Q. How do I insure that I get the last look in a competitive bid situation?
A. This is a question I’m often asked. In a lot of industries, particularly those involved in construction, government purchases and large-volume manufacturing, most of the customers require an official bid. It’s not unusual for these to be highly formal and structured.
Here’s a typical scenario. The customer sends a bid to five suppliers, and each responds with a written document by a certain specified date. The customer reviews the bids, and awards the business.
The writer of the question wants the ability to go in after the bids have been submitted, to look at the competitive bids or at least the lowest bid prices, and to change his/her prices in order to be awarded the business.
First, it should be noted that in some instances, the “last look” is illegal. In many cases, it’s viewed as unethical. In other industries and situations, it’s viewed as business-as-usual. This question and answer is only relevant to the latter situation.
I have responses for this on several different levels: 1. Avoid a bid situation to begin with, 2. Make a last look unnecessary, 3. When all else fails, insure you get a last look.
Let’s think about each one separately.
1. Avoid a bid situation to begin with
OK, I know bids are standard operating procedures in your business. But, I also know that a lot of business is “negotiated.” In other words, the customer selects the vendor he/she wants to work with, and then negotiates the best deal with that customer.
I’d much rather you get yourself into a negotiating rather than a bid situation. That way, you’d avoid the bid scenario altogether.
While it is true you’ll never convince 100 percent of your customers to negotiate with you rather than send out bids, if you are successful over the next few years in moving 20–30 percent of your customers to negotiating status, you’ll see a tremendous improvement in your sales.
How do you earn that position? Build powerful business relationships, be a reliable supplier and offer a special relationship - “negotiating” - with all your good customers.
In other words, bring the subject up regularly, plant the seed in your customer’s brain, tell stories about how you were able to work effectively with others – how they cut costs, paperwork and time out of the cycle by working with you.
If you are good, and persistent, you’ll eventually convert a significant chunk of your customers.
Some of you who have been in my programs have heard me tell the story of how I did the most profitable transaction of my life in an account whose policy it was to bid everything to five vendors.
2. Make a last look unnecessary
The whole concept of a “last look” implies the reason the customer would do business with you is you are the lowest price of the group of bidders. While there is a time and place to be the low price, I’d like for you to question whether or not this is how you’d like the customer to think of you.
If you have done a good job in the past for the supplier, become the low-risk supplier, understood the customer’s situation at a deeper level than your competitors and have communicated those things in a persuasive way, then the customer should be happy to do business with you even if you are not the absolute lowest price.
So, rather than try to be the low price, I’d prefer that you do a deeper, better job of selling this account so you don’t have to be the lowest price. And that means that you have created powerful, trusting relationships with the key people, you have understood the dynamics of their situation at a deeper and more detailed level than any of your competitors, and that you have fashioned a unique proposal that meets their deeper needs.