Don't Just Bid: Plan to Bid!
Life’s on the up at the moment…all of your electricians are fully employed and your forward pipeline of work is stretching out ahead of you further than you’ve seen for years. Things just couldn’t be better, but then a bid inquiry lands from a general contractor that you just can’t ignore. It’s a company that’s given you a lot of work in the past and you want to do more work with them in the future. You just can’t afford to upset them, so what do you do?
Of course, the easy solution is to just submit a high-priced bid so they won’t choose you. But wait…if you do that, then they might not ask you to bid in the future if they think that is your normal price range. They’re also likely to know the procurement managers with other general contractors, and if rumors start to circulate it could seriously damage your reputation. You could always decline to bid, but surely that will annoy them and they might not ask you to bid again. This is turning into a nightmare!
Relax, it’s all hypothetical, so there’s no need to panic just yet! Let’s take some time to think about what you can do to ease the pain.
For years, electrical contracting has operated on low profit margins driven down by competitive bidding that uses price as the determining factor rather than value. I’ve heard lots of contractors tell me that there isn’t any real opportunity to sell their services on value, and of course this is true if you’re connected with general contractors or clients that only want the cheapest price. However, continuing to accept this as the norm means you’re in danger of attracting this kind of bid and the inevitable downward spiral of tightening margins and having to cut corners just to survive.
To change this we need to learn more about the general contractor and align your proposals to meet their objectives…WE NEED A PLAN!
Before we look at that, here’s an example from when I first started bidding over 12 years ago. My client was a large national house builder bidding for sites that the government was bringing to market. Known as the ‘redundant hospitals site program,’ there were around 196 named sites that were being slowly released to the market and the expectant bidders. Every so often, my client called and off we went again bidding on the next opportunity. But there was no plan and the whole process seemed very haphazard, so I asked a simple question, “Do you want to win every site that comes to market?” The answer was, of course, “No.”
To develop more structure and order, we ranked the projects according to their preferred location, the available resources in those areas, the skills needed to deliver each project, and their financial capacity, amongst other considerations. This enabled us to apply our full resources to the ‘must win’ bids, be less diligent to the others, and formally decline to bid for work that didn’t align with our Work Winning Plan (WWP).
As a general contractor, my client could call on a long list of contractors to work on sites that weren’t planned, but this will be different for you. Like most electrical contractors, you’ll have a list of regular clients, those who give you work less frequently, and target clients you want to work with. And if you’re worried that there isn’t enough work to start turning bid inquiries away, just consider that the value of the electrical contracting industry in the United States is estimated to be over $130 billion a year.
You can develop your own WWP to map your approach by following a simple three-step process. Using the steps, you can better rank the electrical contracts in the order you want to win or the general contractors you want to work with. The bonus is that through the meetings and discussions you’ll need to have, you’ll get more sales opportunities when you can build and you’ll strengthen your relationships.
Step One: Meet with the general contractor and, rather than trying to sell anything, just listen to what they are doing. Learn about their objectives and concerns about work winning and the projects they have planned over the next few months or year. Dig a bit deeper and find out which of these are secured and which are important ‘must win’ projects. Then explore where they think they can influence their client’s solution and differentiate themselves from their competitors – this will directly influence how they want you to work with them.
Step Two: Find out what the general contractor thinks of your relationship…that means your business relationship rather than your personal one, although the two can often be interlinked. The information you’ve learned in step one will show the areas where there are the greatest opportunities to provide your specialist advice that could make all the difference to them. This is your chance to open the dialogue into a shared experience of how you could improve profits for both of you by working more efficiently and using your expertise in the best way to help them. When you get this right, you will raise your status to being a trusted advisor and someone whose input the general contractor values…and they’ll start to look beyond just the lowest-priced solution.
Step Three: You’ll now have a good picture of the general contractors and the projects that are most beneficial to your business and can start to rank them in order of preference.
Start by listing all the general contractors and/or projects you’re interested in – I use post-it notes for this because I can move them around to suit. Stick them on a flip chart and then list the areas of expertise that differentiate you from your competitors – this might be particular to a type of electrical installation or a value band or any other differentiator that you can capitalize on that helps you stand out. Place them under the projects. (You may need to use multiple copies of your skills for each of the projects.)
Now go through your post-it note lists and move them into your order of preference – you can change where they sit in the ranking and move your skills up or down the list in order of importance. This will highlight where your expertise and skills will be of most benefit and will form the basis of your WWP.
It’s important to remember that bidding is not just about the pricing and return of your offer but part of a much more involved process that is all about relationships and communication. So when you’ve finished your WWP, share the relevant parts of your plan with each of the general contractors or your direct clients. That way you’ll be able to demonstrate where your expertise is best placed and that you might not be the right choice for some others areas of work. This will help determine the bids that you would prefer not to bid on because you don’t think you will offer the best value. If you get an inquiry that looks to be only price driven and where you cannot achieve the margins you want, then you can use your WWP to decline to bid without upsetting anyone. Use this approach wisely and only go as fast as your business will allow the change.
Neil Southwell is a strategic bid director for Vision tdm and has helped win over $9 billion of new contracts using his detailed understanding of marketing, selling, and business generation. With a career that spans over 30 years, he has been exposed to most market sectors and all kinds of organizations from small contractors to international blue chip companies.
In 2012, Vision achieved a 100% success rate using these techniques and won over £525 million of new contracts. This was closely matched in 2013 with over £500m of new business wins and Vision has continued to expand and support its clients by challenging the norm, providing strategic bid direction, and delivering targeted training.