We would all like to achieve high RFP close rates, but unfortunately, that doesn’t always happen. According to an industry study, the average win rate for RFPs is slightly under 5%. This means that only one proposal in 20 is successful.
Presuming that the average size of your proposals is around $20,000 dollars and you end up closing one of these proposals, you gain 20 thousand dollars in net new business. Still, you will also lose an average of 30 hours for each of the other proposals you’ve sent.
Considering an average hourly rate of 25 dollars, you can end up with losing more than $14,000, without taking into accounts costs of opportunity, overhead and many other variables. So let’s see how we can create an RFP response formula that will help you get a higher close rate.
Work using a proposal template
The easiest way of saving time while responding to RFPs is to develop a proposal template. Simple as that. By developing a stock copy for your executive summary and also adding new Q&A responses to a central document, you will end up trimming large amounts of time off your RFP response process.
On average, this will cut the time you need to complete and submit a proposal from 30 hours to a mere 10. Automatically, this increases your productivity rate, which is great news for both you and your company.
Use a knowledge base for RFP response automation
Time is a valuable resource, so it’s essential to manage it properly. Using a knowledge base helps you automate your responses, since you have access to a significant amount of information in one place. Just imagine not having to start over from scratch with each and every proposal.
Keep your eye on the metrics
When it comes to improving the overall RFP response process, there are a few key metrics any manager should follow, if the final purpose is – among others – making use of RFP response automation:
- the average response rate for RFP process agility
- the average team hours for coordinated effort
- the average response time for process efficiency
By calculating and tracking these metrics, you can better understand the bottlenecks in your response process, so you can take the right steps towards improving your organisation. In order to determine the RFP success rate, you need to keep track of specific variables, such as: amount of RFPs received, number of RFPs responded to vs. opted-out of, number of RFPs closed, value of closed RFPs vs. value of unsuccessful RFPs and average amount of time required to complete an RFP.
All this data you gather plays a very important role in putting together a winning RFP response formula and ultimately getting a higher close rate.
Start developing thought leadership
Once heavily reliant on and influenced by sales people, purchasing agents spend a lot of time online, in order to do the majority of their due diligence. Thought leadership is actually unbiased content, providing all the answers needed for the biggest questions on the minds of purchasing agents, as well as their teams. Even more so, it’s a form of content marketing communicated through various channels, like blog articles, whitepapers, videos, and more.
As a matter of fact, 60% of the purchasing decision is now done before an agent has even had a conversation with a supplier. Therefore, if you manage to reach a high thought leadership level as a company, you’re on the right path to getting a higher RFP close rate.
Taking all of the above into consideration, let’s take a look at an RFP response formula that can help you get a higher close rate.
RFP response formula for winning more proposals
1. Think of any proposal or RFP response as a cover letter
If you want a company to consider hiring you, they need a clear summary of what you can offer them and why do you think they will benefit from working with you.
2. Send an executive summary
This shouldn’t just summarise what the proposal is, but state what the prospect wants, where they want to go, and most importantly, what they will need in order to get there.
3. Deliverables and strategy
This is the core of the proposal documents, as it makes it easier for the prospect to understand the different parts of the proposal, as well as the different recommended activities.
4. Project summary
After you are done with the deliverables and strategy document, you can create a list with all the deliverables, as well as a price for each of them.
5. Include an ‘About Us’ section
Ignored by many, but very important. A client who gets to know you will have a better understanding of what you can do for their company.
Don’t forget about adding an agreement or a contract in the proposal, which the client can sign as soon as they make a decision. Make sure that it’s clearly labeled and the dotted line is visible.
7. Use RFP response automation
As we have mentioned before, time is your most valuable resource. Using an RFP response automation tool is crucial for improving your effectiveness and, eventually, getting a higher close rate.
The capability to re-use knowledge assets in RFP responses is the single most important reason why we’ve built Kaito, the newest addition to the Quandora family. Companies create lots of RFP content over the time (lots of duplicates as well), but since it’s not centralized and structured, it’s very hard to find the response to a particular requirement.
Kaito allows you to import your RFP files in the system as a set of requirements (or questions), build the responses using its suggestions, and export the completed RFP in the original file, or other templates. Using suggestions based on a Machine Learning-powered engine, able to identify similar questions in your existing content, Kaito will be able to provide more and more accurate suggestions in time, providing human validation.