Knowing when to invest your time and resources on developing a proposal can be just as important as submitting a good one. In this article, we will try to explore the question of when the time is right to submit a proposal.

Lead to Order

Let’s take a step back for a minute and talk about Customer Relationship Management (CRM). There are several business processes encapsulated in CRM, but the one we’ll discuss today is called Lead to Order. Depending on what CRM system you are using it might be called something different, but even and most especially if you don’t use a software system to track CRM, you should familiarize yourself with this process if you’re in the business of selling services. Let’s take a look at the figure below.

The process starts with a lead. The “lead” is the specifics related to the services that the prospective client requires, while the company itself is termed a “suspect.” This word literally comes from the fact that you “suspect that they may want to do business with you” but you’re not sure.

Often when a company calls, the Sales person’s head furiously spins with expectant joy. Every call is a potential commission, so the call is made to get out a proposal ASAP. Ultimately this means assembling a team consisting of business analysts and usually including a project manager, to perform discovery of the prospective client’s requirements, estimate the work effort and develop a proposal with scope, deliverables, timeline, milestones and price, usually in a frantically short period of time.

But does this really make sense? Will this take time away from servicing the needs of your current, valued customers? Selling software and/or services is about establishing a relationship that is built on trust. The suspect must trust that you can deliver the services that they expect. But, and this is where some sales teams seem to miss the mark, this relationship of trust is a two way street. You must trust that there really is an opportunity here.

Lead to Opportunity (or Qualifying Suspects)

The first sub-process of Lead to Order, during which you qualify the suspect, is called Lead to Opportunity. When we “qualify the suspect”, we are determining whether there’s a real chance your company can make a bit of coin out of it. So the object of Lead to Opportunity is to investigate the suspect until you can establish trust in the fact that there really is something going on here. How you do that will vary depending on exactly what types of services you are selling. My company sells software, so let’s say the suspect is looking for someone to develop a custom software system for them.

If there is an opportunity, then usually all of the following questions can be answered as “yes.”

• Do they have a budget for the project, perhaps not yet approved, but at least well on its way to approval?
• Is there some driver that makes them want to change the way they are currently doing business? For software systems, this usually involves a change to automation or in the method of automation.
• Do they understand that their suppliers (in this case, our company that develops software), are in the business to make money and that these services should result in a fair rate of return to the supplier?

The challenge is for your Sales team to earn the prospective client’s trust sufficiently to clearly and unequivocally determine that these three basic questions are true, because most of the time you can’t simply ask them outright and expect a straightforward answer.

How do you go about earning that trust, while at the same time qualifying the suspect to ensure that a tangible opportunity exists?

One of the most effective means of establishing the answers is by engaging them in a feasibility study or gap analysis (or whatever other term you choose to call it). This gets you in the door, establishes your credibility, helps you to gain their trust and provides you face time to explore the three basic qualifying questions without them realizing that you’re probing for those specific answers. This is business consulting and the company should be charged a small sum that is sufficient to at least recoup your costs for the initial discovery. If you’ve found someone that is willing to pay, you can take some comfort in knowing that you probably have both a prospect and an opportunity. This is a trigger that confirms further investment in a full-blown proposal for their software system is likely to be a good one.

Once you begin to establish trust, the suspect will most likely be much more open about many things. They still may not share with you the specifics of the budget they have approved for the project, but it’s likely you’ll at least hear a little history of what went into getting the project’s budget approved, especially if there were challenges (people love to talk about challenges they’ve overcome). By asking open-ended questions or leading statements such as, “so I bet it was challenging to get a budget approved for this project,” are quite likely to draw them out. If you’re on good terms with them, it should be pretty easy to spot cases where they’re being disingenuous. It is unlikely that they’ll lie directly about any of the fundamental questions, but you should be circumspect in identifying cases where they may exaggerate a little.

Be sure not to let your Sales team beguile you into the shotgun approach to proposing work for potential clients. Insist on the sniper’s approach: stalk your target, establish the conditions for the carefully aimed shot and then take it. The sniper’s motto is: One Shot, One Kill and the same applies to issuing proposals. Nearly every proposal should result in a sale assuming you perform your due diligence, so keep track of your proposal to win ratio.

There are other ways to qualify a prospect, but rest assured that if you make no effort to do so, you’ll be shooting out tons of proposals that bear no fruit. One of the best ways to determine qualifications is to confirm that the suspect has thought through what they’re asking you to do. Have the benefits to the client, i.e., the motivations for a change to the way they’re doing business, been clearly described? How do these benefits quantify with respect to these important, expected business results: 1) improving revenues, 2) reducing costs or 3) improving customer service? Pay close attention and document what you hear, because this information will be invaluable to you once you actually start developing a proposal. Here is where the paid consulting engagement can really pay off – help the prospective client think through the benefits of what they’re asking for.

Have you ever been confronted by a case where a suspect issues a Request for Information (RFI), that he wants to use to establish the amount of budget he should allocate for a specific project? Whenever you see an RFI, you can almost bet that this is the case. There is no harm in putting in some effort to satisfy an RFI, as long as you know exactly what you’re getting into, if for no other reason than it puts you in the running for when they actually are ready to submit a Request for Proposal (RFP). Be careful though when you are given an RFP but the true meaning of it is an RFI. The suspect may not have intentionally been trying to deceive you, but the result is the same – you’ll end up expending a whole lot of effort for a very little (or possibly no) return.

For each suspect that turns up, your sales team should be required to answer the three fundamental questions as honestly and as completely as they can. My suggestion is that they include probabilities that their answers to the fundamental questions are correct and that they provide as much corroborating evidence as possible. A good Sales Manager or Director should be able to sift through the results and determine whether they make any sense or whether further investigation is necessary.

So let’s say you’ve done your due diligence and everyone is convinced that this is a qualified prospect and the job truly represents an opportunity to generate some business. Prospect is actually an abbreviation for “prospective customer.” That’s right! He’s not a customer yet. The definition of a customer is really quite simple: they’ve paid or are paying you money to complete a work product at a profit. For the sake of this definition, any paid consulting engagement to qualify that company does not count because it is usually too short term and/or too small a sum, and may simply cover your cost. In other words, there was probably little or no profit in it.

Another thing to remember is that just because a company has been your customer in the past, doesn’t mean they’ll continue to choose you for the next job. You may have the inside track because of this, but the three fundamental questions still apply to the next prospective job. Many companies are required to seek alternate bids, so taking this for granted may cost you additional un-recompensed work. Each time a new services delivery is contemplated, even for an existing customer, you should remember that for this service they’re only a suspect until they are qualified.

Of course, let’s not forget that during the qualification process there are likely to be cases of suspects that do not qualify. That’s right – they have not passed whatever litmus test you’ve established to qualify them as a prospect and confirm that there is actually an opportunity here. If you’re timid about this, you might as well ignore everything I’ve said up to this point. Unqualified suspects should be rewarded with the minimum amount of effort to ensure that they don’t waste your valuable time, but that you’ve considered their opportunity and just don’t feel right about it at this time. If you try to be positive about the case, there’s a good chance they’ll consider returning the next time around.

Opportunity to Quotation

When you do find that you’ve got a prospect with an established opportunity, it comes time to develop and submit a proposal. There is usually a quotation along with the proposal, so the sub-process is called Opportunity to Quotation. Submitting excellent proposals is essential to closing deals, but the mechanics of doing so are beyond the scope of this article. Suffice it to say, you’ll need to dive more deeply into discovery and deliver a document that clearly shows you understand what it is that the customer needs.

The benefits that will be delivered to the prospect by whatever system or service you’re delivering are integral to the proposal. If you followed my earlier advice, you’ve already documented these and the more tangible the better. These are a strong selling point within the proposal as it establishes the expectations to all the people that will need to read and evaluate your proposal. Doing an excellent job of documenting the benefits is likely to impress them more than any details you’ll include about the work, especially if you do it much better than the competition or their internal resources have.

Quotation to Order

Finally, the last sub-process of Lead to Order is Quotation to Order. During this stage you should keep careful track of how close this opportunity is to a final closing (technically this is known as a “win probability”). The sub-process involves negotiation, perhaps discounting and maybe even a bit of revision to the proposal you just spent many hours preparing. This is where you’ll find out if your proposal was good enough. You either win the business or you do not. Winning the business is not however the sole criteria of whether a proposal was successful.

Submitting proposals is essential to services companies to win new business. Beware of spending too much time on fruitless efforts because you may find yourself with little time left to service your paying customers. Once you have submitted a proposal to a qualified prospect and they accept, now you have a customer. And that, my valued readers, is something you can take to the bank.