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August 16, 2016


You've probably heard the adage "the lowest price does not necessarily equal the best value". And too often, the lowest price ends up not really being the lowest price, much less the best value. In our constricted economy, with everyone trying to stretch budgets, many marketing and creative projects are initiated with Requests For Proposals (RFPs) that get sent out, scatter shot, to a bunch of prospective creative firms, agencies or freelancers. At the agencies, someone has to process these requests, prioritize them, and decide which ones are worth pursuing. Even when the agency has a conversation with the person making the request, a proposal will still largely be a shot in the dark. A written proposal, as the sole means of making a choice of creative partner, is fraught with missed opportunities, miscommunications and misunderstandings. Beyond all that, whose not guilty of flipping through a proposal and just looking at the fees?

Understandably, people contracting with creative partners have anxiety. After all, it is not like buying a widget. Choosing a creative partner or starting a project can feel like leaping into the unknown. There are so many options out there, and how do you know if you are getting the right team for the project?

A written proposal, as the sole means of making a choice of creative partner, is fraught with missed opportunities, miscommunications and misunderstandings.

The True Costs of RFPs

Organizations spend a lot of time preparing RFPs and reading all the proposals submitted by agencies and firms. And, at This Is Folly, we often get the sense that RFPs are being used to establish a budget for a project, that the client has no idea how much a particular project should cost and that they don't have a budget in mind. And, when they get back wildly-different proposals, the numbers appear to be capricious and subjective. Sometimes they are, but more often the agencies are simply interpreting the projects very differently. At that point, the client still isn't able to compare apples to apples, as the variables the agencies used are very different.

From the agencies perspective, it takes time to write the dozens and dozens of (largely) random RFPs we receive every year. Because the return on proposals is fairly low, agencies have to write a lot of them to generate business, despite any process in place to evaluate which are a good fit. Time is money, and so that time becomes an expense added to the cost of doing business. Smaller firms can easily dedicate a substantial portion of one person's time every month just getting work in and responding to and writing proposals and estimates. Larger firms may have entire teams dedicated just to new business and proposals. But isn't that just the cost of doing business? Perhaps, yes, but those costs are passed along. Those costs are then reflected in the fees agencies and creatives need to charge to make a living or be a viable concern. According to Cal Harrison of Beyond Referrals, "excessive proposal writing costs are a $20 billion+ (yes, "billion" with a "b"!) problem in North America." (See video link at bottom of article for source.)

RFP Often Misses The Mark

And, once a project is awarded, presumably to the lowest-priced agency, the client has little more guarantee of a successful project than if the firm were picked out of a hat, particularly if price was the only measure and dialogue was limited. Perhaps the project goes off without a hitch and the agency comes in on budget. But it is just as likely that to offer that low, low price, the agency had to restrict variables, offer fewer options and less time and/or rounds of revisions on the project than is needed, put a less-experienced staff person on the project, or they may actually not be a capable firm or a good fit. Then the change orders start to roll in, as rounds of revisions occur and suddenly the overall cost of the project goes up. Or the end product is substandard or misses the mark. Or, even more likely, wasn't really what the problem warranted in the first place. These are some of the ways in which the lowest price turns out to not be such a great value after all. From the beginning, the relationship is set up to be transactional vs. a mutually-beneficial, engaged partnership.

If you were to ask marketing folks and creatives what their biggest lament is, you might assume that it would be compensation. And, while that is an important issue for everyone, more likely a major complaint would be that marketing and creative folks are brought in too late in the process, that the clients prescribe solutions and then ask creatives to merely create and execute tactical work. And the RFP process is at the root of this issue. Instead of the client calling in a creative partner and saying, "Here's my problem. What approach would you recommend to find a solution?", the client, who feels compelled to define concrete deliverables in the RFP, says, "I need a brochure and a website. Give me a price to do that." And once the RFP is written and a proposal drafted, everyone is moving down the path that was established by the RFP, even though perhaps the client really would have benefited from a social media strategy or a repositioning, or whatever the case may be.

At the end of the day, we're all paying the costs of RFPs and it may be that they are an unproductive load on business. One could draw a parallel to how accidents drive up the GDP, but aren't really what we consider a positive force.

RFPs: Good For Buying Pencils, Bad For Buying Custom Solutions?

As a business, corporation, or non-profit, you might be thinking, "But I thought I was doing the responsible thing sending out RFPs! How am I supposed to find good creative partners and get projects done? How do I make good choices? How do I know I'm getting fair and competitive pricing?" Increasingly, there is talk in the marketing and creative industries—as well as other industries—about other methods of selecting the best partner for the job and addressing these concerns.

Cal Harrison argues that professional services are not a commodity, even if marketing and creative often feel like they've been commoditized in today's economy. Rather, compensation varies based on the level of experience of the agency staff, the time needed to complete the process and the degree of complexity, overhead, etc. Cookie-cutter requests lead to cookie-cutter solutions (garbage in=garbage out). Professional and expert services, particularly when they require a high degree of collaboration and input from both parties and when customized solutions are developed, are clearly not suited to the more black-and-white, non-interactive RFP process.

What process should we be using? One potential approach, for those of you who like acronyms, is “Qualifications-Based Selection” or QBS.

Is There A Better Way?

So, if lowest price doesn't guarantee you best value or a successful result, what would? What process should we be using? One potential approach, for those of you who like acronyms, is "Qualifications-Based Selection" or QBS. In simple terms, it is using a process to select the best, most qualified partner(s) for the job, and holding off concerns about pricing until the end of the process. Seem counter-intuitive? Sure, it requires a rejiggering in corporate procurement culture, but it really isn't such a strange idea. Focus on selecting the right person for the job first, and let pricing happen at a more appropriate and considered moment.

So, how would a qualifications-based selection process work?

Step 1. Establish the qualifications you require. Too often, we've seen clients choose a web developer to do a branding project, or an advertising agency to develop packaging, most likely because they didn't have a clear set of criteria by which to choose a partner. Rather than using price as your primary deciding metric, develop a set of criteria, or a rubric, for what qualities and qualifications you require in a firm. Use these criteria to both develop a list of prospects and to evaluate them throughout the process. Consider that while sometimes it is efficient to use a one-stop shop, you might also get great results by asking the best creative firms in their respective disciplines to collaborate and coordinate.

Below is a starter list of qualifications for you to consider and build on:

1. Is a reputable firm; well-regarded by their peers and their clients; award-winning; an established body of work

2. Utilizes industry best practices; ethical

3. Is clear about the process used; can explain how work will happen, milestones, etc.

4. Can demonstrate experience in the specific discipline required, if special skills or knowledge are required (i.e., SEO, advertising, signage, branding, packaging, etc.)

5. Can demonstrate experience and/or specialization in the relevant or related industry (Note: sometimes this is important, sometimes it is not. At times, fresh thinking is needed and using a firm too saturated in a particular industry is a detriment rather than an asset.)

6. Is transparent about who will be performing the work

7. Is forthright in communication; openly answers your questions; honest

8. Is a good fit for the personality and culture of your organization; do you like them? Can you work with them? Are they a good fit with your culture? Do you need a disruptive force to shake things up or a firm that will mesh seamlessly?

9. Appealing, high-quality work that delivers. Don't be fooled by hype or glamour; is the work on strategy? Does it work? Is the prospective agency able to talk convincingly about the results of the work?

10. Add your own criteria.

QBS: Qualified Partners

Step 2. Establish a short list. Create a short list of a couple of prospective firms. Research firms online, ask for referrals, call up companies whose marketing and creative you admire and ask them who they are using.

Step 3. Invite agencies in for a chat.
Ask your top picks to come in for a capabilities presentation and a chat. Important: be clear that you are not interested in their hourly rates, fees, estimates, bids or proposals at this stage. The purpose here is to connect with the agency, and allow them to present their expertise, capabilities, tams, relevant projects, etc. Use your criteria or rubric to honestly evaluate and score the interactions with and experience of the firms. If you need to, ask your short, short list back for a deeper level chat or to clear up any uncertainties you may have. Most firms should be more than happy to have meetings to get to know you better rather than to write cold proposals, which is no better than throwing darts at a board while blindfolded. Keep in mind that while you are interviewing the prospective agency, they are also interviewing you! Transparency and honesty on your part about your organization, your expectations, etc., will contribute to both parties being able to determine if the partnership will beneficial to all.

When you think you have know which agency is the best fit, let them know you are ready to talk more specifics and thank everyone who graciously participated in the process.

[Note that Steps 4 and 5 could swap order, depending on the project.]

	1.	At the end of the process, you have a realistic, well-considered plan and budget in hand. The agency is invested in the work and will feel that they are your valued partner and not a commodity.

Step 4. Scope the project. Depending on the project, you may have clear objective and deliverables, for which you can establish a budget, or you do not. Here's where this process really works to everyone's advantage: work with your preferred partner to explore and define the scope of the project and even to co-craft a creative brief. Depending on the scope of the project, this may be able to happen in a single meeting or together you may decide to initiate a discovery phase to explore the problem deeper before landing on tactics and executions. By tapping into your partners' expertise, and strategic and design thinking, you are likely to get a more innovative and effective approach than you might otherwise. The agency knows by now that you are serious about the project, and you know that this is the agency you want to work with. This allows both parties to have deeper level conversations.

Step 5. Define and share a budget. Gasp! Share the budget?! Yes, share the budget! Once the project, scope, objectives and deliverables are defined, work up a project budget based on the actual work required. If you don't know what a project like yours might require for a budget, simply ask. Call up several reputable firms of various sizes and ask for ball-park ranges for projects. Let them know that you are asking for your own information and to develop appropriate budgets. Most firms of any repute are likely to want to help you. Be honest with yourself and your partner about what you are willing to spend and about what you really want to achieve.

QBS: Find Valuable Partners

Step 6. Negotiate with your preferred partner. Now that you have a budget in mind and a project scope, ask your preferred partner to work up an estimate for what the work will cost. At this stage, the agency has some assurance that you aren't trying to get a low-ball bid and they will be more forthcoming about what the real costs will be. And, by knowing your budget, they will be able to tell you if your expectations are realistic or not, and what is a fair price. You may have to give up some wish list items or make some shifts. The agency, in turn, has incentive to try to find an approach that will fit your budget. After some honest negotiations, if for some reason, you are unable to come to an agreement, agree mutually that the relationship will not be a good fit for this project, and move on to your second choice of agency partner. (Now you see why it is important to be gracious to the rest of your list!)

Step 7. Sign a contract and start the work! At the end of the process, you have a realistic, well-considered plan and budget in hand. The agency is invested in the work and will feel that they are your valued partner and not a commodity. The work is likely to be more successful and, consequently, a better value. You are confident that you have made a good choice and that your chosen agency will deliver.

This proposed new process has a lot of advantages for both parties. While there is growing consensus on the topic, it is still a relatively new idea. But perhaps it is time to consider blowing up the old RFP!

Check out this TEDX talk on the topic, though it is about a different industry (it starts a bit slow, but picks up): Five billion reasons to change the RFP.

And share your thoughts and experiences! Let's get the discussion going and make a process that is more efficient and effective—a win-win for everyone!

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