Many clients come to JMA excited about tender, bid and proposal “opportunities” and wanting help. It never ceases to amaze me how many are eager to throw everything into a bid without first establishing the value of potential revenues – that is, the size of the prize.
This is often true, even when they are incumbent service providers.
I will ask, “How much revenue is this client generating for you at the moment?”, and a common response is a shrug and sheepish “I don’t know”.
Before you decide to bid, you must size up the opportunity. It will help you get a sense of proportion with respect to the time, money and other resources you choose expend in pursuit of the “prize”.
How to dimension the size of the prize
Your answers to the following questions will be important to determining what is up for grabs.
If you are incumbent (or have done some work for the client in the past), do you know how much revenue the client generates? Finding out can be as simple as checking your invoices. The bills always tell the story!
If you are not an incumbent, do you have any idea of the value of work on offer?
Other questions that will help you determine the size of the prize:
- How many providers currently service this client?
- Who are the incumbent providers? Do you have any insight into their current charges?
- What panel size is envisaged after this process?
- Is the vendor planning to reduce the number of external service providers?
- What is the tendering organisation’s approximate annual spend on these services? Can you find out? If it is a government department, agency, authority or other entity you can often request this information. Annual reports can be a good source for government and publicly listed companies.
- How does this annual spend break down by category or area of expertise?
- How is work distributed to incumbents?
- Are user departments compelled to use the selected providers, or does work go off panel? If so, under what circumstances?
- What is the expected duration of appointment?
- What changes (e.g. legislative or regulatory) are expected which may significantly impact (positively or negatively) the value of this work and its fee potential?
- What cross-selling opportunities will there be to expand and grow services provided to this client if you do win?
By determining the size of the prize, you can better assess your prospects of success and make a sound decision on whether this particular bid, tender or proposal is the right one for an investment of your time and resources.
Download part 1 of Win More Tenders to help with better decision making.
Never miss a post
Stay up-to-date with business development insights and tips from our blog.
If you’re new to the world of tenders (or were just curious about the meaning of some common ‘tender’ terms) this is the tender definitions blog for you! What is a ‘tender’? Tender has a few meanings of course (it can mean ‘sensitive’ for instance), but in a commercial context ‘tender’ means preparing and submitting […]