Should You Welcome RFPs?
By Mike Carlton
The Way it Works
You know the drill. An unsolicited, unexpected request for proposal (or request for information) arrives. It is from a search consultant representing a well known marketer. It is a client you have had no contact with but would very much like to add to your roster.
There is very little info about the marketer’s challenges and needs in the RFP. It is mostly questions about your agency. Most of those questions are logical and make sense. But some are quite intrusive and in your opinion have little or nothing to do with your capabilities of serving this particular marketer.
Almost reflexively, your new business team swings into action. They drop what they are doing and pour their energy into this new opportunity. The atmosphere is heady. Everyone pictures the joy of landing this new piece of business.
But at this point you’re flying blind. The boilerplate in the RFP doesn’t reveal much about the marketer; Its aspirations? Objectives? Needs? Wants? Pain points? Culture? Decision makers? Why they are changing agencies? Budget? These are all unanswered questions.
A call to the consultant doesn’t help much either. He is polite but not very forthcoming. He basically just recites the rules of the process telling you that any questions you have should be formally submitted and they may be answered for you with copies to all the other agencies being considered. And, he won’t even tell you who those other agencies are. Or even how many there are.
Thus, your people are left playing a high stakes game of trying to precisely answer sometimes vague or even irrelevant questions. Not sure of the best way to frame answers to the RFP questions. It’s something of a big guessing game.
So you play by the rules. Finally, usually at the last minute, your package is ready. Off it goes. Then the waiting begins. The marketer misses the date they had set for a response. The consultant tells you that they have been diverted internally by some other issues and will be back to you shortly.
Finally it arrives. The consultant calls to tell you that you came very near to making the short list, but not quite. He thanks you and that’s it. He won’t even divulge the agencies that did make the short list. Or even the other also-rans.
Your people are bummed out. They have spent lots of time and energy on this. But, they quickly get over it. And who knows, there will probably be another RFP next week. And it starts all over again.
But sometimes you do make the short list. That’s when it gets really exciting. The time and money begins flowing big time. You now learn a bit more about the marketer’s issues and interests. Your folks are mobilized. They put their heart and soul into it. They are immensely proud of what they put together.
Then comes the presentation. The emotional roller coaster. Then the waiting. Sometimes you get a call saying you won. Your people are ecstatic. So are you.
But much more often the consultant tells you that it was very close and you came in an incredibly strong second. But you know he’s probably saying the same thing to all the other losers. Your people are devastated. They wonder why? What happened? But there is no answer.
What’s Going on Here?
The whole idea of marketers using search consultants and the RFP process is really fairly new. It used to be that most marketers selected agencies largely on the agency’s reputation and their personal relationships with the agency’s leaders.
They wanted an agency that had proven performance in the advertiser’s marketplace. An agency that had a clear and unique reputation and culture. One with well defined and well internalized principles and creative standards.
And, most importantly, an agency run by people they had faith in.
A Simple Idea
This was a simple but quite successful idea. It worked. And continues to work for a lot of smart marketers that choose not to use search consultants and the RFP process. Ones that really understand the fundamental basics of this business and how to employ agencies most effectively.
And the good news is that a surprising number of client/agency engagements still are made this way.
Complicating That Simple Idea
Unquestionably though, the use of RFPs and search consultants has grown dramatically in recent years. It is said that this more rigorous, some say more scientific, process assures a better match between client and agency.
Yet that is a hard premise to prove.
Clearly the overall tenure of client/agency relationships is shorter today than it was just a few years ago. So the use of RFPs certainly doesn’t seem to have made client/agency relationships more enduring. And it is almost impossible to measure if the effectiveness of agency work is greater today than it used to be.
So, it is hard to find convincing evidence that the RFP and search consultant process has delivered significant value to either marketers or agencies.
It just seems like the selection and engagement process has become more complicated, more expensive, more impersonal and more frustrating.
So Why Is it Done?
This is not an easy question to answer. Some believe that there are three factors at work here; First, general market conditions. Second, internal dynamics within the marketer’s company. Third, the character of agencies themselves.
Let’s look at each of these factors:
1. Market Conditions
A basic rule of economics dictates that the law of supply and demand ultimately controls every market.
The Great Recession has had a devastating impact on the advertising agency industry. Clients slashed budgets. This led to massive overcapacity within agencies. And in response many quickly shrank their staffs by a quarter to a third or sometimes even more.
Yet even with the cutbacks the supply and demand balance still swung dramatically in the marketer’s favor. This gave the marketer a greater array of choices. And greater control over pricing. As well as a special sense of power.
Yet at the same time hungry agencies quested after almost any new business, even if they were not well suited to handle it.
Thus, one could argue that it made sense for careful marketers to more thoroughly vet the potential agency resources they might choose to use. And the RFP process made that vetting quicker and easier.
The marketer held the hoop. And agencies gleefully jumped through it.
Interestingly, with the economy now improving it appears that many agencies are now operating at capacity, or close to it. In classic economic models this could tip the power balance back in the favor of agencies.
This may allow agencies a bit more client selectivity, a bit more pricing power and a bit more swagger.
2. Marketer Internal Dynamics
The past few years have been really tough on CMOs. The average chief marketing officer job tenure has dropped to about two years. Not much time to deliver real results.
In this environment justifying decisions can mean the difference between keeping a job and the unemployment line. Even if the RFP process is only window dressing to validate a predetermined agency preference.
So it is no wonder that many senior marketing people have embraced the RFP and search consultant process. It is safe and sanitary. It provides documented validation supporting the selection.
Yet the reality is that safe decisions in advertising and marketing are usually not the most effective in the marketplace. Nevertheless in this time of immediacy short-term safety can trump long-term success.
3. Agency Character
As Pogo once said, “We have met the enemy and he is us.”
Like it or not, agencies themselves have almost invited the RFP process. It is increasingly hard to distinguish one agency from another. And that encourages marketers to use RFPs to discover and document small, sometimes inconsequential, areas of agency differentiation.
We are in an era where it is common for many full-service agencies to attempt to be all things to all people. The “We can do it all” is a reoccurring theme. Yet common sense tells us that with increasingly complex markets and the proliferation of ways to commercially communicate even the biggest agencies and holding companies can’t do it all. No one can. Different talents, skills and experiences are needed for almost every marketing challenge.
Thus CMOs are faced with a sea of agencies that, to the marketer at least, look like Frick and Frack. And this impression is fortified by the constant movement of individual talent from one agency to another. Sometimes clients change agencies only to end up having many of the same people working on their account. It just doesn’t make much sense.
The unfortunate truth is that many agencies that guide their clients in building strong brand individualism are guilty of allowing their agency’s brand to become commoditized.
Some Things to Think About
It is not pre-ordained that the principal way to get new business is through the RFP process. It is an important way. And one that may be precisely right in some circumstances. But it is not the only way. Agencies do have choices.
But changing things is not easy. Particularly when so many worthy marketers are choosing to use RFPs. Yet every business arrangement should be a win-win situation. Marketers need good agency services just as much as agencies need good clients. If the selection process is unbalanced it serves neither very well.
If you believe there is benefit in leveling the playing field to become less dependent on the RFP process, here are some things worth thinking about:
1. Clarify Your Brand
Really strong agencies usually have a strong consistent brand perception. Marketers know what these well branded agencies stand for. Their unique successes. What they are good at. What they believe in. And the principles they embrace.
The market also knows what well branded agencies are not good at. And the kind of work that is not appropriate for them. This prior knowledge makes agency selection faster, easier and less expensive.
It is not uncommon for well branded agencies to be personified by a strong and very public leader. Marketers knew what David Ogilvy, Leo Burnett, Jay Chiat, Bill Bernbach, Pat Fallon and Alex Bogusky were all about. The brand values of each of their agencies were crystal clear.
This clarity attracted the right kind of clients and employees. And it excluded those marketers and people not suited for the agency’s culture and capabilities.
Unfortunately, this kind of clarity is hard to establish and even harder to maintain, particularly when agency management changes.
So, if your agency’s brand attributes and perceptions are a lot like those of competing agencies the RFP process becomes almost inevitable.
2. Market Your Brand
Ironically, while many agencies are superb at marketing the brands of their clients, they can be terrible at doing the same thing for themselves.
Too often agency business development programs are built around mailing out elaborately clever dimensional stuff followed up by outbound phone calls. Calls sometimes not thought out much more than saying, “Hi. I’m from agency X. Hope you got our mailing. We just wanted you to know we’re around and ready to work with you when the time is right.”
This is sales activity not marketing. As the saying goes, sales is when you call the prospect. Marketing is when the prospect calls you. And well branded agencies do get the calls when the marketer is ready to move.
And start with a giant advantage even if the marketer still chooses to issue an RFP.
Building a strong agency brand takes time. Lots of time. And it takes unremitting consistency. Years of it. Even decades. But it works. And the good news is that it doesn’t necessarily cost a lot of money.
3. Focus on Your Strengths
Every agency is excellent at some things and not so good at others. That’s just the way it is. Be honest with yourself. Know what those strengths and weaknesses are. Then play the strengths, constantly enhancing and marketing them. Become well known for those strengths.
And at the same time, accept the weaknesses. While there is an enormous temptation to try to improve on the agency’s weak areas resources expended there will likely come at the expense of improving your strengths.
It is hard to maintain a laser-like focus just on your strengths But not adhering to this concept can lead to an agency that is pretty good at a lot of things but not really excellent at any. Thus becoming a prime target for differentiation created by the RFP process and search consultants.
This means when a prospect needs something that you are not very good at you should be prepared to say no, thank you.
4. Be Financially Ready
But saying no isn’t easy if you need every bit of revenue you can possibly get. Thus it is vital to embrace a business model that is first and foremost consistently profitable.
It wasn’t so long ago that agencies were measured by their headcount. Their size and heft. But that is changing. Today the lean and nimble agency can often outperform its larger and more traditional competitors.
This means carefully controlling committed expense. Having only the absolutely necessary number of full-time people on staff. And then augmenting them with project focused contingent talent as needed. As well as avoiding expensive inflexible real estate commitments.
Restful nights come easier when you know that any particular new business opportunity is not critical to the agency’s well being.
5. The Inside Track
While no one likes to talk about it, it is not unusual for one agency to have the inside track in an RFP agency selection process. An agency that, if the truth be known, the marketer is biased towards well before the RFP is issued.
This agency may have had a prior relationship with people at the client. Or it may have been courting the client for some time. Or even have an active mole within the client organization. In any event, the inside track agency may know of the RFP well before it arrives.
So if you receive an unexpected RFP you might ask yourself if there might be an inside track agency. And what that might mean for your agency’s chances.
6. Be Selective
With a tight focus and a marketing machine behind it a profitable agency can increasingly pick and choose what opportunities are right for it. And what RFPs are worth responding to. While politely declining those situations lacking proper fit.
So, instead of immediately responding to a questionable RFP, what would happen if you told the consultant that before responding you would like to spend one hour with the marketer’s leaders?
From this brief encounter both the marketer and the agency should have a better idea of their appropriateness for each other. And if the marketer turns down this offer it probably tells you something about what a relationship with them might be like.
There is an interesting psychology that can go to work when you politely redirect a new business invitation. It is not unusual for the marketer and the search consultant to be surprised by a show of courage and conviction. And suddenly see your agency in a different light.
There can sometimes be something of a subtle role-reversal. Going from them expecting you to court them to their tentatively starting to court you. Not a bad dynamic in approaching any potential business engagement.
Dance to Your Own Tune
In primitive terms, the RFP and search consultant process is a mating dance. An elaborate and tightly choreographed event in which the marketer is the dance master. He determines the dancers. He selects the dance hall. He calls the tune. It seems like agencies are almost like puppets in this show.
And a lot of it may be just that, a show.
Is this a healthy way to create an effective, strong and durable engagement? For the marketer? For the agency that wins? Not to mention the unproductive effort for the other participating agencies.
There are better ways. And strong agencies are embracing them.