By: Michael Rega

Publication: The Advisor
Date: April 2009

 

Have you ever spent thousands of dollars responding to a request for proposal (RFP), using your most qualified and experienced employees or affiliates, only to lose the business to a firm that appealed to the client’s emotions better than you did? If you have, you are not alone.

 

Consultants often view an RFP as a technical device, but it can be more. Putting forth professional technical skills in the document may not be enough to win the business.

 

A familiar dilemma: a client knows what s/he wants, but this may not be the same as what s/he needs. Suppose a client has been cited for an OSHA violation or s/he must meet fire code requirements on a renovation project. To the client, the action is the result of a necessary evil. This client wants the problem to go away as cheaply and quickly as possible. It can be difficult to convince them that they could save as much as 30% of the whole job if they take the required action up front rather than having to retrofit something because an agency mandates the action. Trying to convince firms to institute a comprehensive health and safety program because it makes good business sense is even harder.

These tasks are possible, but they require that consultants use sales skills rather than technical skills. Because clients often look for a quick, easy and economical solution, they issue an RFP, which often leaves little room for creativity on consultant’s part.

 

PRICE COMPARISONS

 

Sometimes the clients already know whom they want to give the job to but want to be sure they receive a competitive price. An RFP can also be used to create a leveling effect. The client wants to find two or three firms that are equal and acceptable and let them fight it out.

 

The customer tries to convince the vendor that all things are equal. This puts the potential client in a position to claim that the vendor’s multiplier (burden rate) is too high or senior-level personnel is billing for work that a junior technician could perform as well. The client may also say the vendor needs to gain more jobs in the locality or type of industry and should buy in on this first piece of work.

 

In these cases, the potential client tries to reduce the consultant’s professional service to the level of a commodity product. Standalone products/services have value added and command premium prices. Commodities are homogeneous and highly price-sensitive.

 

For example, if you drop the price of Cadillacs, you do not significantly increase the number of cars sold. In turn, if you raise the price, you do not significantly decrease the number of cars sold. People buy Cadillacs because they believe it is a value-added product. Whether it actually is unimportant.

 

On the other hand, Chevrolet is far more price-sensitive. If you raise the price, you will push consumers into Buicks or Mercurys. Drop the price and you will pull consumers out of the used car market. A Cadillac is perceived as a value-added product, while a Chevrolet is perceived more like a commodity. Cadillac has created an image.

 

Perception may not be fact, but in marketing, it can be a reality. If the prospective customer feels more comfortable with one vendor over another, it quickly becomes reality when your firm loses the job. Both firms have substance and both firms are qualified to do the project. Perception can impact decision as easily as style impacts substance.

 

SELLING CONCEPTS

 

The secret of marketing is to consider the concept side of the marketing situation. Here is an example of how an SH&E consultant makes a mistake when calling on a prospective client:

• Consultant: I wanted to talk to you today about an employee right-to-know program currently required by the government.

• Client: Let’s just let sleeping dogs lie. Besides, if we need a program, we probably would use the firm we have used for years. We are very happy with them.

• Consultant: I know the firm you mentioned and they do fine work. However, let me explain our qualifications and experience in this area. We have a dedicated full-time training staff who can run your programs, or if you prefer, we have a total courseware package geared just for your industry.

• Client: Well, you have convinced me that you are the most qualified to do the job. In fact, if we ever decide we need an employee right-to-know program, your firm will get the business.

 

Unfortunately, the consultant focused on the brand side of the sale instead of staying on the concept side. He should have been selling for the whole industry. He should have said, “Mr. Client, the firm you mentioned has fine people and perhaps they should do the employee right-to-know program for you. Why don’t we discuss with you and your general manager, the benefits of such a program before we discuss who should do the program?”

 

Is it necessary to sell for the engineering firm your prospect currently uses as well as yourself? Absolutely- that is the first rule of concept selling. The one who sells the concept is usually in a strong position on the brand side of the sale. If your firm has total service capabilities, then you should be selling the concept of buying from any multidisciplinary firm. The one who sells the concept of “a comprehensive safety and health program” will be in a strong position on the brand side.

 

In some cases, you can offer a different way of solving their problem. Do not sell apples to apples. If the client is happy with its present firm, you will not convince them that you can outperform that firm. Introduce another method of solving the problem. Then let the present firm justify why it did not recommend this better approach.

 

The decision maker on the concept side of the sale is often different and higher in management than the decision maker for the brand side of the sale. This is not always true but picture this situation. You respond to an RFP to implement a respiratory protection program.

 

You visit the plant and discover that the majority of the problem could readily be corrected with a manufacturing process change to a less hazardous chemical. This change would also reduce the amount of hazardous waste generated, so you can save the client several million dollars, but what you need to recommend is outside the parameters of the RFP. Further, this is one of eight sister plants and the quote came out of corporate headquarters from one of the technical staff groups. You must make a concept sale.

 

Brand sales merely shuffle market share and as a result, are highly price-sensitive. Concept sales add value to the market and, therefore, are far less price-sensitive. Sell a firm on the concept of a computer software program to manage its chemical inventories and in many cases, it will not go out to bid and you will not be nickeled and dimed over the price.

 

Price is the common denominator for equating value. The customer negotiates, uses RFPs and does whatever s/he can to convince the vendor that all things are equal. This forces the consultant into a reactive marketing posture. The consultant must learn proactive marketing. Learning how to sell concepts is a strong way to tell prospective clients that all things are not equal.