Now that we have our PESO Model™ month complete, we can focus on other things. Things such as business growth, using artificial intelligence in your work, leadership, predictive communications, and more.

All of that is forthcoming (which means I have notes about each of those topics in my notebook), but today I want to focus on RFPs. 

You know, the request for proposal that you receive and get all excited about it because it’s typically a large brand, and man, oh man. If you could just win this one, it would change the trajectory of your business. 

I fall victim to this, as well. Right before U.S. Thanksgiving, we received an RFP from the U.S. Postal Service. I sat on it for a good week, trying to decide what to do. On one hand, it’d be really cool to do that work. On the other hand, WE DO NOT DO THAT WORK! Not to mention, I can only imagine what the procurement process is for the post office. That would be enough to put me into an early grave. Ten years ago, we would have chased it, and we would have worked through the holidays to get it done. And I’m sure we would not have won it.

This time, I politely declined it stated our expertise is in SaaS and that we wouldn’t be a good fit. Look how much I’ve grown!

We all do it. We all chase RFPs as if they’re the one golden ticket that will change everything for us. Every time a client says to me, “I got this RFP…”, I interrupt and yell, “NOOOOOO!!!” Sometimes they listen to me—and sometimes they don’t. And it does not give me pleasure to say, “I told you so,” when they pursue it anyway and lose. It makes me sad.

Crazy Payment Terms

Several months ago, the agency world was in shock when Dr. Pepper issued an RFP. The story goes that, after a review of its U.S. water, tea, and juice PR work, they made a stipulation, “Agree to 360-day payment terms or obtain financing from a third-party bank.”

Holy. Moley. 

So not only do you want us to work for free for an entire year, you want us to obtain financing (which, as you know, comes with fees and interest rates) to manage it all? 

As it turns out, agencies are not banks, and the expectation that you would do work for an entire year without payment is ludicrous. You can’t even go to a bank and get a loan without payment for 360 days. The entire thing is insane.

And yet, payment terms continue to get longer and longer. If you work with any large organization, they always claim they can’t pay for 90 days or longer. (I say “claim” because there are ways around that, but that’s a different topic for a different day.) 

We won’t work with anyone who won’t pay us within 30 days. While my agency is on a growth trajectory, the money we make from our work goes to paying employees and contractors. No one is going to sit around and wait for their paycheck. Why would anyone expect a business to do that?

The bigger challenge is that procurement teams are leading the financial discussions, and their job is to squeeze every vendor for every penny they can. Totally understandable. But when you’re a small agency, even the work the procurement agency requires you to do is time-consuming and takes you away from doing your job. 

RFPs Create an Unhealthy Relationship

What’s more harmful, though, is the strain it puts on your team. Imagine how that conversation goes. We won the Dr. Pepper business! Yay! Everyone celebrates. It’s a big brand with a well-known name. Presumably, with big budgets that allow you to do great work and test new ideas. Super fun!

But wait. We’re not going to get paid for a year. Don’t worry, though! We have enough cash to get us through, so you won’t wait for a paycheck. Unless something happens and we lose a client, or there is a recession or a pandemic, or a war. It’ll all be OK!

I repeat: Holy. Moley. 

Here is the thing about RFPs: it requires one party to grovel, jump through hoops, and sometimes even beg. And it’s often required without any clear direction or the opportunity to have conversations with the hiring team to discover what their pain is and put together a proposal specifically for them. (I also have an issue with proposals, but that’s another story for another time.)

It creates an unbalanced—and unhealthy—relationship. It creates an “us versus them” dynamic, and, as I have experienced first-hand throughout my career, it creates unmotivated and cynical team members on the agency side and entitled people on the client side.

Not good.

So, before I tell you to ignore all RFPs, let’s take a step back and ask ourselves, “What is the purpose of an RFP?”

0% vs 80%. You Decide.

Certainly, in some industries, there is a need for RFP: government and associations require them, no matter who you are or what relationships you have. Outside of the required industries, the value of the RFP to the client is to see what their options are, certainly, and to be introduced to new thinking.

And, on the agency side, they can provide an opportunity for bigger brands to get to know you and your team. 

About 10 years ago, we were invited to participate in an RFP. We thought long and hard about it because it was a perfect fit for the work that we were doing at the time, and their CMO was a former client of mine turned friend. We learned that we were going to pitch against Edelman, Ketchum, and GolinHarris. We decided not to do it.

But my friend called me and said, “This RFP was written for you. We really want you to get the work. If we pay for your time and expenses, will you do it?”

That was the clincher for me. If I didn’t have to invest time and resources and just present great work, we would do it. 

We flew to the East Coast and pitched the business like our lives depended on it. And we crushed it. We knew their industry, we knew their business, and we knew their customers. We knew exactly how to help them reach their goals. The pitch was highly customized, and we not only showed what we would do for them but all of the case studies we had of similar work, too. We flew home thinking we had it in our pocket.

Except we didn’t. My friend called me a week later and said we hadn’t won the business—they’d awarded it to Edelman instead. When I asked why, she said, “When you pitched against those giant agencies, you just looked smaller than they are.” I said, “That’s because we are.” She said, “I know. But when we talked about risks and rewards and whether or not you could scale with us, we decided it was too risky.”

Gut. Punch.

I’m not bitter about it because we were paid for our time and our travel, but it was a great lesson. 

We decided right then and there to no longer respond to RFPs. Our win ratio was 0%. But on new business meetings where I could have a conversation with the potential client, dig deep into their pain, and figure out if we could solve it, our win ratio was 80%. 

Kind of a no-brainer, isn’t it?

Whether or not you decide to pursue RFPs is definitely up to you. I’m here to provide you with the collective experience I’ve had, what I’ve seen with my agency owner coaching clients, and what I’ve heard from friends.  

Plus, I really like winning 80% of the new business we pitch. You will, too.

Discussing RFPs, Business Growth, and More

If you’d like to learn more about agency growth, RFPs, and new business, join us in the Spin Sucks Community

It’s a community full of crazy smart professionals. It’s free, it’s fun, it’s smart…and you might just learn a thing or two from your peers. I’ll see you next week!

Gini Dietrich

Gini Dietrich is the founder, CEO, and author of Spin Sucks, host of the Spin Sucks podcast, and author of Spin Sucks (the book). She is the creator of the PESO Model and has crafted a certification for it in partnership with Syracuse University. She has run and grown an agency for the past 15 years. She is co-author of Marketing in the Round, co-host of Inside PR, and co-host of The Agency Leadership podcast.

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