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Business Essentials for Professionals



International RFPs: are you ready?


01/19/2017

One of the many gifts of globalization: when deals were still mainly national, twenty years ago, common markets, such as the NAFTA area or the Eurozone, have made bidding for deals across borders very common practices, even for relatively modest companies. But beware, selling to companies abroad has little to do with selling to your next-door neighbor.



An international RFP is to a company: individual people don't go through that kind of trouble. And it's probably big, because the company wouldn't bother with an RFP otherwise. BtoB is very different from BtoC: you’re not selling to a person; you are selling to a group: group dynamics apply and change the game completely. When selling to an individual, the odds are the client will buy whatever is best suited, cheapest and closest: a rather simple equation. When selling to groups, such as businesses, each person has a role, the evaluator, the user, the check-signer, the advisor, etc. Note that these roles are often unofficial: it’s up to you and your team to sense who is who. Mapping out the entire organization is often a good idea, with links as to who likes you (and your competition), who wants what, etc. This will reduce loss of time, running into dead-ends, or even chasing ghosts - as some companies will shortlist cheap suppliers only to beat down the prices of the already-chosen winner. In Jim Holden’s best-seller “power-base selling”, Marcus Aurelius is quoted as a commercial model “Nothing has such power to broaden the mind as the ability to investigate systematically”. Simply answering the client’s question makes losing an RFP quite likely, as other competitors will “outsell” you, to use Holden’s terms. Holden recommends investigating every aspect of the deal and organization you’re selling to, including the people before even making a move.
 
The idea is to divide product ranges (clothing, computer items, car parts, etc.) into different business units, almost like little companies within your company. If only one sales team targets the deal, it will probably focus on what the client wants. By launching ten different sales approaches on the client, you are more likely to sell more to the client of what he needs. The first sales team's job is to sell what the client asks for; the other teams oversee selling the client all the rest that he needs (but doesn't know). This concept is particularly adapted when dealing with international RFPs, because such deals are usually initiated by medium- to large-sized customers. As a larger company, they have more needs (and more means) as small or individual businesses. Taking them from different angles will therefore probably generate more cash-flow. And the different angles will much help your strategy in the RFP. This method is used by many large groups: first open the door, and then let the hunters in, who will each try to send an additional feature to the global deal. In 2015 deal in Uzbekistan, Samsung was re-selected to build a new-generation petrochemical plant, based on its successful previous deals, which had opened the door to extra orders. “As we successfully built a polymer plant for Uzbek Neftegaz in a $700 million EPC deal in July, the state company placed an order for the conceptual study for the BTX plant," Samsung's spokesman said.
 
Know who your client is, and what his norms and demands are, in the fields of performance, transparency and security. Oberthur Fiduciaire CEO Thomas Savare, who prints banknotes and secured documents for governments around the world, explains why, and why it’s necessary to deal with this. "Secured printing companies are first confronted through an international request for proposals. Retained candidates must then submit their application, on the basis of a very specific design brief, and expose their technical and technological capacities, their references, security awareness, graphic qualities or price. These RFPs are getting tougher, as nowadays it is common to have to go through pre-selection before actually competing. And that’s not counting the strengthening of contract bindings.” The last thing your client wants is to be exposed through you, for failure to meet his quality norms. But that it is only ever half the game: “there is also an artistic component. You have to be able to understand the history and the symbols of a country to create attractive designs tailored to the specific culture. That is what makes the design of each banknote very interesting”, adds Oberthur Fiduciaire CEO. "The customer is always right", especially when customers are central banks and governments.
 
When to work with the client, and when not? When dealing with quality levels and thresholds, it is unsafe to simply accept client demands. If you simply wait for the client to alter its quality requirement levels, you will be slapped with unexpected obligations every time. Whereas when it comes to the actual product, it is wise to include specific client requests into the product, if the customer is a key account. True, it will require a little more work from your teams, but once the customer has asked you to modify the standard item you sold, it is no longer standard, therefore no longer compatible with peripherals: you are now your client’s sole supplier in the field. Defense contractors are known to do this. In September of 2016, Lockheed Martin sold six choppers to Taiwan for 150 million euros, doing just that. By selling the helicopters as “uniquely configured”, Lockheed scored three hits: they charged the client extra for the modifications, they told the world they could make anything, and they secured their customer for a long time. In addition, state deals, such as defense deals, are often as much political as they are technological: a government purchases loyalty through a deal as much as it purchases the actual product. This US-company/Taiwan deal isn't unrelated to the tight alliance between the US and its historical ally across the bay of China.
 
Don't aim for what you are, aim for what you want to be. If you aim for deals your size, it may pay your bills, but you are not strengthening your position, or your company. International RFPs are unique opportunities to place yourself on the map as key players. Aim for deals bigger than what you usually handle, and once the deal is secured, invest. Your client will be paying, through the deal, for your upgrade, and you keep the production capacity after the deal for extra income. This was done by Indian IT company Tech Mahindra, in a deal with Bombardier in 2014. “Tech Mahindra plans to invest significantly in infrastructure and talent in the Montreal (Canada) region. Tech Mahindra aims to grow its Canada team to 1,200 people in the next five years," software services firm said.

Dealing with international RFPs, it is essential to understand that BtoB selling is very different from BtoC. Groups don’t behave like people, and neither are they the sum of their parts. A group of rational people can very well make irrational decisions, for lack of communication, or internal politics. A carefully planned, smooth and commercially aggressive approach is necessary, and so are a few sacrifices. If the RFP is international, expect to spend a lot of time and money building trust, to reassure the client as to what you are doing, thousands of miles away. The last thing he wants is to be splashed and contaminated by quality problems from the parts you have sold.