Competition is fierce for top paying projects. Multi-million dollar projects are a lot like a beautiful spring flower that attracts hundreds of bees—they attract hundreds of bidders.
In the cruel world of business, everyone cannot partake in this flower. For million dollar contracts, there can only be one winner.
From project kick off to compiling your bid, this process will normally take a few months to a few years.The higher the amount of the project’s value, the stronger the competitors surrounding you will be and the more of your company resources will have to be invested in the whole project process. When projects are in the multi-million dollar bid range, your organization is going to need to invest more company resources into the bidding process, which means that your organization really cannot afford to loss.
Every opportunity and market environment is unique. Being a C-level member of a sales driven company, your strategy is most definitely to efficiently and effectively allocate your limited resources to pursue top level projects.
This can be a daily challenge that you are facing—identifying opportunities, monitoring the sales progress, formulating and implementing strategies on those projects, and ultimately securing the multi-million dollar deals at a reasonable margin level.
Every opportunity and market environment is unique. Requirements differ widely from project to project.
Are there any strategies that can be applied generally to help you increase the chance of your company winning project deals in the million dollar range?
The RIPS strategy
RIPS is an acronym that represents four key processes or strategies that can be implemented in a sales driven organization to help you increase your chances of winning those million and multi-million dollar projects.
RIPS stands for Relationships, Information, Price, Solution
In order to explain more easily to readers who may not be directly involved in the sales process, I made some change in the order of the strategy.
“I” represents information. It includes all necessary and critical information on deals such as budget, time frame, requirements, user organization and structure, key decision makers and decision processes, etc.
The early stages of the project you can get necessary project information, and the more options you can take in to formulate your future winning strategy. The depth and accuracy of information you can get will determine the high level to which your strategy can be executed.
If you are the first solution provider and can successfully influence the key decision makers to accept your product or service specification as the technical or service standard in the tender document, you have put yourself in a very favorable position towards the entire tender procedure.
“S” represents the solution or value your organization can offer to a client. A unique and irreplaceable solution which can perfectly fulfill the user requirement is an ultimate goal for the organization.
However, in many cases, for some political or personal reasons, the client isn’t allowed to have a single vendor or supplier, so they are forced to introduce some forms of competition among the suppliers in order to get the best price or terms these suppliers can offer.
This leads to margins being cut. In these cases, open tendering is a common process the client will use. Some suppliers feel frustrated when the deal is entered into the open tendering process, and end up thinking that the tender process will reduce winning possibilities and overall margin.
However, there are still some ways to reduce the impact on your chances of winning and on your profit margin, even in the cases when it is an open tendering process. I will discuss this in future articles.
“R” represents relationships. Relationship building is a mutual, interactive process, and is different from a simple friendship. The bond is characterized by trust, respect, and/or mutual benefits. Sales processes or even tendering is kind of process which involves human factors. Once the processes have humans involved, personal decision and judgement can be affected or influenced by your relationship with the decision makers.
There are hundreds level of relationships between the clients and the suppliers such as personal, relative, class mates, ex-colleagues, same members in a golf team, or just business lunch friends.
In some common cases, relationships between relatives will be stronger than the relationship of classmates from university, for example. The relationship level between classmates may tend to be stronger than ex-colleagues. The relationships between those who served in the same military team who have been in war zones together, will undoubtedly have a stronger relationship than indirect relatives, such as distant cousins.
In some Asian countries you may notice a sudden appearance of a wide variety of agents telling you they have good relations with the key decision makers and help you to secure the million dollar contract. Being a sales professional, you should have a very full and clear picture of the relationships and background of key decision makers inside client organizations or between business partners you are managing.
“P” stands for the total price of your solution and it affects chance of winning the deal. Client relations, the uniqueness of your solution, and the quality of the information you have always affects the final price of your offer.
From the supplier’s side, they prefer to offer the solution at the highest margin possible while the experienced client will expect to get the solution at a reasonable and affordable price.
In many cases, the lowest price offer does not necessarily guarantee a deal. In fact, the majority of clients don’t favour suppliers who offer the lowest price, as they know they may face unexpected troubles if the project price is unreasonably low. No normal commercial organization will keep a long term deficit project P&L in their account book. The supplier is always forced by management to find some way to get money back for covering the loss in the tender bid price. In many cases, conflicts will be raised when the client requests to increase the amount or tries to claim more money over the awarded project price.
The four strategies outlined in RIPS are interrelated and affect each other. The whole RIPS process and strategy is dynamic and continually changing to fit the different stage and timing of a million dollar deal. I will further discuss in detail each element of the RIPS strategy in future articles.