VALES CONSULTING GROUP, LLC
Helping Great Clients Dominate Markets
Joseph J. Vales 125 Wappanocca Avenue
Senior Partner Rye, New York 10580
To: Clients and Friends
From: Joseph Vales / Gilbert Parker
Subj: RFP Proposal Process: Emerging Trends / Best Practices
Date: April 17, 2009
Vales Consulting Group is pleased to send you this Summary Report that we prepared on the
RFP Proposal Process, which covers the Emerging Trends and Best Practices of U.S. service
providers in both the ITO and BPO segments of the outsourcing field.
This report is based on original research we conducted during Q1 2009 on the RFP Proposal Process,
to identify the emerging trends and best practices among the leading outsourcing service providers.
We interviewed 15 senior executives including Vice Presidents of Marketing or Sales; Directors of
Strategic Bid Centers or Proposal Centers; Global Client Service Executives; and RFP Advisory
Firms. The report also reflects our in-depth knowledge of the RFP proposal process, having led,
managed, and authored over 300 successful proposals to the senior managements of Global 1000
companies over the past 30 years, with contracts valued in the billions of dollars.
We present our report in the following three sections: Emerging Trends, Best Practices, and
Recommendations – which will give you practical ideas for improving the sales-effectiveness
of your company’s proposal process, so as to win more new business in this global recession.
Also, the Attachment outlines the more critical areas where the proposal process most frequently
breaks down, and where providers need to strengthen the weaker links in their process.
Offshoring. About one-third of the U.S. service providers we interviewed have begun offshoring
proposal development and production work to their client service centers in India or Philippines.
The offshore proposal managers (writers) and knowledge managers prepare about 70%-75% of
the proposal with the standard content and answers to frequently asked questions. The remaining
25%-30% of the proposal is customized content that the US sales leaders, solutions developers,
and subject matter experts draft to meet the prospect’s special service needs and requirements.
This division of labor enables providers to respond to RFPs better and faster as buyers shorten
the proposal submission time to only 2-3 weeks; it also reduces the ever-rising cost of sales.
Bid/No-Bid Decisions. Virtually all of the leading U.S. service providers are becoming much
more selective in qualifying prospects that are the right opportunities for them to pursue, so as to
increase their proposal win rate and reduce the cost of sales. Many are using more sophisticated
qualification scorecards and automated modeling tools to predict the “probability-of-winning.”
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Value Propositions. Buyers and their RFP advisors are increasingly asking bidders about the
business value they will deliver to their companies. In their RFPs, they are asking bidders to
discuss the value propositions and value-added services they offer their companies. Buyers
expect at least a 20% cost reduction/savings to justify any outsourcing program, plus other
strategic, operational, and technology benefits as well. To be sure, “Best Total Value” is
becoming the new standard for evaluating/selecting service providers.
Budgeting Pursuits. The most successful service providers have been budgeting for mega-deal
pursuits for some time; but an increasing number of providers are now beginning to budget for
medium-size deals as well, as budgets drive better behavior throughout the proposal process.
Budgets for smaller-to-larger deals can range from 0.5% to 1.5 % of total contract value.
Two Processes. The leading service providers are running two different proposal processes: one
for the larger, more customized outsourcing deals; and one for the smaller standardized deals. An
increasing number of these smaller proposals are handled entirely by offshore teams.
Proposal Quality. The quality of proposals written offshore has traditionally been a mixed bag
for many years; but the quality has improved dramatically in the past few years as the leading
service providers have recruited and trained highly educated professionals for proposal writing.
Win Rates. Proposal centers are being measured more on their win rates and dollar value of new
business brought in, rather than the number of proposals produced per year or the productivity
of individual writers. It’s all about the revenues and profits generated and the total cost of sales.
Proposal Process. Nearly all of the leading U.S. service providers say they have a formal
proposal process in place – which typically ranges from 25-50 steps (or more) with 4-5
executive review checkpoints. But with respect to how they document their processes, only
a small number of firms have an official RFP Proposal Manual or Sales/Proposal Playbook.
Centralization. About a third of the leading U.S. service providers have totally centralized
proposal centers; another third have centralized proposal centers along with several regional
centers throughout the US and/or the world; and the other third are totally decentralized by
region or service line. The most successful firms are largely centralized, which we consider a
best practice, because of all the synergies of teams working together in the same location.
Organization. Companies with revenues in the $1 billion to $3 billion range and a centralized
proposal center typically have about eight FTE employees. This includes one Proposal Center
Director, two senior writers, two junior writers, one knowledge manager, one graphic designer,
and one administrative assistant. Each writer handles 1-2 large/medium proposals a month,
or 3-4 smaller proposals a month. Larger companies may have up to 20 FTE employees, plus
free-lance writers as needed, to handle higher proposal volumes and peak workloads.
Marketing Departments. About half of the leading U.S. service providers provide Marketing
Department support to the RFP proposal process – corporate profiles, facts/figures, thought
leadership, case studies, executive references, and research/analyst reports. The other half
provide little or no Marketing Department support for new business proposals, which is a major
shortcoming of their sales efforts. Among the more successful outsourcing providers, marketing
is fully integrated with the sales proposal process, which we think is a best practice.
Knowledge Managers. About half of the leading U.S. service providers have Knowledge
Managers currently in place supporting the RFP proposal process. While some are based in the
U.S., most work at their companies’ client service centers in India, which is known for business
analytics and knowledge management. Their role is to collect, analyze, update, and distribute
the latest, best-written, and approved information to proposal teams. This ensures high-quality
proposal content and consistent messaging, while also reducing proposal development costs.
Competitive Intelligence. About one-third of the leading U.S. service providers have some kind
of a Competitive Intelligence group or function in place to support the RFP proposal process.
Their role is to provide market intelligence on major competitors, including global resources,
capabilities, services, value propositions, strengths/weaknesses, and proposal strategies/tactics.
The other two-thirds of the providers have only limited ad-hoc information on competitors.
Technology. Virtually all service providers have some sort of technology platform to support the
proposal process. We estimate that about one-third have home-grown software at the enterprise
level; another third use Sant, Pragmatech, and eRoom at the business unit level; and another third
use any of 25 software firm offerings for different industries or product-oriented offerings. Also,
many companies use the Microsoft SharePoint software for team collaboration and publishing.
Workflow. No firm that we know of has workflow software built into its technology platform
to manage the complex RFP proposal process more effectively and efficiently, given the many
different players and inter-dependent steps involved in proposal development and production.
Win Rates. Proposal win rates are typically in the 20% to 30% range for large mega-deals where
there is a lot of competition among the Top 10 ITO and BPO service firms. Win rates for routine
mid-size contracts in different market segments typically range from 50% to 75% where certain
stronger players may dominate their niche markets.
Government. Service providers with large federal or state/local government businesses have
dedicated proposal centers located around Washington DC and State Capitols. They also have
specialized proposal processes to meet the unique requirements of government contracting.
Incentive Bonuses. Most U.S. service providers give commissions and/or bonuses to their sales
leaders for new business won; some also give annual bonuses to their solution architects who
play a key role in securing new contracts. Only one firm we know of gives incentive bonuses to
the entire proposal team that wins a major deal. For example, a lead proposal writer can receive
a spot bonus of as much as $10,000 for a major new client win.
Given the Emerging Trends and Best Practices discussed above, we recommend below a number
of practical proposal strategies and tactics that are easy to implement and that can make all the
difference between winning and losing major new business opportunities:
Winning Proposal Strategy. Conduct a 1-2 day RFP proposal strategy planning session so that
all bid team members can build the winning strategy and be on the same page as to what it will
take to win the account. For major opportunities, attendees should include the bid/pursuit leader,
sales leader, client service leader, account manager, solution architect, domain specialist, subject
matter expert, proposal manager, and marketing manager – sometimes HR and Finance. Team
members need to come out of the proposal strategy session with a common understanding of
exactly what they need to do to put the agreed-upon strategy into action on a coordinated basis.
Such planning sessions are critical to winning new business, because they keep everyone on
strategy and on message, totally focused on the prospect’s RFP objectives, goals, and service
requirements, and communicating effectively with the company’s key decision makers.
Robust Value Proposition. Corporate buyers want to get more business value out of their
outsourcing relationships, and are asking bidders to present more complete and substantive
value propositions in their written proposals. Service providers should offer more robust, multi-
dimensional value propositions that go beyond basic cost savings and reductions. They should
include a wide range of client benefits in seven important areas: economic, strategic, operational,
technology, human resources, risk management, and corporate sustainability. These benefits
should be tailored to the specifics of each client’s outsourcing program and quantified as much
as possible for maximum impact. Providers should compete more on the total business value
they will deliver – and the many benefits the client will enjoy – rather than have to compete on
the basis of price or cost alone, especially for services that have become commoditized. A clear,
concise value proposition, communicated effectively throughout the entire proposal process, can
put your firm far ahead of the competition if they can’t get their value proposition together.
C-Level Cover Letter. Prepare a highly personalized and persuasive 2-page Cover Letter to
build rapport with the prospect’s C-level executives and any RFP consultants advising them on
vendor evaluation/selection. The Cover Letter is your first opportunity to build a meaningful
dialogue with the top decision makers, and to show that you really understand their outsourcing
requirements and priorities. The letter should communicate high-level messages about achieving
their RFP objectives and goals, your robust value proposition offering a wide range of benefits,
your customized business/technical solution, your highly credentialed global leadership team, the
resources and commitments you will make to the company, and the client benefits and results
you expect to achieve. Also, plan to have 2-4 of your senior executives sign the Cover Letter, to
demonstrate top management commitment to the success of the outsourcing program, especially
if the prospect will be a client of the Office of the Chairman/CEO, as we recommend for your
larger accounts. Bid Managers and Sales Leads should not be the only ones signing the Cover
Letter; prospects want to see senior executive sponsorship of their outsourcing programs.
Powerful Executive Summary. Prepare a high-level, high-impact Executive Summary that
brings together in one place all of the dozen or so reasons to select your company, not just some
of the reasons. Remember, the most important decision makers may only have time to read the
Executive Summary of the various bidders’ proposals. Also, the Executive Summary will be
circulated to the technical reviewers along with their respective sections for scoring. So your
summary has to be a complete and persuasive sales document that stands on its own and really
distinguishes your firm, value proposition, and proposed services from the competition. Most
RFPs require that bidders include an Executive Summary in their proposals; many specify a limit
of 10 pages, while some may set a limit of only 5 pages, and others may set no limit at all. Work
within these limits, and know that any firm that fails to provide such a summary will likely lose
points in the scoring or even be disqualified for non-compliance with the RFP instructions. For
larger opportunities where there are many decision makers worldwide, we recommend preparing
a separate Executive Summary brochure for wider distribution to the decision-making group.
Section Summaries. Prepare 1-page summaries that would lead into the various RFP sections
or groupings of questions or requirements of the proposal document. These summaries would
provide highlights of your response to those sections and questions, extend and reinforce the
continuity of messages with your Cover Letter, Executive Summary, and Value Proposition –
and thereby help readers conclude that your firm has the best-total-value solution and client
service delivery plan. The most important sections where 1-page summaries would be especially
helpful include the Business/Technical Solution, Transition/Implementation Plan, Organization/
Staffing, Account Management, Pricing/T&Cs, and Supplier Resources/Experience. These
summaries could be either narrative paragraphs with a general overview of the section, or a
series of 5-10 bulleted items with bold headings that summarize key points about the section.
Relationship Building. Develop effective working relationships with key executives at your
most important target companies early on during the pre-RFP stage – to help them identify their
outsourcing needs, pre-sell your services, and influence any RFP documents they issue in your
favor. Work closely with the company’s designated RFP contact(s) who can provide valuable
direction and advice during the proposal process, including feedback on your proposed solution
and client service delivery plan. Work closely with the third-party RFP advisors the company
may have engaged to manage the proposal process; they can also advise you on key steps in the
proposal process, your proposed solution and service plan, and the vendor selection criteria being
used to evaluate the bidders. Finally, identify one or two company executives who would be
good coaches to guide you on management’s hot buttons, concerns, and priorities as they will
impact your proposal strategy and tactics.
Oral Presentation. The oral presentation is where the proposal will be won or lost. Written
documents get firms to the orals, but the client service team must personally sell the work to the
key decision makers. First, get company feedback on your written proposal, what the executives
like and don’t like, so you can address their questions and concerns. Select the best presentation
team, matching the number/level of presenters with the executive attendees; your senior client
service executive should clearly be in charge. Prepare a slide presentation (and handout) so
executives can follow the speakers, take notes, and have a convenient hard-copy as they make
their selection decision. Allocate 2 days to conduct 3 dress rehearsals for a polished presentation.
Anticipate the tough questions and develop the best answers. At the orals, build personal rapport
with each of the individual executives. Speak with energy, enthusiasm, and conviction. Come
across as friendly, sincere, trustworthy, and committed to the company’s success.
Site Visits. Organize and provide an exciting site visit experience with a “wow” factor that the
prospect’s managers will remember, as the site visit is often the last critical step in wrapping up
the lengthy sales proposal process and closing the sale. The most important factor is for your site
directors and specialists to be fully briefed on the prospective company, their RFP objectives and
service requirements, vendor selection criteria, and what they expect out of the site visit. Your
presenters should also understand your firm’s proposal win strategy and the key selling points
to emphasize that come out of your cover letter and executive summary which they should read.
This way, they can customize their prepared remarks and questions/answers to talk more with
the prospect about meeting their special needs and interests – instead of giving the same canned,
boilerplate presentation about the client service center that all visitors get. Everything you do
and say has to be connected to the prospect’s RFP objectives and your proposed service plan.
Also, visitors expect to meet the leadership team members and supervisors who will serve them
throughout the contract; so you need to make firm commitments of the key people who will be
responsible for your various services; otherwise, the visitors will leave very disappointed.
Pro-Active Follow-Up. After the orals and site visits, follow-up with the key decision makers to
get their feedback, answer any questions, clarify scope of work and fees, negotiate contract terms
and conditions, and close the sale. Stay in close contact with the prospect at all times.
Win-Loss Analysis. Institute an ongoing program of conducting win-loss analyses of major
proposals, to identify the real underlying reasons for winning or losing, to assess your strengths
and weaknesses against selected competitors, and to take corrective action to fix any problems
or shortcomings in the proposal process. For best results, engage an independent outsourcing
consulting firm for interviewing your pursuit/sales teams and the appropriate buyer executives
to uncover the buyer’s wants/needs and why/how they made their selection decision.
If you have any questions about this outsourcing report, or would like additional information,
please call Joe Vales at office phone (914) 967-3200 or cell phone (917) 592-8939.
Summary Report Prepared by:
Vales Consulting Group
April 17, 2009
Please see the Attachment on the following page.
Where the RFP Proposal Process Breaks Down
The RFP proposal process for outsourcing service providers is a lengthy, complex, and costly process –
involving the firm's senior executives and many inter-related proposal activities, meetings, documents, and
presentations. Everything has to be planned, coordinated, and executed strategically and flawlessly, so as to
have maximum communications impact on the prospect's key decision makers. We outline below the more
critical areas where the proposal process frequently breaks down and needs to be strengthened:
Proposal Process. Virtually all providers have an RFP proposal process; but in many cases, it is not
well documented, and therefore not well understood and followed by everyone.
Global Coordination. Nearly all providers have difficulty in coordinating proposal development and
pricing with their overseas offices in pursuing large multinational deals.
Budgeting Pursuits. Only a few providers have a formal budgeting process for funding new business
pursuits on an individual deal-by-deal basis, which improves accountability and results.
Bid/No-Bid Decision. Some providers have much more sophisticated information systems and scorecards
for qualifying the best prospects and quantifying their overall probability-of-winning.
Winning Proposal Strategy. Some providers have no real substantive strategy to win proposals, in terms
of their value proposition, business/technical solution, and competitive differentiators.
Robust Value Proposition. Too many providers focus only on cost reduction/savings, without also
covering other strategic, operational, technology, human resource, and risk management benefits.
Company Requirements. Few providers communicate a deep understanding of the prospect's culture,
outsourcing objectives, goals, requirements, and special service needs and priorities.
Relationship Building. Many providers fail to build effective working relationships with company
executives early on during the pre-proposal stage when they could influence the RFP.
C-Level Cover Letter. Nearly all providers include a brief transmittal letter, but very few prepare a more
compelling top-executive letter (2 pages) to establish rapport with the key decision makers.
Executive Summary. Many providers prepare short 1-3 page summaries, instead of powerful 10-page
summaries to cover all of the reasons to select their firm, not just some of them.
Leadership Team. Providers often fail to introduce and credential the leadership team who will serve
the prospect; not to have the team identified and in place is a fatal flaw of many proposals.
Business/Technical Solution. Many providers do a poor job of presenting their solution – who will do
what, where, when, how, and why – and what will change and be better than it is today.
Oral Presentation. Many providers have inferior presentation decks (and handouts), and the teams fail
to rehearse three times for a polished presentation and answers to tough questions.
Site Visits. Most providers need to improve the site visit experience – site managers need to review the
RFP, written proposal, and oral presentation to communicate better with the prospect.
Competitive Pricing. Many providers do not have the sophisticated financial models and industry pricing
information needed to automate contract pricing; too much management time is spent on pricing.