Lately, there has been more discussion around RFPs and how frustrating, time-killing and disheartening they can be for many of the parties involved. As the travel industry begins to embrace change and value drivers when it comes to travel programs this is a perfect time to evaluate the time-worn approach to RFPs. We believe that simply changing one word in the RFP acronym will allow us to see and understand more closely what we are trying to accomplish along with the why and how.
Request for Proposal is outdated and reflects a more stringent, structured and old fashioned approach. When we transition from request for proposal to Request for Partnership we begin to look at, in many cases, a more comprehensive, value-driven and longer-term approach. In today’s world of highly specialized, often outsourced and frequently changing business it’s more important than ever that we be comfortable with who we choose to help us take care of our products, employee’s and, essentially brand. Economics is important in every decision we make in the business world, however, in the past, the RFP process has been used more as a negotiation tool, or in some cases an opportunity to simply bludgeon and threaten suppliers on price, than anything.
How many times have we heard one of the following lines when it comes to RFPs:
- “The company makes us do an RFP every XX years whether we like it or not” or some variation thereof
- “Our business has changed and we need to review our agreements”
- “Procurement said we need to get an additional XX% savings”
- “You haven’t fulfilled your commitments – we are looking to change”
- “We need to have an open, transparent process to ensure no bias or unethical activity is occurring”
- “We have to send out an RFP to at least XX companies”
One could spend endless hours replying to the questions above, If suppliers and service providers in areas that are likely critical to your success are simply a transaction provider or process handler then these approaches are perhaps understandable. How the business world has evolved to integrate technology and data-driven views has provided an opportunity to evolve how we view the RFP process and our providers (we’ll talk more about that in an upcoming blog). It’s incumbent upon suppliers and service providers to hold up their end of the partnership as well to ensure that values are provided and economics are real. Changing the underlying thought process and approach to why and when we do an RFP can help ensure that the process is effective, fair and timely as opposed to simply driven by some of the previously mentioned old standards.
When sending out RFPs many companies fail to communicate clearly and simply ask/state what they are they are trying to accomplish. If you haven’t screened a company to see if their culture fits with yours or don’t know much about them don’t include them in an RFP just for the sake of including them. A good rule of thumb to use when sending out an RFP is to ask yourself “do I know as much about them as I would want them to know about my company”?
On the supplier/service provider side many companies have individuals and teams dedicated to ‘bid avoidance’. These additional resources on top of Account Managers, Salespeople, Relationship Managers, and others are clearly an indicator of how expensive and time consuming the RFP process can be for all parties.
All this being said the RFP can be an effective tool when used wisely. If the approach is shifted to one of Partnership versus Proposal the process is likely to be much more efficient and ultimately more successful. Here are some key takeaways that help make the RFP process less painful:
- Clearly define internally what you are trying to accomplish/gain through the process and what truly are going to be the key determining factors for selection. In other words – what business problem/challenge are you trying to solve and are you really willing to change?
- Consider in-person ‘interviews’ taking the place of multiple pages of arcane, obscure questions which the replies to are often not read or given substantial weight in the decision process. Obviously ‘presentations’ etc. are part of the selection process – are multiple rounds and steps in the process really necessary? In other words – does your RFP ask specific questions about the business challenges you are trying to solve or does it delve into topics that are research items for you to know and understand?
- Who do you currently partner with, who would you like to partner with and why for both? If you don’t have a current relationship with a company establish one now, at least 6 months prior to any RFP. Homework is required on both sides – yours and theirs!
- Does your process reflect what you want in a partnership? Are you trying to impress them with a 25 page RFP or are you trying to see if they are a good and capable fit for your company? If other departments are involved in your RFP have they met with any of the candidates previously and what do they truly know about them compared to having heard about them. RFPs shouldn’t be intended to be a once every 3-year update to departments you work with peripherally or directly.
- What unique business insights or mutual offerings can be brought to the table and how deep and wide do you want your partnership to be – understand all parties need to make this a profitable relationship. Transparency and honesty don’t necessarily mean divulging specific numbers from ancillary areas of income such as incentives. It does mean awareness of these and the potential impact on the pricing you may receive in your RFP.
A well thought out process can enhance any RFP process. Take time to make sure what is being asked is relevant and will make a difference in the selection process – if not, get rid of it. A partnership that is built upon candid communication and honest dialogue is one that will be best and, despite how thorough any RFP is, can only be forged over time.