Selling: There’s more than one way to skin a cat
“Oh no, it’s disastrous. Our services have been bundled with a whole load of others. We can’t even influence the total price!”.
Have you ever found yourself in this position? Don’t panic, there’s still time.
For sure, having a workscope that is written for you (by you?) is ideal, but in reality, this doesn’t happen very often, especially if you are a smaller specialist provider. Once a workscope has been defined, approved by management, partners and regulators, it is highly unlikely that it will be changed. However, as the old expression goes, the “devil is in the detail”, and generally high-level approvals leave the details to people who are running the bid. We’re going to look at two of these details, one of which is very much within your control and the other less so. Let’s get the worst one out of the way first!, as it refers to a critical factor, the evaluation model.
Whilst many companies and regulators put strict controls on tenders to safeguard ethical practices, there will always be some freedom for evaluators to avoid automated selection of sub-standard suppliers, or at least short-list those suppliers they believe will deliver most comprehensively. Knowing how a workscope will be evaluated is therefore absolutely central to being part of this short-list. The commercial double-whammy for our sales team here is that no matter how aggressive their pricing is, there will be no certainty that will be enough to win the whole package on price. To make things worse they risk reducing their own market rate for the future. Clearly you need to be able to ascertain what percentage of the total package offer your services constitute. Tools exist to help you do this. If you contribute less than 75% of the evaluation total (which is frequently the case), being simply price aggressive is a risky ploy.
This brings us to the second factor over which you have more control. Assuming you will not be the contract holder, who will you sub-contract to? Will you pick a single partner or maximize your chances via multiple potential contract-holders? Here alignment is important. If your collaboration can help a bidder become more competitive, you have a mutual benefit to be gained especially if you complement their own offerings. If you represent a possible duplication of offerings with the contract-holder, you must assess the risk of only supplying some of the work if the contract-holder is successful. Think how you could nuance your support from one contract-holder to another. You are under no obligation to provide the same services (or even pricing) to all bidders.
As a subcontractor, your impact on a contract-holders proposal depends in large part on the evaluation model of the end-user. If the contract-holder can make it over the technical hurdle without you, then your support is less important. If on the other hand the evaluation ranked or scored technical strength, then you could find yourself in the position of king-maker.
Today, many large packages are split between 2 or 3 suppliers, so who will likely win the biggest packages? How will work be allocated post award? If it’s on performance, will your contribution be measured? These are considerations you need to decide upon as early on in the sales cycle as possible, especially if you believe you can significantly strengthen a single contract-holder’s proposal.
The final consideration to take into account is how you can improve your negotiating position with the contract-holder if you are all successful. This doesn’t have to be conflictual but is a business reality all the same. Let’s start by safeguarding your expected workscope. It is very tempting for a contract-holder to sub-contract the smallest amount of work, keeping as much as possible in-house. However, this is not necessarily to your benefit as a sub-contractor. Creating the perception of integration of your own offerings both with the end-user and contract-holder is an important BD activity for you. For example, if you plan, design, or customize your offerings, the expertise needed to do this is as important as the core offering itself. Following Michael Porter’s sustainable competitive advantage concept, the more elements that make up your successful offering, the stronger your negotiating position with potential contract-holders. What you take for granted may not be what your competitors are even capable of doing, but if you see no value in it, for sure no-one else will.
Understanding how any proposal will be evaluated will provide you, as sub-contractor, with the insight to decide your own bidding and negotiating strategy. You may well have more control over your destiny than you believe at first sight. Don’t forget there are many ways to skin a cat!
