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ALP 7: The pros and cons of RFP’s for agencies

In this episode, Chip Griffin and Gini Dietrich discuss the pros and cons of responding to RFP’s as a way to win agency business.

Neither Chip nor Gini are big fans of RFP’s for agencies — at least in most cases — and on today’s show they discuss why, as well as when you should make an exception.

The duo also have some advice for agency owners and executives who do end up responding to RFP’s, either out of necessity or choice.

Automated Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy before quoting.

CHIP 0:03
Hello, and welcome to another episode of the agency leadership podcast. I’m Chip Griffin

GINI 0:07
and I am Gini Dietrich

CHIP 0:09
and we are back with you again this week if we didn’t put you to sleep last week talking about lawyers and

GINI 0:14
accountants, I think

CHIP 0:16
will really enjoy this week’s show. Because this one is all about revenue generation and one particular method. But before we get into that topic, I’m looking out the window here as we record and waiting for the the flakes to fly because hey, I told her supposed to have our first measurable so it’ll be probably less than an inch but measurable

GINI 0:36
measurable. If you if it sticks to the ground, you can measure it. That’s awesome. We had ours last week so it’s very exciting for me. I love snow.

CHIP 0:44
Yeah, I think you’re more excited than I am I the older I get the more I understand why it is that people move from knowing when to Florida right. As you know it’s fun seeing those first few flakes of the season but after that it’s really just a nuisance more than anything else

GINI 1:00
from home what’s the big deal like you have to commute?

CHIP 1:04
No but I do travel a lot and it did get

boards and things like that fortunate I do have some teenagers so you know once the shouting is all done they they do usually pick up the shovel and clear the walk at least so that’s that’s something to look forward to. It

GINI 1:21
is something to look forward to I will look forward to the day that I can have my small one do that

CHIP 1:26
yes just keep in mind other things come along with that so

Unknown 1:29

CHIP 1:30
take your pick up the shoveling but you also get the mouth so

GINI 1:33
I get the mouth now so why not

CHIP 1:37
speaking of multi families any Thanksgiving plans

GINI 1:40
oh we always host so we have you think there’s 12 or 13 people coming

CHIP 1:46
that’s a good size

GINI 1:47
Yeah What are you guys well we

CHIP 1:50
we mix it up we’ve been trying to travel for Thanksgiving more last few years but this year will we will be home will be having my folks over and my mother in law. So it’ll be pretty small by our by our normal

GINI 2:05
what’s your What’s your favorite Thanksgiving side dish?

CHIP 2:08
Well, so you know, I actually really enjoy cooking. Unfortunately for Thanksgiving. In the past. I’ve tried to be adventurous and so much static that now it’s simply a Pepperidge Farm stuffing and mashed potatoes and you know, microwavable frozen vegetables because, you know, I’m just not interested in the hassle. But I mean, my favorite is probably the mashed potatoes. And I do I do like, I don’t quite get to the one to one ratio between potato and butter. But I come darn close

GINI 2:38
as you should take mashed potatoes. Good.

CHIP 2:40
Exactly. I remember not to get too far off on a tangent here. But a few years ago, more than a few. I guess over a decade ago, I had one of my business partners was helping me cook for the company holiday party. We had about 50 people at my house for that. And one of the things we were doing was mashed potatoes. And so we boiled five pounds of potatoes. And I asked him to throw some butter in there while I was working on something else. And he said, he said, you know, a couple tablespoons, I’m like, I’m like, it’s five pounds of potatoes. I said,

GINI 3:08
I said, I found the butter.

CHIP 3:11
I said, start with two pounds of butter. And we’ll see where we go in there.

And he said, he said, Do you mean to sticks? I’m like, No, I mean, two pounds, like eight sticks. That’s where the starting point is. Start with that. Yeah, he’s like, Oh, boy. I’m like, this is a holiday party. Come on.

People didn’t come over here to eat healthy. But.

GINI 3:31
And not only that, but the calories Don’t count on the holiday. So

CHIP 3:34
that’s true. That’s true. Although I’m fairly sure my doctor would disagree with that. But well, we won’t tell him. No, I don’t invite my doctor over for Thanksgiving.

GINI 3:42
Smart. Very smart. Yeah.

CHIP 3:44
Anyway, I suppose we probably ought to, to talk about putting some money and agency owners pockets so that they can actually afford to have Thanksgiving, right. Yes, as a segue.

GINI 3:55
That’s a great segue. That’s a Martin Waxman level segue.

CHIP 3:58
Oh, wow. Graduated now. That’s fantastic. So So what do we have for a topic this week?

GINI 4:05
We are curious as to your RFP thoughts. So somebody posted in the spin sucks community, we’ve we are among a dozen agencies invited to submit a proposal, in my opinion, 12 proposals. As far too many indicates that the prospect is either one fishing for ideas or two doesn’t know that what they want in an agency. So they’re looking to be educated part of our team feels this is a waste of time, and the others feel that most agencies will avoid the RFP and we stand a chance of winning by showing up.

CHIP 4:37
So if it will, it will not surprise you to know that my view is it depends. So, you know, to me, I want to look at this first of the philosophical level, which is our FPS yes or no, because I think one of the things we saw in some of the feedback that question received in the forum, as well as just generally the topic when you bring it up, you know, some people are adamantly posed to RFP, people love them, I think it sort of depends, I’m not a fan of them, if there hasn’t been any prior contact with the prospect. So if you just if you receive an RFP over the transom by by email, or something like that, saying, Hey, will you submit I’m generally not a fan of those with the sole exception of government work primarily, because in the case of government agencies, sometimes they’re great today,

but in the private sector, the over the transom RFP is always something that sort of worries me if I haven’t had any prior

GINI 5:35
contact. Yeah, I agree. I think it’s. I mean, when I worked at Fleishman Hillard, we would respond to our fees. But we had a specific new business team that that’s what they did. And of course, the accounting team that would eventually work on the business had worried to win, it would be part of the brainstorming and the ideas and all of that. But that’s what it was, was it was this gorgeously designed, put together proposal of ideas and you were giving all of that brainpower away for free. And, you know, spending I mean, I can’t even imagine how much money they spent in all of that, because the design team was involved in the digital team was involved in the of course, the PR team was involved. So I can imagine that the responding to one RFP was easily easily $50,000 or more. And so when you are not a global PR firm, and you’re looking at at the RFP dance, can you compete at that level? And sometimes you can for sure, we’ve had situations in the past where

we’ve actually been the smallest agency in the room, and the prospects has felt sorry for us and paid for all of our travel fees. And we still were able to compete at that level just because of creativity and ideas and experience, right. But we can’t I think that that’s what you have to weigh is from a time perspective, does it make sense for your agency to be doing it? Because it is a lot of time? Do you already have a relationship there? And if you don’t weigh those pros and cons as well, who who’s the competition? Who are you going up against? And do you really want to be giving away your ideas for free?

CHIP 7:16
Yeah, and, you know, I think that understanding what the, what the true cost of completing the RFP is, is really important, because I’ve seen in in many cases where agencies don’t do a good job of actually understanding both the the hard costs as well as the opportunity cost of responding to that RFP. Because particularly if you’re, if you’re not a huge global agency, with a dedicated business development team, you’re taking people away from other activities that they great age, right. And so you have to start to get really good at figuring out you know, which are FPS are more likely than not to be truly competitive, because the sad reality is that a lot of our FPS are out there, either is fishing expeditions or simply to make the procurement officer happy, okay, that there’s been some competitive process going on. But when in reality, the ultimate client internally within the organization already knows who they want to use.

GINI 8:12
And usually the incumbent, almost always, it’s the income income, and

CHIP 8:16
almost always the incumbent. But, you know, sometimes that procurement officer just says, look, you know, we need to be able to have a competitive process to show them the best price or sometimes they use it as an associative tool with the existing vendor, which is also something that folks should be thinking about. If you are, if you have an incumbent client, and they go to RFP, be careful about negotiating against yourself. I’ve seen that happen a lot, where in order to you say, okay, geez, I’ve got to make sure I win this business back. But you know, now they’re going to an RFP, it’s going to be competitive, I’ve got to shave price. And if you start doing that, you may end up negotiating against yourself and, and just eat into your own profit margin. So, RFP, or they are a risky proposition, no matter which side of the equation that you’re on, whether you’re the incumbent or whether you’re a challenger. And so you want to be very thoughtful about how you do them.

GINI 9:06
And I will share a quick story, which is what soured me on RFP to begin with, we actually went through an RFP process, and it was early, early, early in the life of, of my PR firm, my own PR firm, it was very early and, and, you know, I came from Fleischmann so that’s what we did, right? We went after our fees, and it was with Macy’s Marshall Field’s because they were coming into Chicago, and they wanted to make sure that this big New York company coming into Chicago wouldn’t fail when they took over Marshall Field’s a because Marshall Field’s was a very long standing brand that had a loyal, loyal, loyal following. And be because we’re the second city and we have a chip on our shoulder when it comes to New York. And so they they were very careful. And they went through the whole RFP process. And they found his Chicago agency they hired us,

which was great, but they did not tell us that they actually they actually would not be, we would actually not be doing the work that they were going to be giving all of the ideas that we had in the RFP process to their current agents, either the incumbent and we never saw dime. So they ended up executing on our ideas. And we found out because we read about it in the Chicago sometimes by their big New York agency. And so that I mean, it’s, it’s another thing that you can be thinking about from the perspective of, yeah, you might actually win a project or when a piece of business, but in my case, I was not because it was Macy’s. So I was like, Yeah, I trust that you guys will pay us and they didn’t, they didn’t. But they’d certainly took all of our ideas and ran with them. So there’s, that’s the other thing and why I really am really sour on the RFP process. And honestly, on the proposal process, too, because we give so many of our ideas away for free, and that’s not that makes us a commodity, and it makes a scene as tacticians when we really are strategic and smart. But because we’re like, and we can do a contest and we can do a media tour and we can do you know, content. And we can do social media. And we can we can do this. And we can do that without actually looking at the strategic piece of it. And then buyers are buying on ideas and not on strategic thinking.

CHIP 11:23
Well, exactly. And I think this is this is something that I’ve seen in a lot of RFP or pitch processes, where the agency gets very excited about it. And they take the thinnest of thin shreds of information that they have from Yes, yeah, and then come in with this full blown campaign. And it’s it, I’ve never understood it, I’ve argued about it with, with partners of mine, with employers, with, with with clients, it just, it makes no sense to go in with that kind of grand scheme unless you really understand what are the that the client is looking for. And far too often, you end up making assumptions that can throw you out of contention, because they, they, these guys have no clue what they’re, they’re bad fit. When, in fact, if you had listened, which is to me a key part of any new business development process, you need to actually listen, not just tell, you’ll be able to figure out how you can find that match so much better. And therefore, you’ll not only win business, you’ll win the right business.

GINI 12:31
And not only listen, which I agree is incredibly important. But you have to be able to ask the right questions and get the right information. And if that requires you, to sign a nondisclosure so that you can get the right information so that you can, you know, actually make strategic create strategic advice, then that’s fine. But what I think to your point exactly ship you what you find, as you get in, maybe you win and you get into start working with a client and everything that you assumed based on the information they gave you is incorrect, or they only gave you half of the information or they didn’t give you all of it because they didn’t know the answers. So I think there’s value as well is in listening and learning to ask the right questions.

CHIP 13:14
Exactly. And most RFP processes do have a question procedure to go through so that you can ask questions. Sometimes it’s in the form of a conference call with multiple vendors. Sometimes it’s in a written process that, you know, there’s a variety of different approaches the different organizations, we if you if you don’t listen to us, and you say, Hey, you know, I’m going to pursue the RFP anyway. Or if it’s, you’re in a field where you really have not a tremendous amount of choice. I mean, for example, our friends who are in the Travel and Tourism space, a lot of them are dealing with government agencies that will insist on RFP, right, sure the vehicle, you know, if that’s if that’s your business, you’re going to have to compete. So if you’re going to go into the process, I think the first thing is that you need to try to decipher that RFP. And part of that is asking questions. And part of that is trying to interpret and figure out, you know, what are the wishlist items here? Because most most people, part of the problem, frankly, is that people don’t know how to run an RFP process, correct?

GINI 14:12

CHIP 14:14
fortunately, on the agency side, we’re not going to solve the client problem there. No, but but clients that they they don’t put the RFP out in front of the right people, they don’t have the right timelines. And more importantly, they don’t craft the RFP, you know, in a good way, because it tends to be a laundry list of everything that they might could ever want, as opposed to, you know, what are they really looking for right here right now. And unless you really have that understanding, you’re going to have a difficult time hitting the mark. So take advantage of that question process, read through what they’ve what they’ve got in their RFP, look at what they’ve been doing, so that you understand where they are today. And that may help you understand perhaps you know, where their pain points are, from the RFP language,

GINI 15:00
I think there’s value in a paying attention to the competition that’s in the room, because you’ll be able to see that because of the q amp a process and really, maybe going back to them and saying, you know, this doesn’t make sense, this whole thing doesn’t make sense for us, but carve out a special project out of the whole RFP process that you could do, that way it gets you in the door, you can win something quickly will, you know, let the light the competitive piece go on without you. But you’ve already you’ve already carved out a piece that you can do really, really well and then grow from there,

CHIP 15:33
right. And, you know, there are other ways to get information as well. So, you know, most RFP processes will say, you know, no phone calls, in some cases, they’re there, in some cases, you can test it, and just, you know, hey, just, you know, I know, you said, no phone calls, but just hoping maybe get a little more color, you have to make your judgment because sometimes they’ll knock you out just for not paying attention to directions. And sometimes they’ll talk to you and you get great information. But, you know, use things like LinkedIn, try to find out if you if you’ve got some connection, you know, perhaps even in another department, who could give you some perspective on things where they say, Oh, yeah, you know, that there was a total flame Out with the old agency. And so they are looking for a new one. Or they could say, geez, I had no idea they were looking for a new agency, they seem so happy, right? There’s different ways to gather that intelligence. And so if you’re going to play in the RFP space, you need to be prepared to to do the legwork in order to to both decide which ones you ultimately want to pursue, as well as how you want to pursue them.

GINI 16:32
Yes, and yes, and then then you have to go also talk to Greg Brooks, who I think is probably the only advocate in our industry of RFP is to get his opinion on it, because he he definitely has an opinion. And sometimes he makes a really good point sometimes and ship I think you’re also right, you know, there are definitely interest industries where it makes sense, like government, you know, and you may be, but if you’re playing in that field, you probably already know how to work the process.

CHIP 17:01
Exactly. And it still it to me, even though you’re required to do them, oftentimes, in that space, it doesn’t take away the importance of using the tools at your disposal to intelligence and figure out, you know, which ones are real, because, you know, I just, I really just hate to see agencies waste time on these if they’re not going to be successful. Because it it can be incredibly costly, as I said earlier, both in in hard dollar terms, as well as that opportunity cost. Because if you’re a small to mid sized agency, you want to make sure that you’re, you know, working on the business that you’re most likely to close and that you’re not, you know, simply, you know, taking a shotgun approach where you hope to gather as much as possible from random bids, pictures and RFP.

I mean, it’s a it’s a bad strategy, it’s not

GINI 17:51
it is a bad strategy fully agree. Yeah,

CHIP 17:54
I guess, you know, I’m a little less concerned than, then, you know, perhaps you and others in the industry are, and far as, you know, giving your ideas away for free, you know, obviously, you know, you have a particular instance where you get burned on that, in my, in my experience, it, it tends to be when, when someone tries to use your idea, they, they execute on it poorly, anyway. So, you know, I tend to worry a little bit less about that. But, you know, nevertheless, it is something that you need to factor in that, that whenever you submit, you know, could will be used in a way that takes business away from you, you know, either now or down the road. So, you know, just think carefully about every aspect of the RFP process before you jump into it.

GINI 18:37
And I would say that in a future episode, we can talk about the proposal process in which you give away your ideas because I am adamantly against that.

CHIP 18:45
Yes, I think, yes, I agree, we should have a specific episode on proposals, because, you know, there’s a lot of things, you know, even if it’s one where you’ve been in the room, and you’ve gotten to know the people and, you know, you really do have a grasp, I think you need to think through that process. I know, you have, you know, I wouldn’t say a unique process. But you I know that with your own agency, you were doing something a little bit different than many. And I think it’s a it’s an effective tactic to consider, you know,

I guess the only other thought that I have on on our FPS before I sort of let go of the, the notion is, I think that, you know, when you’re, you’re working on an RFP response, that the other thing you need to keep in mind is that whatever you put there may not be shared just with the client. In some cases, it ends up right, inadvertently or otherwise being shared with competitors. So you need to understand that whatever your whatever you put in your response is something that no matter what kind of guarantees you’re given, and protections and blah, blah, blah, you know, you sort of have to assume that there are going to be a lot of eyes on that document. And a lot of times in the RFP process,

organizations will ask for pretty sensitive information, they will ask not just for things related to, you know, your actual delivery of work, but they will ask, in some cases for financial or employee headcount. So, you know, all sorts of different things that they may require, and you’re going to have to decide whether and how to respond to those kinds of questions that sometimes come in the RFP or sometimes even in in just an RFP process. So, so think about that, and, and understand that, you know, whatever you’re sharing could get shared more widely, and you’re going to have to make some philosophical decisions about where you draw the line as a business owner about the kinds of information that you’re willing to, to fork over.

GINI 20:44
And I think that’s really important on the incumbent side of things, too, because I have more than once had a client say, hey, do you want to see this proposal that such and such submitted? And I’m always like, No, no, no, but you? No, there’s no qualms about that. That from clients wanting wanting to share with their existing agency?

CHIP 21:06
No, it’s Yeah, it’s incredibly common, and almost shockingly, so that they will offer those up. And it’s something that like you, I’ve been offered at countless times over the course of my career, at always, politely or depending on how well I know, the client sometimes can politely decline

a long message. Gee, I hope you don’t do that with my documents, right?

GINI 21:30
Yeah, no, I don’t know.

CHIP 21:32
I mean, it’s, it’s a terrible process. But if it happens quite frequently, so that’s why I think it’s just, it’s important for folks to as they’re crafting these documents, to consider that because, you know, you’re not just, you’re not just sharing the information with the, the target client, you may well be sharing it unwittingly in a much wider circle. And, you know, I’m not saying that agencies have things to hide, but, you know, we all have things that, you know, perhaps we wouldn’t want to advertise to the world. So, you know,

understanding the possible dissemination of that information is important.

GINI 22:07
It is important and yes, on both sides of the coin, always refuse and then be careful what you put in there. But

CHIP 22:14
because, I mean, you, you will know that many vendors are not saying no, and many grapes are just hearing it. And, and, and, and, and, frankly, I’ve been in situations where I haven’t accepted it, but I’ve been in a meeting where they just tell me some of the details, so, you know, yeah, and there’s not a whole lot you can do there, right?

You look like a cool if you just start yelling, no, no, no,

that works with children, perhaps, but not so much with with clients or prospects.

Yeah, in any case, you know, I guess the, the overall message that we have for our FPS probably could be some summed up with the caveat emptor. You know, be very careful with them, understand, you know, what it is that you think you can accomplish, understand what the real costs are, and then, you know, try to gather as much information as you can in order to produce an effective response.

GINI 23:12

CHIP 23:14
And with that, I guess I request for us to come to the end of this particular episode of the agency leadership podcast, because we’ve exhausted this topic. It’s spring a few more that will need to take a look at in future episodes. So we hope you’ll stick with us and come back for another episode next week.

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The Hosts

Chip Griffin is the founder of the Small Agency Growth Alliance (SAGA) where he helps PR & marketing agency owners build the businesses that they want to own. He brings more than two decades of experience as an agency executive and entrepreneur to share the wisdom of his success and lessons of his failures. Follow him on Twitter at @ChipGriffin.


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, the lead blogger at Spin Sucks, and the host of Spin Sucks the podcast. She also is co-author of Marketing in the Round and co-host of Inside PR. Follow her on Twitter at @GiniDietrich.

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