8. Technology and Proprietary Rights Group of Weil, Gotshal & Manges LLP, ed., Intellectual Property & Technology Law Journal (New York: Aspen Law & Business, 2000).
9. Jennifer Peloso, ed., Intellectual Property (New York: H.W. Wilson, 2003).
7
Proposal and Reference
Management
TIM BOURGEOIS
Services are invisible. Services are just promises that somebody will do something. How do you sell that?
— Harry Beckwith, Selling the Invisible 1
This chapter addresses the role of proposals in the professional services firm business development cycle and how to manage the proposal development process most effectively. When viewed as a stand-alone document, the proposal is a straightforward item that can be 50 percent to 80 percent standardized across most prospects, depending on the specific nature of the services being pitched. However, when viewed as a component of a business development process, the proposal and all of the steps that lead to it and follow its submission are a complex system of interdependent actions that, when successfully applied, lead to regular and predictable new business generation.
To that end, this chapter addresses:
• The role of the proposal: How proposals are used in the business development process.
• Presenting proposals: Many sales processes begin with an opportunity to provide an overview of your firm, which is essentially a phase one proposal.
• Written proposals: The basics and nuances of developing a formal, written proposal.
• Pricing and negotiating: How to price projects and negotiate effectively once the proposal has been submitted.
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• Follow-up and closing: How to manage the follow-up process and close new business.
• Managing the proposal process: If not managed properly, firms can waste hundreds or thousands of valuable hours on futile business development activities.
• Complementary documents: Many related documents are used before, during, and after the proposal submission.
• Keys to success: How to optimize your firm’s proposal development process.
This chapter is organized similarly to the professional services business development process outlined in Chapter 5: prospect identification, generating genuine prospect interest, identifying a specific need and solution, delivering a proposal, and managing the postsubmission process. This chapter also consistently advocates a systems-based approach to managing the proposal development process. Too often, professional services firms suffocate and squander their precious resources because of ineffective business development practices that involve virtually meaningless proposal submissions in situations where the likelihood of success is remote. This chapter provides a foundation for avoiding that pitfall and creating a sound business development system for your organization.
Why This Topic Is Important
Depending on the source you use, 50 percent to 90 percent of the $7 trillion U.S. economy is service based. Manufacturing jobs continue to transition offshore, and the United States has evolved into a mostly knowledge-based economy. For example, IBM overhauled itself over the past 10 years and now derives more than half of its $89 billion in sales directly through services activities. Name a well-respected large company—GE, Citigroup, Wal-Mart, and so on—and you can bet the organization has integrated an aggressive services-based strategy into its plan over the past decade.
The service sector is booming, and that’s great news for anyone with a knowledge-based offering. The bad news is that it’s very competitive. Harris InfoSource estimates there are more than four million services firms in the United States with 25 or more employees or 10 or more professional services staff. That means there’s one established services firm for every 72 people in the United States. These numbers don’t even take into account the hundreds of thousands of “mom-and-pop” shops out there.
At the high end of the market, the largest services companies are beginning to creep into the small and mid-size marketplace due to increasingly competitive conditions for services contracts among the Fortune 1000.
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The Front Office: Driving Sales and Growth
Leading professional services firms have gotten savvier in their pursuit of new business over the past decade, employing time-tested techniques of their product-based brethren, such as aggressive advertising and highly formalized customer acquisition efforts.
So, it’s a competitive market out there. However, small and mid-size professional services companies continue to do a poor job in their new business development efforts, which translates into enormous opportunity for organizations that take business development and proposal management seriously.
Emerging services companies that develop formal marketing and sales plans and diligently pursue them can enjoy tremendous competitive advantage that leads to rapid growth.
In the sales and marketing process, a good proposal serves as the final confirmation before landing a new client—it’s the powerful closer that is sum-moned in the ninth inning to strike out the side. But a good closer is rendered effectively useless if the team can’t establish and hold a lead into the late innings of the game.
The Role of the Proposal
According to the American Heritage Dictionary, a proposal is defined as: 1. That which is proposed, or propounded for consideration or acceptance; a scheme or design; terms or conditions proposed; offer; as, to make proposals for a treaty of peace; to offer proposals for erecting a building; to make proposals of marriage.
2. The offer by a party of what he has in view as to an intended business transaction, which, with acceptance, constitutes a contract.
In the business world, a proposal is generally presented to one of two audiences—new business with a new client or new business with an existing client—but can take many forms, including:
• A conversation with the prospect
• A conversation with an inf luencer (an employee, colleague, investor, partner, etc.)
• An e-mail
• A letter by postal mail
• An in-person presentation
• A public speaking engagement
• A formal proposal
• A response to a request for proposal (RFP)
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It’s important to avoid getting too caught up in the technicalities of what a proposal looks like. Nearly all selling situations require some kind of formal, documented confirmation of the work to be done to be executed. But that doesn’t minimize the importance of other proposal interactions. A good business developer is always on the lookout to help individuals in his or her sphere of inf luence solve problems. And that’s at the heart of a proposal: providing solutions and ideas for problem solving, whether the problem is declining market share, impending litigation, or an atrophying technology platform.
What’s more, a proposal plays vastly different roles in the selling process depending on the service being provided. Architects and insurance and real estate professionals rely more on the actual proposal than do management consultants or advertising agencies. Exhibit 7.1 illustrates one insurance executive’s view of the role of the proposal in the selling process; while many of the points are applicable to all professional services, others are industry specific.
The Selling Process
At the highest level, selling professional services follows a generic sales process as illustrated in Exhibit 7.1, which highlights where the proposal fits into the cycle. Once a lead is acquired—a monumental task in itself and addressed in Chapters 4 and 5—the work, in many ways, has just begun.
Lead acquisition
Research prospect and hold brief telephone interview
Preliminary discovery
to establish needs and potential fit with firm.
Meet with decision-makers at prospect. Discuss
In-person meeting and presentaton
needs in detail and present qualificaitons.
Does the characteristics of the lead align with my firm’s
Lead evaluation and approval
ability to serve it successfully and profitably? Is the lead
a qualified and motivated buyer?
Develop a proposal based on needs identified in
Proposal development
face-to-face meeting and budget availability.
If necessary, make revisions to proposal based on
Refinement, negotiating, adds/changes
conversations with prospect.
Commence project
Exhibit 7.1
The Professional Services Sales Process
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The Front Office: Driving Sales and Growth
Each stage along the process should reinforce your firm’s value proposition to the client and involve a go/no-go decision. “Selling services is a process of seduction, not brute force,” says Jim Jonassen, partner at Riviera Partners, an executive search and placement firm. “Desperate moves are quickly identified by prospects, and no one wants to do business with a desperate firm,” he notes.
PRELIMINARY DISCOVERY. Preliminary discovery determines whether the
prospect has the potential to be a good client for your firm. There is a definite, though sometimes difficult to identify, differentiation between good business and bad business, also known as the qualifying or prescreening phase. This phase includes examining:
• High-level needs
• Industry specialty
• Availability of buyer/decision maker
• Credit history
Most of the areas can be understood through secondary research and a brief telephone conversation with the prospect. Though it depends on your pipeline and sales structure, securing an in-person meeting with a prospective buyer—assuming a financial decision maker or senior staffer who inf luences spending decisions will be present—is almost always a good idea.
Regardless of whether the potential to serve that organization is a perfect fit, you’ll be giving your firm the opportunity to display its capabilities and make a favorable first impression, which often leads to related opportunities.