Managing the Proposal Development Process
The key to managing a successful services firm is staying focused on two initiatives: delivering superior client services and maintaining a steady new business pipeline. Working in concert with lead generation activities, the proposal development process is a service firm’s gateway to new clients and opportunities. As such, it commands a firm’s resources in the form of executive commitment, investment, and continuous improvement.
Services firms are generally organized in one of two ways: as a partnership or corporation. New business development responsibilities at partnerships fall on the shoulders of the partners; corporate entities operate more traditionally, employing a salesforce.
An effective proposal development process f lows as follows:
1. Management and sales evaluate the opportunity to gauge its worthiness.
2. Assign a point person to manage the process once a “go” is determined.
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3. Conduct preliminary meeting with prospect to present qualifications and gather detailed requirements.
4. Assemble the necessary experts inside the firm to discuss the project and determine the specific resource requirements.
5. The point person develops the proposal and distributes for review and feedback.
6. The proposal is delivered.
7. Negotiation and follow-up questions may ensue, and the point person accesses necessary experts and /or executives to address the issues.
Though the process management is fairly straightforward, a variety of factors contribute to regular and predictable new business acquisition:
• Effective lead generation techniques: At-bats are important.
• Strong frontline people: The quality of your business developers is paramount, since they are perceived as being directly representative of the quality of your firm (unlike product salespeople, whose wares can stand on their own). Partners selling services they deliver on personally is ideal but costly, especially when the sales cycle for big projects can last months and run hundreds of hours in investments. Nevertheless,
smart account managers are what prospects are looking for, not shal-
low salespeople.
• Team involvement: When service delivery professionals are included in business development efforts and have a say in the process, they are much more likely to provide positive support to the ongoing servicing of that new client. They can also offer valuable insights, though they admittedly can sometimes hinder the process as well if not managed
properly.
• Establish the process and get out of the way: Senior management, if not directly involved in new business development on a daily basis, will often be enticed to become overinvolved with these activities given
their high stakes. But this can become counterproductive and hurt
morale. Work hard to implement a solid process and then oversee it regularly, but keep a distance.
Related Documents
The main purpose of proposals is to secure new business with a new client.
But a variety of documents are involved with either the new business development process or with the working relationship with a new client. These documents are described here:
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• Request for information (RFI): An RFI is a document issued by larger or governmental organizations that are seeking to establish their short list of vendors for evaluation. RFIs are sent to 8 to 15 or more firms for completion, requesting general information about the vendors, with information organized in such a way that facilitates comparisons.
The first time a firm completes an RFI, it is a time-consuming pro-
cess. But future RFIs take less and less time because they are often similar in structure.
• Request for proposal (RFP): An RFP can follow an RFI process or be issued standalone. An RFP usually provides a fair amount of information about a project—the premise is to provide enough details so that firms are able to develop a proposal in response. However, there are usually holes in the RFP that must be discussed with the prospect.
RFPs are widely used in public work—federal, state, and munici-
pal—where formal processes are in place to try to guarantee objectivity.
They are also used in the commercial sector. Because of the nature of RFPs, responding blindly—without establishing a relationship with the buyer—results in low conversion rates. Make every effort to make contact with the buyer and assess the opportunity before walking down this path, which can be costly and rarely yields new business.
• Master services agreement (MSA): An MSA is used by many service companies that do business with clients regularly over the long term—
consulting firms, IT services companies, marketing companies, and so on. The document governs the overall terms of the relationship between the client and a vendor—issues such as ownership rights, fees, payment terms, termination, confidentiality, and so on.
The MSA is effective because it allows clients to call vendors and
request support quickly and easily without having to issue formal paperwork. Many of my firm’s MSAs specify that any piece of work that
requires fewer than 30 hours can be completed based on a telephone
call or e-mail, whereas projects that require 30 or more hours require a statement of work.
• Statement of work (SOW): An SOW describes a specific project being completed, along with its details. For example, when Pixel Bridge contracts with a new client to build a new web site, it executes two documents: an MSA, which governs the general terms and conditions of the relationship, and an SOW, which describes the specific web site development project.
An SOW provides a blueprint for the project, describes how a proj-
ect will be completed, and assigns responsibilities. In the web site development example, if the proposal requires 1.5 pages to describe the project and how it would be completed, the SOW requires 6 to 10 pages because of the additional detail.
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• Change order: A change order is issued when something changes during the project that falls outside the SOW. This generally happens when a new requirement is added to the project, such as a new system feature, or the project is expanded to include an additional assignment outside the original scope (e.g., instead of recruiting one sales executive for the client company, why don’t we recruit two while we’re at it?).
Change orders have enormous importance in the professional ser-
vices industry given the prevalence of scope creep. When clients are managed properly, scope creep is readily apparent and easily accounted for through the use of change orders; when projects aren’t documented properly from start to finish, getting clients to pay additional fees for additional services can be a nightmare.
Keys to Success
Professional services firm executives are ambivalent about the exact role the proposal plays in the new client acquisition process. “In a best-case scenario, proposals aren’t delivered until the very end of the sales process and aren’t very important at all,” says Alan Osetek of Carat Interactive. However, anyone who’s been around awhile knows that best-case scenarios are the exception, not the rule, and that many cautious, risk-averse buyers use the proposal as an important tool for selecting service vendors. And its role differs depending on the service being provided, the prospect’s industry, and a thousand other possible criteria. Nevertheless, there are four keys to successful proposal development, regardless of the service specialty or industry being served.
Hunt Wisely
Determine where your firm has a meaningful competitive advantage—making sure you can serve that market segment successfully and profitably—and focus new business acquisition efforts squarely on that sector. Establish and maintain a high profile in that sector so prospective buyers can find you. If you have an elephant gun, go elephant hunting and stay away from the small game, no matter how attractive it may seem. This approach will provide a solid foundation for the proposal development process and improve conversion rates. “My firm is three years old and growing. In the early days we took on a few clients that were out of our focus area because we felt we needed to be aggressive. In every case the situation failed and put excessive pressure on the firm that comprised our health and distracted us from much more important business development initiatives,” says Antony Abiatti of SCS Financial Group.
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Allocate Resources Intelligently
New client acquisition opportunities never materialize as often as we’d like, so it’s important to make the most of them. Put your best resources on the job and be diligent in follow-up and nurturing a new relationship. Get a system in place and follow it; be process oriented. The first meeting with a prospect is critical. The firm must do whatever it takes to make a positive first impression—that means bringing in senior resources if the prospect has been qualified—and walk prospects down a proven path to convert them to clients. Too many services firms f lounder not because their service offering is weak or market demand is soft, but because they presumptuously assume that prospects should be able to easily recognize their value, and if they cannot, tough. That approach may work for a lifestyle firm whose staff is content earning a comfortable living serving a handful of clients, but growth-oriented firms need to get serious about business development to prosper.