Why RFP’s Are The Worst Way To Bid Out Your Business


Let’s call a spade a spade: the RFP (request for proposal) process sucks.


It inundates everyone involved and leaves your team agitated and exhausted — not to mention a number of other pitfalls that make the process so cumbersome and ineffective.

But don’t get me wrong. As a business, you need to vet the agencies you’re looking to hire and you need to make sure they’re the right fit for both your company and the project, are capable of executing at a high level, and fit your budget. With that in mind, I’ve come up with some alternative options for the rough-but-necessary RFP.

Before we get into the many pitfalls, though, let me attempt to be unbiased (which I’m not — I hate RFPs… as you might have guessed from the title) by covering the advantages of RFPs for businesses.


ADVANTAGES


1. Free ideas


This is a big bonus for businesses bidding out their work to agencies. As part of the RFP, many businesses will ask the agencies for free ideas/spec work to help them understand how they think and how they’d approach the problem. This can give a business great insight into what they can expect from the agency (although there’s even pitfalls to this as well, which we’ll discuss later).


2. Cost savings


Bidding your business out to a number of agencies is a great way to save yourself a few pennies. As bids start to come in, you’re able to leverage one offer against another in an effort to drive all agencies’ fees down. As they say, “a penny saved is a penny earned.”


3. Driver’s seat


This one is a bit more subconsciously done, but one benefit of bidding out your business through an RFP is that it keeps you in the driver’s seat of the project, rather than to give “power” away to the agencies. This makes a lot of sense at first glance — business owners want to control as much as they can in their business in an attempt to save money and prevent any catastrophes from hurting their company.


Now, let me remove my unbiased façade and talk a little about the disadvantages of RFPs.


DISADVANTAGES


1. Free ideas


Yup, you guessed it — I’m going to talk about the back-sided weaknesses of each of the advantages I outlined above. The problem with free ideas is that they tend to have very little value in the grand scheme of things. In the scenario of the RFP, free ideas are given with very little (if any) true knowledge of the ins and outs of the problem. And while some of these ideas might sound glamorous or innovative, without a thorough diagnosis of the problem, every free idea/solution is merely speculation.


2. Cost savings


You may jump for joy by saving a few dollars on these bids, but trust me when I say that it’s done at your detriment. Let me explain: when you pit agencies’ bids against one another, you’re likely to spark a “race to the bottom” price war. Again, YAY for savings, but all a price war really means is that you’re going to get a product/service that’s done on a shoestring budget. And when your project is of extreme importance, do you really want to pay the cheapest agency?


To compound the issue, when an agency is putting together their original proposal, they’re doing so without true knowledge of the problem nor what the true solution will be. Because of this, they’re going to pad their prices to protect them in case they missed the mark on their projections. When partnered with the price war, this means that you’re getting lesser quality products for the same padded price.


3. Driver’s seat


Let me say this as delicately as I can: in order for your project to succeed, you need to NOT be in the driver’s seat. Case in point: you wouldn’t be needing to hire an agency if you being in the driver’s seat actually worked.


I’ll let that sink in.


You’re excellent at doing what you do and the agencies are excellent at doing what they do, so it’s to your benefit to let the agency sit in the driver’s seat. Rest assured that they will take care of your project knowing that they have a vested interest: they only win if you win.

This isn’t to say that you shouldn’t be actively involved in the project (in fact, you should be), this simply means that you should trust the expert agencies with solving the problem that your business faces. Let their unbiased eyes and experience bring a new perspective to your situation. If you bring your biases into the project, you’re very likely to steer the project towards less effective outcome. And if you’re spending a large sum on the project, you don’t want this!


Now that we’ve addressed the issues that are inherent in RFPs, let’s take a look at some alternative options that provide you a ton more value and significantly decrease wasted time and irritation.


THE NEW “RFP” PROCESS


1. Do some homework


Find 3–4 agencies that are reputable and have experience in the area you’re struggling in. Reach out to your business contacts and even people within your industry if they’ve worked with any of the agencies you’re considering. While past success doesn’t guarantee future success, it does help to mitigate some risk in your decision making process.


2. Invite each agency for a 60 minute in-person conversation


There’s so much you can learn from an agency simple by visiting with them in person. Are they prompt, are they engaged, do they ask great questions, do they fit your business culture, etc. This is where the RFP process fails, as it’s designed to limit face-to-face time.


3. Review 1–2 case studies


Instead of asking for speculative ideas on a problem the agency knows very little about, ask them to review 1–2 case studies of former projects that are similar in nature to yours. This is a great way for you to understand how they think, how they attack problems, and how they might address yours.


4. Hire your top agency in a phased/tiered approach


When you’re looking to hire an agency, it’s typically for a large, expensive project. The idea of trusting a project of this magnitude to a new relationship can be a bit of a nail-biter. Instead of putting all of your eggs in one basket, why not hire your top agency to run a diagnostic/audit on your businesses problem?! This is a great way to mitigate risk and to test the new agency out. Pay them a small percentage of your project budget to come in to diagnose the problem for you. The last thing you want to do is self-diagnose. A doctor doesn’t allow you to do that and you don’t want your agency to allow you to either!

If by chance you didn’t like the engagement, you can pivot to agency #2 and use the recommendations from #1 as their roadmap. This will also help to reduce costs because the problem has been diagnosed by an expert and the agency can remove the budget padding they would have included otherwise.


On the other hand, if you enjoyed your partnership with agency #1, then you’ve successfully significantly reduced the stress, time and agitation that comes from the traditional RFP process, along with having identified a long term partner for your business.


P.S. If you’d like to learn more about how to properly hire a creative agency, check this short video out…