RFP after RFP).

    With that said, I do believe an organization can improve their ability to improve their win-rate on RFP’s. Asking the right questions in the right way very early on . . . can best position a company to know whether to move forward or move on. Some organizations invest so much time and resources that they don’t want to walk away from that investment, when all signs say they should redirect efforts to more probable opportunities. So they stay in the game, just hoping and no longer investing – but now wasting even more time and energy.

    I believe there are some RFP’s in the days ahead that are prime candidates for RMI to walk away the victor. Maybe don’t go cold turkey quite yet, but certainly a light diet with a careful regimen around how you exercise RFPs, for the reasons you described so well.

    RFPs or not, every organization will build their success on the decisions they make everyday. Some customers you want, some you don’t . . . same could be said about RFPs.

    Have a great week,

    Chris

  7. joe phelps says:

    i feel your pain, Ken.
    i’ve found that if i ask the tough questions of the person fielding the RFP i get a gut feeling of our chances. If i feel someone is being totally open, and i’m getting the answers i need, then we proceed with the RFP. But if the answers are mealy-mouthed to questions like “Why are you issuing this RFP when (name of current agency) is well-respected in the industry?” That’s an indication we should drop out.
    Also, if we don’t have a champion inside the company — we don’t compete.

    other than that, i like the way you think.

    Joe Phelps

  8. AnnMaria says:

    We’ve won a lot of RFPs over the years and I totally agree with you, so it is not just sour grapes. I have passed on several RFPs this year. We are a Woman-owned Small Business and Minority-Owned Small Business and our expertise is in statistical analysis, program evaluation and statistical programming. I have gotten pretty good at spotting the invitations that are really, “We have a vendor picked out but we want to say we considered women/ minorities .” I’d say your #1 is the biggest reason I am doing fewer RFPs.

    #3 is another – we have twice been turned down because although our proposal was technically superior (we were told) the competitor had a lower price. Many RFPs are so vague that a task could be done for $20,000 or $100,000, e.g., identify and survey target market . The client does this hoping to get the best price but they certainly have SOME price range in mind.

    The main reason, after receiving many over the past couple of decades, I have soured on RFPs is exactly the point you made – the time involved at the high risk of no pay off. I think my time is better spent on billable hours.

  9. Jon says:

    Good post, for many of the reasons already mentioned. I’ve been on the client-side for my entire career, and having participated in them as both a leader and participant, I’ve seen many of the things you describe. I think the biggest reason many companies use (misuse?) them is they create a sort of paper-trail to defend a decision should things go horribly wrong. And, sadly, many companies just don’t have the respect for a prospective agency or vendor’s time as they should (telling an agency they don’t have time to read their carefully-completed response is just outrageous).

    That said, the reason I still use them in some instances is it does help you evaluate agencies or vendors based upon what’s important to your business. In my experience, I’ve found that capabilities presentations can sometimes be twisted to what an agency wants to show you, rather than addressing what we, the client, is looking for (not that RMI is an example of that, just saying in general).

    Anyways, enjoyed reading your arguments and the many good comments above. And for the record, if I were in an agency and had received a 108-question RFP, I’d run full speed in the other direction…

  10. Melanie Merrifield says:

    Thanks, Ken, for being a voice of sanity. This struck close to home this week!
    So glad to hear from another (relatively;-) level-headed source what I’ve felt through this rather painful process.

  11. Andrew says:

    I loved this post. Truly a gem. Hats off to those who commented who find the process valuable. I have always felt it was a grand waste of time because it drains the life out of everything. For me, finding a vendor is about people finding people who understand each other and feel a sense of connection in achieving a goal. The RFP reduces the realtionship aspect pretty much all together. And I do agree that it is slefish and greedy for these companies to demand all this info and time from vendors and then give nothing back.

    I feel I have to say that. They give nothing back because in essence they refuse to engage, refuse to relate and try to make it fair for all. That is truly a cover up for all the reasons Ken has noted.

    I don’t mind competing for a new client but in my experience, the RFP process is an energy draining waste of time. Again, good on you, those who win. I haven’t in the past and won’t participate further.

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  21. Great post!

    I”m sure after writing it you felt better about being “mad as hell and your not gonna take it anymore”.

    No one will argue the point that the RFP process truly is a waste of time, money and energy for all concerned. But the bigger truth is there are so f**king many of us. Clients have abundant choice. All ad agencies, PR firms, design shops and brand consultants (no matter what their web site says) are pretty much the same. Clients treat agencies like the low-value vendors they are. CMO’s have the life span of fire flies.

    Even if your agency has created massive success for your clients, you’ll still have to audition for the part you already have. It’s nonsense.

    But this will not change the behavior of clients who have all the power in the buying cycle. It’s simply a matter of supply and demand economics. Anything in abundant supply is devalued.

    At the end of the day this is a business of relationships. In thirty years of business, I have never been hired by a client who didn’t enjoy the process of working with me/my firm. We were not better than anyone else… or any more well-suited to provide the deliverable. We just nurtured our relationships. My best client (financially) couldn’t hold a job longer than two years. With every career move he made, I had a new client. No pitch, no RFP bullshit.

    Be someone’s buddy, take care to serve them well and enjoy the ride for as long as it lasts. Everything in the ad game is unfair, stupid and random. Accept this and all will be well… or find another business to be in.

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  25. Jay Pinkert says:

    If it can be argued that there is an upside to war, it’s that battle-tested armies, strategies and tactics are more effective than simulated ones, and the same goes for new business development activities, whether it’s an RFP response or a cold call capabilities pitch. You can’t know what works/doesn’t work without actual field experience.

    Mind you, constant battles without gaining ground leads to war fatigue, and that’s what this post reflects.

    I wholeheartedly agree that you should never respond to an RFP when you’re the incumbent, but writing off cattle calls just isn’t a sustainable strategy. Win or lose, selective engagement in RFPs improves readiness and hones capabilities.

  26. Rachel says:

    Agreed, if the project doesn’t bring in a relationship or challenging work, then I would ignore and pass on the RFP. Otherwise, who knows?

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