Problem: Many distributers are frustrated because they have to participate in a competitive bidding process to obtain business. Winning is often based on having the lowest bid. More than in any other type of sale, the buyer is in total control of the process. All information is disseminated to the bidders at a common bid conference and individual meetings are rare. The seller has no advantage over his competitors and frequently is reduced to guessing what his company will need to win the bid. If there are six qualified distributers bidding, your chances are less than 20% of winning the bid. And if you’re the “lucky” one that is awarded the bid, chances are your margins won’t be as healthy as you’d like.
Analysis: Typically, prospects use the bidding process to avoid having to deal with salespeople. But for the salesperson, failure to have access to the buyer is a recipe for disaster. You must find a way to take control from the buyer if you are to improve both your chances of being awarded the bid and arrange to generate higher profit margins on the contract. In other words, submit the bid on your terms, not the buyer’s. To do this, we suggest the following “re-direct” strategy.
Solution: Get the buyer aside and say the following, “We’ve looked at the bid specs and see some problems. It looks like you might have made some mistakes in planning. If we bid the contract the way it’s set up, you’re going to have problems. By the way, have you ever awarded a contract only to discover that there are cost overruns, lots of change orders, and the work not done on time? That’s probably because the specs were flawed from the beginning.” (Most contracts have cost overruns, changes orders, etc. because the specs are often flawed, so the buyer can always relate to that.)
Continue with this tactic to take control of the bid process. “If you want us to bid, here’s what we suggest…let us come in and review the bid specs. We’ll have to charge for this service, but you’ll get it back if we are awarded the bid. I’ve got to tell you one thing, we’re higher but you’ll make up for that during the course of the contract since there’ll be less cost overruns, etc.”
Sell the analysis. If you find gaps or flaws in their specs and you have a solution that can correct those then re-write the specs to favor your company and enjoy a much higher close rate and higher margins.