The Wired versus the Unwired

Here's a piece of traditional sales wisdom: "Winners never quit, and quitters never win."

Nonsense. We believe that most organizations don't quit often enough, or early enough, when the odds are against them. Without a defined sales process, they don't know that the odds are against them.

Consider the case where a firm receives a "wired" request for proposal (RFP) that requests responses from ten vendors, and a sales manager authorizes the 60 hours needed (by multiple people) to prepare a response. (By wired, we mean that the fix is on, and the process is not truly open.) Would you agree that the salesperson who generated the initial interest, and shaped the RFP's requirements with a bias toward his or her own organization's strengths, has a 90-plus percent probability of getting the work? We would.

Now let's say that six other organizations choose to respond. What probability will the salespeople from those six firms enter on their respective forecasts? In most cases, the win rate on unsolicited RFPs is less than 5 percent. But if a salesperson were honest and assigned a 5 percent probability to this effort, his manager would almost certainly ask why 60 hours should be spent in crafting such a careful response to such a low-percentage opportunity.

Experienced salespeople skirt this issue by assigning even the wildest long shots at least a 50 percent probability. If you think about it, being a salesperson is one of the most measurable jobs in the world (percentage of quota obtained), but one of the least accountable. The 60 hours are spent, and when the order goes somewhere else, that opportunity quietly falls off the radar screen. In this example, even though only one favorable decision could possibly be made, six organizations within the vendor community have acted as if they all had at least a fifty-fifty chance at getting the contract.

This points out the fact that in defining your sales process, it may make sense for your organization to define two RFP processes. One should be for RFPs that your company has proactively uncovered and driven. A second one could be defined for RFPs in which you have been mainly reactive—that is, not well positioned to influence any of the requirements in the RFP prior to your receiving it.

To give you an idea of win percentages: We worked with a company selling enterprise software that had an entire department that did nothing but respond to RFPs. The previous year, they had reviewed their records and divided RFPs into proactive and reactive initiation. They discovered that in 1 year they had responded to 143 unsolicited RFPs that required an average of 75 hours—and got the business a grand total of three times! Long story short: Responding to RFPs that you did not initiate can be a huge drain on your resources. Consider segmenting your sales process, and investing your limited resources where they'll give you the most return.