4 Reasons Why RFPs Don’t Work and What You Should Do Instead
If you have spent any significant time in the business world, chances are that you have been exposed to the old-fashioned method of vendor selection known as the “Request for Proposal”, or RFP for short. While RFPs are generally created with good intentions, there are some major drawbacks to the process that can end up costing you time, money, and aggravation. This is especially true when dealing with a service-based situation, as opposed to purchasing a commodity, such as office supplies. Here are some things that you may want to keep in mind the next time your company is considering issuing an RFP, as well as an alternative route you may want to try instead.
Think back to the most successful job interview that you ever went on. There likely was a significant amount of back and forth in that conversation. They were asking questions, you were asking questions; the conversation flowed naturally. That type of communication allows the company to determine not only whether a prospective employee is competent, but whether or not they’re a good overall fit for the organization as well. However, when it comes to an RFP, which is basically just another form of interview, you lose that essential two-way communication. You are essentially giving an exam, as opposed to digging beneath the surface in order to find out whether a potential partnership makes sense for both sides.
Furthermore, based on how an RFP is written, it has the potential to completely block out innovative solutions. We see this in the fleet industry all of the time. A company has been leasing their vehicles in a certain way for so long that their RFP leaves no room for alternatives. This causes the company to completely miss out on the potential value that a different approach could provide. An RFP restricts the company from keeping an open-mind to solutions that they may have never even considered. In addition, many quality companies will refuse to respond to an RFP, thus further narrowing the number of potential solutions for your company.
RFPs are also not extraordinarily conducive to developing long-lasting business partnerships. Think about your best clients. Most likely, they have been working with you for many years. You know their business, and they recognize the value that you provide to theirs. It is not a relationship that was built overnight, but rather one that took years to cultivate. Now imagine if that client shopped you out every few years, making you respond to a litany of questions. Your relationship with that client would be completely different. That is what an RFP does. An RFP changes the dynamic from a strategic partnership, to a simple vendor transaction. For businesses who are just looking for the lowest bidder, an RFP works fine. However, for companies who are truly seeking the best solution for their business, an RFP is most likely not the avenue they want to take.
It is also important to remember that a good presentation does not necessarily translate to a successful outcome. Many companies go through the RFP process, only to become dissatisfied with their selection down the road. Just because a potential vendor can put together a long, detailed presentation, does not mean that they’re the right partner for your company. As previously mentioned, one of the many shortcomings of the RFP is that it does not allow for adequate two-way communication. As a result, you may miss out on an opportunity to partner with a company that would provide real value, simply because their RFP response wasn’t as slick as another competitor’s.
So, what is a more efficient method that your company could try instead? It starts with narrowing your list. There is no reason to reach out to 30 different companies; it’s a waste of time. Do some research, ask around, and try to find a few companies that are most likely to be a good fit. This step may take a little legwork on your part, but it will serve you well in the end. Once you have your short-list, pick up the phone and give them a call. A phone call will allow you to gather some general information, and determine whether or not you could potentially see yourself working with this company. From there, if you like what you’ve heard, invite them in for a meeting. This is where you can get to know each other in a more in depth manner, and possibly hear some solutions that you may have never considered. From that point, you’ll be able to make an informed decision based off much more than the answers to a bunch of RFP questions. Conducting your search in this manner can end up saving your company time, money, and frustration over the traditional RFP process.