Can I win more deals and ensure they are profitable? Does this sound as improbable as, "can I have my cake and eat it too”? What can organizations do even before the sale is won, to steer their efforts towards winning profitably.
To Win or Not to Win! Is probably never the question.
Most of us want to win all the bids we compete in and we want them to be profitable. Both these objectives together probably also sum the job description of the CEO of a B2B turn-key solution provider. What kind of an organization you are or what kind of priorities you have at a given point in time will dictate your strategy – either go after wins and sacrifice margins or win only profitable deals. Overall, it’s fair to say that one without the other is not going to be a great outcome.
How then can organizations ensure they meet these twin objectives. Here are some suggestions:
1. Take holistic account view (not just the deal P&L) – Given the nature of the business, we mostly make bid P&Ls. While this is absolutely required, how about an account P&L – one which combines the margins of the previous projects, current deal and also the upcoming opportunities. This will give a comprehensive picture of the account and can better guide the pricing decisions regarding the present opportunity. Sales teams mostly request for higher discounts or lower margins. That may seem over the top. But if we know that they are attainable based on previous projects, and are also aware of the fact that 2 large projects are coming up we would possibly approach the margin ask differently.
2. Qualify early - We know the old adage - never respond to the RFP you have not been involved in drafting. But that may not be the option always. You next best position is to build more rigour in the Go : No-go decision. Collate data from previous bids to determine the level of risk and relevance you are happy to tolerate and compare the current bid basis on the baseline. The decision makes itself. Many a times organizations limp around this step and then regret that they did make a whole-hearted effort
3. Leverage the pre-bid meeting - Pre-bid meetings are a great opportunity to gauge the direction of the deal. Is the customer amenable to our way of thinking, or is he biased? Does she view the tender as an opportunity to improve her business or merely tick-off the specifications? A stringent customer not open to logical suggestions implies either he is not solution focussed or is already heavily inclined to another vendor. Time to rethink the deal.
4. Don’t short-change the technical approval process – This is probably where you get to see a lot of push and pull. Whether it is estimation or configuration, most sales teams want to keep it to the bare minimum whereas the technical teams what to create an art installation. While it’s quite tempting to reduce the resources or the configuration to keep the price down, it usually hurts more in the long run. The right balance matters.
5. Let all stake holders have their say – Risk, finance, QA are probably the most conservative folks on earth. But by the same measure most sales folks are overly exuberant. There’s a reason to the balance. There’s no fun in winning a bid only to see it turn red coz the decision makers turned a blind-eye to some of critical risks. A prudent assessment is your best insurance against a deal going sour later.
6. After you have won – Contract negotiation is an extremely crucial step in ensuring
every rightful dollar. While it’s not wrong to be in a comfortable mood, how you handle this
process can determine if you can add another 1% to the margin or lose 2%. As the project
progresses timely CRs, renewals all count. Because if the project is executed successfully the
chances of going aggressive in the next bid are that much more.
Needless to say, there are many more variables on the delivery side. But as they say better begun is half won. The earlier you recognize and determine your deal strategy, the better are the chances of it turning out the way you planned – profitable.
Comments and observations welcome at firstname.lastname@example.org.