Writing Winning Tender Responses
In many procurement exercises I have been involved with there have been instances where incumbent suppliers have been retained even where new potential suppliers were scoring better in evaluation processes. Why is this?
My initial thoughts centered around the extra work involved for new supplier implementation, but another theory caught my eye.
Daniel Kahneman in his book Thinking Fast and Slow highlighted the idea of prospect theory and loss aversion. This examines behaviours where individuals are faced with decisions where there is a risk of a loss or opportunity for gain.
Kahneman summarises common behaviour as:
- In mixed gambles, where both a gain and a loss are possible, loss aversion causes extremely risk-averse choices.
- In bad choices, where a sure loss is compared to a larger loss that is merely probable, diminishing responsibility causes risk seeking.
This poses questions for both procurement professionals as well as suppliers trying to win new business. Kahneman believes the perceived benefits need to be twice as large as any perceived loss for the change to happen.
For incumbent suppliers the plan is clear. Make sure you are doing what you are supposed to and dealing with any issues which may arise. By doing this, it would be highly likely you will retain the business when it is next put to market.
Key Response Points
1. Demonstrate a clear understanding of your customers needs and how your solutions address those needs.
2. Avoid generic responses or presentations. These will not provide a clear enough view of the benefits of making a supplier change. Bespoke and tailored solutions should always be the norm.
3. Address the customers key concerns or risks.
4. Highlight the key benefits of your solution and answer the question of “why should you be selected”.
5. Make yourself easy to deal with and respond quickly to any follow up questions
6. Familisarise yourself with the scoring criteria and tailor your response accordingly.