In many industries, the Request For Quotation or RFQ is the standard way of selecting a supplier. The RFQ is provided to a shortlist of potential suppliers with information specifying their requirements for a product or service and request that the suppliers then provide individual quotations. The buying company can then make a choice by comparing the product specification and price included in the individual RFQ’s.
Imagine that you have just received an RFQ from a client they have not seen for a while. You will probably be over the moon that you have been invited and get all excited that you have a chance to win the business. However, how much of a chance do you really have? How much convincing and persuasion can you really do after the RFQ has been received?
Why is it important to sales people:
We have worked with many companies and reviewed how successful they have been on winning business from the RFQ’s that they have received. In every case, it was clear that if they were responding to an RFQ that they were not expecting and had not met anybody at the company who is managing the process in the near past, then their chances of success (their closing ratio) is extremely low. The reverse is also true, the closing ratio when they are 100% aware of the RFQ and have had meetings with all the concerned people is much, much higher.
If this is understood, then clearly salespeople should ALWAYS be proactively making sure that they are aware of ALL potential RFQ’s that are in the pipeline from ALL their target customers. And wherever possible influencing the buyers before the RFQ is even written.
Here are a few things to think about the RFQ:
An RFQ is given out to a variety of supplier companies. They all work hard on it and often put in significant resources as they are excited about having been invited to bid. They work out the best possible prices they can offer to win against their competitors often giving more than they need. Some of the sales team work day and night trying to understand what needs to be done for them to be the hero and win the deal.
Now let’s look on the side of the buyer. They have released an RFQ as they must, it’s their company policy, their way of doing business. However, the company they have been working with for the last 3 or 4 years will almost certainly retain the business unless something remarkable happens.
Let’s assume that the current supplier is good at what they do, and competitively priced. Others may well come in with lower prices but can you trust them? Do you want to build all the new lines of communication that you have with your current provider? Probably not, but the RFQ process is good to keep your current supplier on their toes and provide you with an accurate way of benchmarking prices.
Alternatively, you may find that the customer issuing the RFQ isn’t happy with their current supplier. In this case, it is the new potential supplier that has been in regular contact with them for the last year, putting pressure on the current supplier that is in the driving seat. They know what is in the RFQ, in some cases, they may write the RFQ document and will have already built up a relationship with the buyer over time to eliminate their concerns about switching suppliers.
What do you have to do before the RFQ goes out
In most cases, once an RFQ is released it is too late for the sales person to persuade or influence the buyer. Sounds weird but very true. In many bigger RFQ’s the buying entity are not even allowed to talk to the potential supplier about the requirements of the RFQ.
Tips to remember:
- Don’t just focus on responding to RFQ’s. I have yet to find a business where sitting waiting for RFQ’s and then working hard on the response is more effective than building relationships and understanding prior to the buying process taking place.
- Nurture the clients that have potential, keep in contact even if you know they aren’t buying what you have to sell right now.
- Understand the jobs they have in the future and make sure that they are aware of how your product or service could help them in the future.
- Build an understanding of what is important to them when they award projects.
- Build a relationship with key contacts, not just the person who signs the RFQ.
- Understand their buying/selection process and how it works
- Learn who they have relationships with today and the strength of these relationships.
Once you have done these things, make sure that you demonstrate in your RFQ response how you, your company and your products can satisfy all of these needs and requirements.
Simply put, in most cases if you receive an RFQ from a company that you have no relationship with unless you are much cheaper you have little chance of winning the business.
Make it a priority to always understand how and when your target potential companies buy and over time build relationships that will show them you can be trusted. Even before you are a supplier, convince them that you have the products that they need; and when the RFQ does come, you will already be way ahead of the companies who haven’t done this.
Connect with me on LinkedIn to follow very relevant sales content for you regularly.
You can also join our Sales Advice Club to discuss with like-minded individuals on LinkedIn!
Also follow me on Twitter or Facebook Group.