Table of Contents
Winning client RFPs is a key component for many corporations’ financial health yet very few have mastered both the art and science of negotiating winning proposals. We leverage our proprietary 6-step proposal optimization framework in driving sustainable, value unlocking change (Exhibit 1). PNI has helped clients with the following: (1) increase their winning proposal conversion rate by 21 to 59 percent, (2) improve margin per winning bid by 6 to 14 percent, and (3) increase the agreed to price (revenue per winning proposal) by 13 to 36 percent. While many believe that a winning proposal is simply about professionally presenting your corporation’s goods or services along with competitive pricing, nothing could be further from the truth. The clients and competitors are becoming more sophisticated. Thus, proposal work must have equal layers of sophistication including behavioral science techniques and sophisticated negotiation methodologies that is customized to each client.
For example, BATNA (best alternative to a negotiated agreement) equates to the next best course of action a party will take if the current negotiation fails. A potential client will likely be requesting an RFP not only from your corporation but also from your competitors, which continually increases their leverage/power (BATNA) (Exhibit 2). Most corporations often forget that RFPs are BATNA generators. Because the power thus lies with the client in the form of optionality (i.e., multiple RFPs to choose from and leverage at the negotiating table) it is increasingly important to have sophisticated proposal writing and negotiation capabilities to combat this power shift (Exhibits 7 and 8).
Proposal Optimization Approach & Frameworks
We have a proven track record of increasing winning proposals while also raising the revenue per proposal won. In a recent PNI study, we tracked the proposal process for ~700 executives from a variety of industries, ranging from professional services, banking, and CPG/retail. We asked these executives to analyze their proposals against the key proprietary benchmarks created by PNI. These executives found that only ~27 percent of the proposals they created were truly distinctive in nature.
PNI has created a proprietary negotiation and behavioral science proposal toolkit. We help corporations (1) assess each client’s unique needs via internal and external benchmarking, (2) train the proposal team on implementing PNI’s proprietary decision-making and negotiation toolkit for RFP creation, (3) create a war room for internal capability negotiation training, and (4) build metrics to track proposal results and overall system wide adaptation. Finally, we offer proprietary proposal management tools and databases to accelerate and unlock significant, sustainable impact via higher RFP conversions and greater revenue per winning bid (Exhibit 3).
- TOOLKIT OVERVIEW -
Proposal Optimization Transformation Framework
We have developed a proprietary proposal optimization transformation framework in which we take clients through a holistic six-step transformation process consisting of strategic identification, customized platform creation, and function-wide implementation for embedded, sustainable results (See Exhibit 4).
Proposal Decision-Making Transformation Framework
In addition to our proposal optimization framework, we also employ our decision-making framework to ensure debiased, value added proposals across the entire proposal function. Improving decision-making via debiasing efforts can increase ROI by 9 percent and greater. We diagnose the existing decision making, identify the root causes of value eroding biases, redesign the decision-making system, and institutionalize the revised decision-making system via capability building, feedback mechanisms, and metrics/continuous audits (See Exhibit 5).
Roadmap to Maximized Value Capture - 10 Best Proposal Negotiation Practices
Post engagement, you'll be equipped not only with our proprietary playbooks and capability building protocols but you'll also be well positioned to apply our 10 quick win practices to any corporate proposal negotiation, thus ensuring maximized value capture (See Exhibit 6).
3 Proposal Quick Wins
Three Quick Wins
Quick Win #1: Increase Power via Bargaining Zone and BATNA initiatives (Exhibits 7, 8, and 9)
Our clients capture on average ~82 percent of the bargaining zone compared to an industry average of ~50 percent via:
- Analyzing both sides' BATNA to determine the full bargaining zone
- Engaging in covert BATNA RFPs to increase power and bargaining zone capture
- For example, if buying go acquire additional RFPs to increase leverage and market insight
- If on the selling side, covertly request RFPs from competitors, providing the appropriate data for drawing out key market insights
- Leveraging bargaining zone analysis, proprietary negotiation techniques, and capability building initiatives to prepare for at the table negotiations
- Keeping at-the-table negotiations integrative versus distributive to ensure greatest bargaining zone capture and thus value maximized deals
Quick Win 2#: Create a Dynamic Scoring Model to Optimize Real-Time Decision-Making (Exhibit 5)
A dynamic scoring model ensures quantifiable, value-maximizing decision making instead of "gut" based or biased led at the table decisions which can ultimately erode significant value. In addition, practice via war room creation will ensure the scoring model is best leveraged which ultimately:
- Increases bargaining zone capture (allows up to 95 percent settlement rate increase) (Exhibit 11)
- Provides a platform to scale other capabilities across the corporation
- Allows other advanced tactics such as debiasing, opponent perspective taking, and MESOs to be mastered to your proposal optimization
Quick Win #3: Develop Multiple Equivalent Simultaneous Offers (MESOs) (Exhibits 12 and 13)
- Increases the chance of a Pareto Optimal outcome by ~139 percent while also ensuring ~37 percent greater likelihood of reaching a negotiated agreement.
- Provides key insight into the opposing side, allowing for more informed decision making
- Shows flexibility and willingness to concede which improves collaboration and enlarges the bargaining pie
- Naturally fractionates the issues leading to "package" level versus single issue negotiations
Examples of Our Work
We have helped clients unlock enormous top and bottom-line improvements via proposal management transformations. Examples of our work include:
- Example #1 (Exhibit 14): Increased a clients winning proposal rate by 61 percent, improved cross-selling by 46 percent, and increased revenue per winning bid by 21 percent by implementing our proprietary proposal toolkit and negotiation protocols
- Example #2 (Exhibit 15): Increased RFP conversion rate by 58 percent, improved average revenue per winning proposal by 37 percent, and increased margins per winning bid by 6 percent via implementing behavioral science and key negotiation tactics into both proposal writing and at the table negotiations
- Example #3 (Exhibit 16): Improved the chance of a Pareto optimal outcome by ~139 percent through (1) internal and external benchmarking, (2) proposal customization and playbook creation, and (3) behavioral science and proprietary negotiation toolkit implementation
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Additional Client Results
Additional Transformation Services
Our customer experience work ensures top customer engagement/loyalty, top quartile net promoter scores, and a pain-point free customer journey, equating to 12 percent and greater revenue increases
Our digital transformation engagements drive significant growth, innovation, and organizational success ensuring distinctive (1) employee empowerment, (2) product differentiation & (3) customer experience
Our organizational health, culture, and employee transformations ensure ownership, company wide adoption rate, sustainability, and significant revenue and profit growth, including up to 4X ROI
Our sales transformations includes key negotiation and behavioral science levers, allowing our clients to experience revenue improvements of 12 to 33 percent and margin increases from 6 to 17 percent
Our M&A and PE engagements optimize purchase price while ensuring target synergies are fully reached, resulting in 28 to 77 percent higher RTSR and ~37 percent increase in deal closings
We help clients unlock key account value while improving the customer journey via elimination of negotiation pain points, enabling 11 to 17 percent revenue growth and 8 to 15 percent margin increase
Our procurement and supply chain transformations help corporations achieve sustainable cost savings from 16 to 63 percent typically followed by additional cost savings of 2 to 4 percent annually
We help clients improve their decision-making protocols via debiasing initiatives, resulting in 8 to 15 percent improvement in ROI and ~29 percent increase in the likelihood of exceeding targeted return
Our contract transformations increase profits up to 31 percent, improve the likelihood of reaching an agreement by ~95 percent, and increase the chance of a Pareto Optimal outcome by ~139 percent