Don’t respond to an RFP unless you can have a conversation and get your questions answered. That’s the simple advice from Chip Griffin and Gini Dietrich in this Agency Leadership Podcast episode.
The co-hosts build on a conversation started on LinkedIn by Parry Headrick of Crackle PR who explained that his agency turned down an RFP because they couldn’t get an answer to the question of how many other agencies had been invited to participate.
It was a simple question and should have generated a simple answer. When one wasn’t forthcoming, Crackle PR declined to respond. That was the right step.
Chip and Gini took it a step further and suggested that you need to be able to have a real conversation with real human beings — ideally before the RFP is released, but certainly before you begin to invest in a response.
Many agencies don’t realize just how much it is costing them to respond to RFPs because they don’t accurately track their own time investments. If you take a lot of time to thoughtfully respond to 10 RFP’s and only win one of them, then you need to subtract the cost of responding to all 10 of those RFP’s from whatever profit you think you’re making on that contract you won.
While Chip and Gini don’t believe you should always say no to every RFP, you should look at them skeptically and with a real understanding of the likelihood of success (and the cost of doing so).
Finally, agency owners will be able to hear some advice on how to handle RFP processes when they are the incumbent, as well as some discussion of how to see an overall improvement in the climate of agency-client relationships.
Chip Griffin: “More agencies need to say no to these crazy RFP processes. That’s how you’ll actually get change. That’s how you will move on from this convoluted, stupid structure that doesn’t produce good results for either the clients or their agencies.”
Gini Dietrich, on agencies saying no thanks to RFPs: “I think your point about making sure that we are all standing up for ourselves in this way is what’s going to change it and what’s going to change it for the whole industry. So be adamant about it.”
Chip Griffin: “It’s like spam. Spam doesn’t go out there because it doesn’t work. It goes out because it works. Enough people respond to the Nigerian prince that it’s actually worthwhile for them to keep sending those. So don’t be the sucker who falls for the Nigerian prince scam, also known as RFPs.”
Gini Dietrich: “One of the ways that I always coach clients through this is I say to them, okay, let’s say that you do this RFP, but you’re not going to do it using your team. You’re going to do using contractors and you have to pay for their time. How much are you willing to invest in creating it and paying contractors to help you build it and pitch it? The answer is always zero.”
The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.
Chip Griffin: Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin. And she’s Gini Dietrich. And I just demonstrated that once again, I don’t know how to start a show, so I don’t know. Maybe I should put out an RFP to figure out how to, right after this.
This technology thing, just, just baffles me. I have a hard time figuring out which buttons to push and, oh, man, that was funny. Yes. So, we’re going to talk about RFPs today. It’s something we’ve talked about before. I think most people know that, you know, we kind of have a hold our nose approach at best to RFPs and often just, you know, throw out the stop sign.
But this is based on a LinkedIn post that we saw recently by Parry Headrick, who is the founder of Crackle PR. And so he talked about how his firm had just declined another RFP in this case because they couldn’t get an answer to the question, how many other agencies got this RFP? And they just got back a mealy mouth, “Well, you know, you look qualified. We thought it would be great to hear from you, but we’re not going to have that information.” So RFPs, Gini. I think to me, the jumping off point here, is that just because you get an RFP doesn’t mean you should say yes, certainly, but it also doesn’t mean that you have to say, no, it means that you probably should ask some questions, both of yourself, as well as the person offering the RFP.
And if you don’t get the kinds of answers that you’re looking for, then you absolutely should walk away.
Gini Dietrich: Yeah, absolutely. I think, you know, it’s a really good LinkedIn post. And some of the comments were great too, because they talked about how important it is to have transparency and be open. So if you can’t get simple answers, like how many other agencies did you send this to?
You know, what kinds of things are you looking for? That kind of thing then I think it’s, you should walk away because you’re going into it. You’re flying into it blind, which is not what any of us want to do. And none of us want to waste our time or waste our team’s time, putting together a proposal that we don’t have any idea if it’s going to work, just because we can’t get the answers that we need.
Chip Griffin: Right. And a lot of times whoever puts out the RFP, will try to steer this through a process. We’ll submit your questions by this date and we’ll send out a master answer sheet. Personally, I think that’s rubbish. I think that’s, I think if you can not have a direct conversation with whoever’s involved in making the decision on the RFP, not necessarily the ultimate decision maker, but at least someone who’s in the process.
There’s absolutely no reason to go forward. And to me it’s, even though the timing is important too, right. And I think I’ve said this before. If you have a conversation with someone before the RFP comes out, at that point, the RFP is something that you should be much more willing to consider because now, you know more, they know more, there’s some sort of relationship that’s being established in some way, shape or form.
And so that to me would at least put it on the list of RFPs that you would consider. But if you just get something over the transom, if you can not get a conversation, if you cannot get straight answers to the questions that you’re submitting and get direct answers, not some convoluted, FAQ type process than walk away and walk away fast.
Gini Dietrich: Yeah. And I also think that. Companies – I mean, as we’ve talked about in recent weeks, I’ve gone through this process with the client and the companies that are trying to send out 10, 15, 20 RFPs to that many agencies. Nobody’s going to be successful in that because it’s too many. And, and part of the reason they probably can’t do conversations or answer questions is because they’re trying to manage too many agencies at one time. So if you want to start with 20, as a corporation and whittle it down to 10 and then start to whittle it from there so that you send it to. Shoot, I wouldn’t even send it to more than three, but from an agency perspective, if you’re hearing that they’ve sent it to 10, 15, 20 other agencies, it’s like, for me, that’s a, that’s a no brainer. Walk away.
Chip Griffin: Right. And for me in this particular case, it’s, it’s less that they won’t give you the specific number and more that they just won’t answer in a meaningful way. Because to me, the number matters, but only a little bit, because. There are times where you can win an RFP easily, if there are 20 people in there, because maybe they’re, they already know that they’re going to pick you. Right. So if I’m involved in that conversation before the RFP goes out and I get the inside track, I don’t care how many there are. So, so to me, this kind of a question is more of a proxy for understanding how open they’re going to be with you? I don’t necessarily think that the answer itself has a whole lot of bearing on whether I would or would not reply to the RFP, because I can lose one with three participants, just as easily as I can lose one with 20, if they’ve already preselected the winner, which is what happens in a lot of these cases, they already know either who they’re going to pick or it’s down to one or two people already that they’re already in conversations with.
I mean, it’s kind of rare that you’re going to see a client go out and hire someone off of an RFP without any knowledge of them in advance. I mean, it does happen, but it’s not particularly common. Generally they have some knowledge of the agency before the process begins.
Gini Dietrich: So to your point in his LinkedIn post, he said, how many other agencies got the RFP?
And they said, we believe you will be pleased to know your firm was included on the basis of our research industry referrals and our estimation of your fit based on materials we read on your website.
Chip Griffin: Yeah. Yeah, we believe you’re full of you-know-what.
Gini Dietrich: N-O. Right. Nooo.
Chip Griffin: And a bunch of people have, have cheered this post appropriately. So, but what we really need is more agencies to take this approach. More agencies need to say no, to these crazy RFP processes. That’s how you’ll actually get change. That’s how you will move on from this convoluted, stupid structure that doesn’t produce good results for either the clients or their agencies.
But as long as you have some people who are willing to play the game, it encourages clients, prospects, organizations, to do this kind of thing. It’s the same thing with terms, right? Payment terms, you know, we can sit here and complain all we want about clients that want 120, 180 day payment terms. But guess what a bunch of agencies are granting that.
And as long as you’ve got some who are granting it, it’s still going to happen. It’s like spam. Spam doesn’t go out there because it doesn’t work. It goes out because it works. Enough people respond to the Nigerian prince that it’s actually worthwhile for them to keep sending those. So don’t, don’t be the sucker who falls for the Nigerian prince scam, also known as RFPs.
Gini Dietrich: Well, there’s the title of this podcast right there. The Nigerian prince scam also as RFPs.
Chip Griffin: It’s overly negative because I mean, you can win RFPs, but it’s, it’s so tied back to that conversation that you have at some point, along the way, not after you’ve already put in tens or hundreds of hours of work, all sorts of creative thinking produced these documents and presentations. If your first conversation is after you’ve done all of that, your odds of success are insanely low. Pretty low.
Gini Dietrich: Yeah. I agree with you. I will say though, that there are some industries that require it, like regardless. Government, government is one of them. So if you’re in the government world, you can’t get out of responding to RFPs, but for the rest of us, follow these rules.
Chip Griffin: You can’t get out of it, but you, but you can decide not to play the game if you’ve never had a conversation with that person.
Right. Because even when it comes to things like government or traveling, tourism, places where you see – education, in my experience, more often than not, you still have had a conversation with that agency with that organization before they, you know, really get seriously into the RFP process with you. And so.
If you, if it really is just over the transom, your odds of success are so small. It’s probably not worth the amount of time and money that you need to invest to respond because RFP processes are always more formal and more complicated than the typical pitch process that you have with a potential client where you’re just going in and having conversation.
Gini Dietrich: Yeah. So what about the RFP where you’re the incumbent and either the client needs to do procurement every three years and look at other agencies, or they’ve decided that maybe they like the shiny new penny and want to go after that, but you’re the incumbent and you are invited to participate in that RFP process.
How do you handle that?
Chip Griffin: Well, I mean, if you’re the incumbent, you know, you have to judge the relationship, right? I mean, if you believe that it is just a dog and pony show so that they can comply with their procurement policies, then of course you go ahead and you play the game because it makes sense.
I mean, assuming that the work that you’re doing is actually profitable. Which I think is an important, because in my experience, a lot of times when agencies have this RFP driven work, that they’re the incumbent on, it’s not the best for their bottom line. And it’s probably only going to get worse through the RFP process.
So you really have to be at a point where you’ve got a comfortable margin going into the RFP process. Otherwise you may be better off just saying, thanks. But no, thanks. We’ll take a pass, which in and of itself is a forcing mechanism for the client because they really are just going through a dog and pony show.
They’ll probably say, Hey look, no, we don’t misunderstand us. We still want to work with you. And so then they, but then you need to still approach it from the standpoint of I’m going to do what’s right for my agency. And I’m going to price it appropriately, going forward with everything that you’ve learned in the one, two or three years that you’ve had the contract already.
Gini Dietrich: Right, I will say that we just had this happen to us. And I said to the client, listen, we’d love to continue to work with you. But as you know, we’ve spent lots more time and it would cost lots more money. And you know, all of the things that you just said. So I think we’re going to decline and it’s been really great.
And we’d have, we’d be happy to, to help you find a new agency. And they were like, Wait, wait, wait. No, no, no, no, no, no, no, no, no, we don’t want- no, no, no. And then they started to realize that all of the time and, and resources that they had invested in bringing us up to speed and keeping us as part of the team and you know, having to go through that process again, they realize it was going to be more expensive and more painful than they were willing to do.
And so we, we came to an agreement there, but I don’t think that we would have had I not said, gosh, you know, I mean, this is going to cost you probably twice what you’re paying. And we’re just not interested.
Chip Griffin: Right. And I’ve seen that happen before. In other cases, you know, where the process magically changes, as soon as it looks like they’re going to lose you.
And so that might, that might be, well, you know, you don’t really have to jump through all these hoops. We already know you. So. you can kind of skip sections six, eight, and 11. You know, you, you don’t, you can just kind of do a pro forma response on this. Cause we already know that we don’t need you to do all of that so they can make the process easier.
You know, they can make clear to you that they’re willing to, to revisit scope in some fashion, there’s all sorts of things that they can do. As long as you’re willing to say, no, I’m not going to play your game. And, and it’s, it’s a powerful lesson for the value in saying no, if you’re willing to say no, if you’re willing to lose business, to lose an employee, to lose a client, whatever you’re in a much stronger bargaining position and much more likely to get what you want out of that relationship.
Gini Dietrich: Yeah. Yeah. I totally agree. And I think your point about making sure that we are all standing up for ourselves in this way is what’s going to change it and what’s going to change it for the whole industry. So be adamant about it. And I know it’s hard to tell people no, and I know it’s hard to send an email that says, Hey, thanks. This is awesome. But if we only have a 10% chance of winning, it’s not something, you know, we’re, we’re not really going to participate. So being able to stand up for yourself, being able to stand up for your team, being able to stand up for what’s best in your business, I think is what’s going to change everything, change things for the industry.
Chip Griffin: Right. And I think, I mean, you can even look at it in terms of pure self-interest and not worry about the industry. Right, because it’s always easier to act in self-interest. If you just sit down. And first of all, I would encourage all agencies to be tracking how much it costs them to respond to specific RFPs. I think most agencies, if they actually did a proper accounting of the amount of staff time and other resources that go into producing the responses to these RFPs, I think they would be shocked at how much they are actually spending to not win business. Right. And if I went to you and I said to you, Gini, will you spend $20,000 for the chance of winning a contract with company X? You’d say no thanks, but that’s effectively what you’re doing because staff time is not free. Right? And, and I think that unfortunately, agencies look at it in terms of, well, you know, I only had to, you know, to buy, you know, this much stock photo or video stuff, or to pay my graphic designer to do this or whatever, you’re paying your team, you’re paying yourself.
Your own time and a small agency, the owner’s time should be the most expensive. The time that you’re spending is valuable. And you need to consider that when you’re thinking about the amount of time it takes to respond to these things, and you really need to, to not look at it in terms of, oh, well, if I won this, it would be a great logo and it would be a six figure account.
It would be all of these wonderful things. Fantastic that’s lovely. Does that pay the bills? I don’t think it does. And if you’re only winning 10% of them. Then you take your, if it’s costing you 20,000 purchase for random numbers, you know, that means your, your cost of winning RFPs is 200,000. So that means you have to subtract that from whatever profits you’re making on the one out of 10 that you do win.
Okay, great. What do you think the chances are that’s happening? Pretty small. Even the big agencies a lot of times aren’t, a lot of times, and this is dirty little secret. Most people don’t understand this. A lot of times the big agencies will win these big accounts because they don’t care if they’re making money off of them because they’re going to go make money somewhere else.
And so they’re happy with getting the trade press coverage that they’re the agency of record for insert Fortune 100 company here. Yup. If you’re a small agency and you’re running yourself profitably and properly. You can’t have that kind of massive loss leader. It just doesn’t work.
Gini Dietrich: So one of the ways that I always coach clients through this is I say to them, okay, let’s say that you, you do this RFP, but you’re not going to do it using your team.
You’re going to do you do it using contractors and you have to pay for their time. How much are you willing to invest in creating it and paying contractors to help you build it? And pitch it. The answer is always zero. Always, always, because as soon as you have to pay someone, not on salary that you’re used to paying, it becomes a different story.
And so when they look at it from that perspective, almost everybody goes, oh yeah. I mean, to your point, am I willing to spend $20,000 to win a client? No, of course not, but that’s what it would cost.
Chip Griffin: Right. And, and it can easily get to be even more than that, depending on the specifics of the proposal that you’re being asked to submit. Because, I mean, the thing is when, when clients sit down and they write RFPs it’s like when you were a little kid and you started, you know, building out your Christmas list. And I mean, when I was a kid, I used to go through like the Service Merchandise catalog or the Sears catalog, like, oh, I want this, I want that.
And all of a sudden, you know, it’s a Christmas list of like, you know, $50,000 in seventies, eighties currency. Uh, and, and so that’s, that’s what a lot of times people do when they put together the RFP. And so they’re not looking at what the total cost is. They’re not looking at all of the work that they would have to do in order to support you doing that work.
And so. With it being such a wishlist. I mean, that sort of brings us back to the original point. You’ve got to be able to have conversations with the clients, with the prospects, even if it’s an RFP process, because that’s how you can really judge, you know, what’s actually important to this, what do they actually need?
How does it fit into the whole picture? And you’re never going to get that off of that lengthy RFP and the FAQ that they put together. And, you know, sometimes they’ll do a zoom for the, for all of the different agencies that are involved so they can ask questions at once, but it’s a stilted process and it’s just a mess.
So have conversations ideally before the RFP. But if not, at least once it’s been put out and if they’re going to say no to that, then it’s just, it’s probably not a good fit for your agency and your time.
Gini Dietrich: Yeah. I think that this is, you know, It’s an interesting conundrum. I think as new agency owners, we all go through a process of, oh, I got this.
I showed up. I should do it, and quickly realize that even if your close rate is 20 or 30%, which is probably pretty high for an, an RFP that comes over the transom without a relationship, it’s still not worth it. You still don’t make the money back. You still don’t – it’s you still spend way too much time and spend too much on resources to get it done.
So I think you’re right. If you’re running your agency profitably and appropriately, it’s going to be really, it’s a really clear answer for you on how to handle.
Chip Griffin: Yeah. And I mean, RFPs that they’re sort of like a security blanket, right? They, it feels good to be responding to them. Cause then you feel like you’re doing something for business development and it’s so much easier to say I’ll spend time filling out this RFP as opposed to building a relationship, a real relationship with a real person at a real prospect, that would be an ideal client for you.
Right. Because you’ve got it in front of you and you can just kind of keep going through the checklist and for a lot of people that’s just a, a calm, comforting feeling that you’re doing. And at the end of the day, you can say, well, we responded to seven RFPs last month. Wow. That’s that’s impressive. How many did you win? None. Cool.
That’s great. You know, I mean, if I played major league baseball, I could probably go up to the plate a lot of times. How many hits am I going to get? Not a single one, I guarantee you.
Not one, not even if they try to bring me on as a replacement player this year. And you know, they’ve got, you know, terrible guys on the mound, I don’t think I would get a single hit. I might get a walk. I mean, I had a hard enough time getting hits in a little league, let alone major leagues. No. So don’t settle for that.
Don’t settle for just know, Hey, I’ve had all these at-bats. I know, I know that psychologically, it can feel good that you’re not just sitting around doing nothing, but it’s actually kind of worse than that because you’re spending money. You’re investing time and resources in something that is highly unlikely to be successful.
So take some advice from Parry Headrick and others, listen to us. Ask questions. Foster a conversation. And if that ends up hitting a brick wall, walk away.
Gini Dietrich: Absolutely. Walk away.
Chip Griffin: And with that, we’re going to walk away from this episode of the Agency Leadership Podcast, I’m Chip Griffin.
Gini Dietrich: And I’m Gini Dietrich.
Chip Griffin: And it depends.