Winning your next bid without killing margins or destroying brand value
The first thing most key account leads do when putting together a competitive bid is figure out how to “make the numbers work”. This type of analysis is based on assumptions about your buyer’s value of price, timing, what level of margins your company can “live with”, and how much revenue your company can bring in over the life of the contract. Over time, this approach often leads to shrinking margins and devaluation of a company's brand.
A better approach is to begin your analysis by looking beyond the request itself and determining what the buyer ultimately values. Then, structure your bid to help your buyer most effectively create and capture that value. This can be accomplished in three sequential steps:
1. Expand the bid
What other products or services can you bundle in with your bid to increase the amount of value captured by the buyer? As the B2B supplier, you are often the expert in areas such as education, market research, marketing support, business intelligence, and competition. Leveraging these types of areas in your bid reduces risk and potential costs to your buyer while increasing the likelihood of higher sales to their customers.
What are your competitive advantages versus other bidders (speed, supply chain, service, reliability, returns, environment, proximity, etc.)? Which of these does your buyer value and why? How do you strategically include these advantages in your bid to maintain your margins and brand loyalty?
2. Focus the offer
There are a number of areas of “pain” that your customer cares about far more than the cost of your product or service. Focus your total offer to address two or more of these areas. Note the following examples.
Growth: How does your offer help the buyer increase growth in units, revenue, and/or customers?
Mission: How does your offer help the buyer achieve their mission through funding, partnerships or participation?
Customer Value: How does your offer increase the buyer’s customer value proposition? What is the impact on the buyer’s average order value, customer loyalty metrics, or lifetime value?
Competition: How does your offer increase the buyer’s competitiveness in ways beyond price?
Budget: How can you structure your offer to offset or mitigate your buyers budget constraints?
3. Validate critical assumptions
During the bid window, it is important to test and validate the critical assumptions underlying your offer and pivot as needed. Resources you could consider in this validation stage include: current buyer contacts, former buyer contacts, industry consultants, buyer customers, and end-customer market research. Make sure the buyer knows of your efforts to understand their business and submit a total offer that addresses the enhanced scope.
Summary
When it comes down to it, your buyer likely has a pretty good gauge on your costs, lead-times and margins. So spending time “sharpening the pencil” in these areas doesn’t add much value to the bid process. Creating and submitting offers utilizing the three steps shown above are the key to winning bids that deliver significantly more value to your buyers while preserving your company's margins and enhancing long-term brand value.
