Imagine if you could increase your turnover significantly by a small, no-cost improvement in just one area of your business.
And I’m not talking about increasing your marketing, changing your marketing message, or increasing the number of channels through which you promote your business.
No, I’m suggesting changing just one thing. Would that be worthwhile investigating, spending some time thinking through how it could be applied to your business?
That one area is your success or conversion rate from the tenders, quotations, bids or proposals you submit. Most small businesses have to submit some form of tender, quotation or bid unless they are in retail.
Let me give a specific, real‐life example. “Bill” is a manufacturer, just a small business with about eight employees. It is a good business, with a well-run operation, although like most small businesses, he doesn’t pay much attention to marketing. His expertise is in his services and the technical knowledge he brings to them.
Pretty much all their business comes from tenders, quotations or proposals he submits. He wins about33% of those; sometimes he is beaten by the competition, sometimes the prospect defers or decides not to proceed.
That 33% gives a reasonable turnover, and because he is a good operator, a satisfactory level of profits.
Now just suppose he could lift his success rate from 33% to 40%, from 1 in 3 to 1 in 2.5. Assuming the average value in each contract didn’t change, that would increase his turnover by 33%, and do so without any increase in his marketing costs.
And that doesn’t even take into account improvements through converting enquiries or sales leads into requests for a quote. Or of course, increasing the number of enquiries.
Sounds a lot, so how can he do that?
The one thing he shouldn’t do is to try and achieve the increased success rate by reducing his price. That would defeat the whole purpose of lifting turnover, and that is to increase profits.
Discounting for small businesses is a dangerous strategy, fraught with peril. Discount and you are guaranteed to have a profit leak.
And quoting pricing too early in the process can turn you into a commodity versus an expert advisor and solution provider.
If the price is the problem, you've done a not so‐good job in your marketing. All reducing prices does, apart from destroying profitability, is to turn your business into a commodity. If you do that, clients will treat it as a commodity and not of something of value.
That is not to say that pricing is not important. It is, as I’ll discuss later on. It's not just one thing that works in tendering or quoting i.e. not just price; it is a number of things. And because most small businesses don’t present their tenders, quotations or proposals well you have the opportunity to differentiate yourself from the competition.
It is an unfortunate fact of life that a lot of small businesses don’t spend much time on their tenders, quotations or proposals. In fact, many regard submitting tenders and proposals as something to be hurried through so they can get on with their main job, doing the job.
So we see the poorly laid‐out typed tender, replete with typos, providing the minimum of information on price and delivery, or a quick hand‐written quotation scribbled into a carbon‐copy quotation book.
Think about it; what will stop a prospective client buying? It is uncertainty, too many doubts or objections in their mind; a feeling of too much risk. With no other information to go by the prospective customer will just take the lowest quote.
Surely a tender, quotation, sales pitch or proposal deserves more than something that just has to be hurried through. After all, it is the prerequisite to your next order, and the cash flow it brings.
“People need to justify decisions logically. While people make emotional decisions, they justify those decisions with logic and facts. You should always give people the appropriate justification for making a purchase.” JW Corbett
Here are 5 steps you must take in submitting any tender or quotation!
- Clearly demonstrate you understand what the prospect is really after – solving their problem;
- Illustrate your solution graphically with a picture or diagram if you are offering a physical product, or the results of your service;
- Identify the prospect’s possible objections or uncertainties, and counter them before they become fixed in their mind;
- Demonstrate how others have found you reliable and good value through testimonials;
- Remove risk by offering a guarantee;
- Work on your presentation and check for typos;
- Establish your Minacc (minimum acceptable price);
- Avoid the common mistakes people make in preparing their prices; and
- Properly present your quotation to confirm your professionalism.
Properly presented tenders, proposals or quotations will both make you stand out from your competition and increase your success rate. All without changing anything else. Small change, big result. Now that must be worthwhile. All it takes is a little more time.
As I have been saying to you, Governments at all level will be putting out projects to help stimulate their economies. And it is happening.
So spend a little more time on preparing your next Tender, proposal or quotation.
Last year I ran a Pilot course online - “TenderWins – The Tender Winning Formula”.
Good luck only happens to those that get in front of it.