ticularly apocalyptic view of the world, doing business with a sound agree-
ment in place that clearly establishes expectations for each party involved
and addresses contingencies is simply good business. For firms that special-
ize in big government, health care, architectural, and IT projects, attorney
involvement can be increasingly significant and necessary.
Legal expertise is most efficiently used during the development of boiler-
plateâ€”or reusableâ€”sections of the proposal. Attorneys should review a â€śtyp-
icalâ€ť proposal to ensure that its terms and wording are appropriate and that it
meets generally acceptable industry standards. Chapter 19 covers the reten-
tion of legal counsel extensively.
DEVELOPING BOILERPLATE DOCUMENTS. Developing customized pro-
posals for attractive prospective new clients is a no-brainer; it gives your
firm the best chance to win. But developing each new proposal from scratch
is wasteful and unnecessary. Many components of the document can be
preprepared and sitting on a shelf, waiting to be customized, especially since
most firms are competing for similar types of business (e.g., corporate law,
Internet marketing, disability insurance). These components include:
â€˘ Firm background
â€˘ Service offerings/project description
â€˘ Terms and conditions
For each new proposal, the Introduction, Situation Analysis, and Costs
sections will differ significantly from opportunity to opportunity, as will the
Project Summary, but even those areas will lend themselves to replication
Most professional services business developers are capable of doing a sig-
nificant amount of proposal development and will benefit by leaning on mar-
keters and attorneys when crafting boilerplate documents, but shouldnâ€™t
need to rely on others much once the process is established, except in un-
172 The Front Office: Driving Sales and Growth
Pricing and Negotiating
Once a proposal has been submitted, 90 percent or more of business develop-
ment activities should be completed with the prospect, including cost discus-
sions. However, negotiating, and more specifically, negotiating about price,
Donâ€™t dread these discussions; embrace them. If it makes you uncomfort-
able, get over it or hire someone who is good at it. But remember that this is
the most opportune time to address these issues and get them taken care of so
you can move forward and build your relationship with the client, according
to terms that are agreeable to both parties.
â€śI DIDNâ€™T EXPECT IT TO COST THIS MUCH.â€ť If you get this response,
you did a poor job communicating with the prospect during the needs assess-
ment and proposal development process. Chalk it up as a lesson learned and
vow to get better in the future.
When dealing with the issue at hand, walk the prospect through the pro-
cess of how you arrived at the fee. Sticker shock is not unusual (though the
proposal is not an ideal medium for delivering that shock), but further un-
derstanding will help the situation. Discuss the competitive conditions of
your industry and provide third-party, objective confirmation of those dis-
cussions, such as cost ranges for similar services. Do not simply introduce
cost-savings measures; discuss the proposal in the prospectâ€™s hands.
â€śTHIS SEEMS EXPENSIVE.â€ť This response is similar to â€śI didnâ€™t expect it
to cost this much,â€ť but with unique nuances. Expensive means relative to the
competition, as opposed to a statement about the absolute cost of the project.
The prospect is asking you to justify your premium, so now itâ€™s time to talk
about your organizationâ€™s pedigree and why the prospect will be getting the
most for his or her money by deciding on your firm.
Alternatively, you can discuss the fee in relation to the value of the proj-
ect. For example, â€śOur fee is $200,000 for the project, but the outcome will
save your company $2 million in excess inventory over three years, so it
seems fair to me.â€ť This is a desired approach, but not always possible, such as
with large IT projects that are billed on a time-and-materials basis. In these
instances, companies may be looking for a target blended hourly rate. â€ś Youâ€™d
better be affordable today,â€ť says Sarah Casalan, vice president of IT at Ecko
â€śWE NEED TO ADDRESS A FEW ITEMS.â€ť This is good news. This re-
sponse implies general agreement on the proposalâ€™s terms, with the caveat of
having to address a few items and iron them out before moving forward.
These could be delivery dates, terms and conditions, staff assignments, and
Proposal and Reference Management
so on. Rarely will you lose a prospect at this stage if you act in good faith and
When to Bend and How to Do It
Some organizations are smart users of professional services firms, others
rarely use external vendors, and still others squeeze services companies at
every opportunity. The type of organization you are dealing with will dictate
your strategy to some extent.
Regardless, maintaining a focus on the long view is imperative. â€śNo matter
what sector your firm competes in, itâ€™s a small world and people have long
memories,â€ť says Jim Jonassen of Riviera Partners. â€śIf you give away the farm
today, people will remember and expect the same treatment the next time
around, which could be a month, a year, or five years later. Itâ€™s a tough position
to retreat from.â€ť
Thatâ€™s not to say you canâ€™t reposition or make smart concessions, though,
and the firm should consider a variety of factors in pricing engagements or
â€˘ Establishing a relationship: If youâ€™re looking to establish a relationship
with a new client who is in your firmâ€™s sweet spot and has considerable
potential, get creative. You can deliver on the project at a fixed rate that
you know will fall short of desired profit margins, but youâ€™ve inserted
your firm at the hourly rate you are seeking. Or adjust the fee to weigh it
more heavily on success criteria, such as project milestones, which will
make the client feel better about the deal. Other options are virtually
limitless: taking equity in lieu of cash, providing guarantees, reconfigur-
ing payment terms, bartering, and so on.
â€˘ Reducing scope: Most proposals include at least a couple of â€śnice to
haveâ€ť deliverables. And most client organizations can offer some level
of assistance with a project. These two approaches can be used to re-
duce the scope of the services delivered and, oftentimes, reduce the
cost of the project. Never reduce fees without some kind of commensu-
rate concession by the prospect; itâ€™s bad business and will negatively af-
fect your reputation.
When youâ€™ve pursued all of your options and still canâ€™t arrive at agreeable
terms, the writing is on the wall and you need to demonstrate the courage to
walk away. Itâ€™s not easy, but if done professionally, you can maintain the rela-
tionship and continue to mine it for future opportunities. After all, different
tools are appropriate for different jobs. Firms are often hired by companies
that passed them by during a previous vendor selection process because of
rate sensitivity or another reason.
174 The Front Office: Driving Sales and Growth
Follow-Up and Closing
Itâ€™s been said that consumers love to buy but hate to be sold. Even under the
most vendor-friendly situation, thatâ€™s not the case in the business-to-business
world. Itâ€™s not that personal of a transaction and rarely provides instant grat-
ification. Even once the decision has been made to hire a firm, documents
often take weeks to get through the system and authorized before the project
can formally commence.
Professional services business developers need to be patient, yet diligent
enough to keep the momentum going. Lance Armstrong, six-time winner of
the Tour De France, once said, â€śIâ€™m a big believer in momentum,â€ť and this
principle holds true during the proposal process. Even though youâ€™ve deliv-
ered a highly polished proposal on time or even in advance of the deadline,
itâ€™s typical for prospects to inform you that theyâ€™ll â€śbe back to you with a de-
cision in a week,â€ť but that decision gets tabled for a month. After all, one of
the main reasons they are hiring an outside firm is that they are unable to
handle the project themselves, so it should come as no surprise when they get
overburdened by keeping the business running day to day.
In the meantime, staying in regular contact with the prospect is critical,
while not being perceived as overzealous or even annoying. E-mail serves as
an effective tool here, sending notes indicating that you are â€śjust checking in
and available for any questions,â€ť and sending along relevant articles and re-
search when appropriate in an effort to differentiate and continue to add
value. At this point, there is little you can do to hasten the process except re-
mind the prospect of the time line or next steps they agreed to in the previ-
Managing the Proposal Development Process
The key to managing a successful services firm is staying focused on two ini-
tiatives: delivering superior client services and maintaining a steady new
business pipeline. Working in concert with lead generation activities, the
proposal development process is a service firmâ€™s gateway to new clients and
opportunities. As such, it commands a firmâ€™s resources in the form of execu-
tive commitment, investment, and continuous improvement.
Services firms are generally organized in one of two ways: as a partnership
or corporation. New business development responsibilities at partnerships fall
on the shoulders of the partners; corporate entities operate more tradition-
ally, employing a salesforce.
An effective proposal development process f lows as follows:
1. Management and sales evaluate the opportunity to gauge its worthiness.
2. Assign a point person to manage the process once a â€śgoâ€ť is determined.
Proposal and Reference Management
3. Conduct preliminary meeting with prospect to present qualifications
and gather detailed requirements.
4. Assemble the necessary experts inside the firm to discuss the project
and determine the specific resource requirements.
5. The point person develops the proposal and distributes for review and
6. The proposal is delivered.
7. Negotiation and follow-up questions may ensue, and the point person
accesses necessary experts and /or executives to address the issues.
Though the process management is fairly straightforward, a variety of
factors contribute to regular and predictable new business acquisition:
â€˘ Effective lead generation techniques: At-bats are important.
â€˘ Strong frontline people: The quality of your business developers is
paramount, since they are perceived as being directly representative of
the quality of your firm (unlike product salespeople, whose wares can
stand on their own). Partners selling services they deliver on personally
is ideal but costly, especially when the sales cycle for big projects can
last months and run hundreds of hours in investments. Nevertheless,
smart account managers are what prospects are looking for, not shal-
â€˘ Team involvement: When service delivery professionals are included
in business development efforts and have a say in the process, they are
much more likely to provide positive support to the ongoing servicing
of that new client. They can also offer valuable insights, though they
admittedly can sometimes hinder the process as well if not managed
â€˘ Establish the process and get out of the way: Senior management, if not
directly involved in new business development on a daily basis, will
often be enticed to become overinvolved with these activities given
their high stakes. But this can become counterproductive and hurt
morale. Work hard to implement a solid process and then oversee it reg-
ularly, but keep a distance.
The main purpose of proposals is to secure new business with a new client.
But a variety of documents are involved with either the new business devel-
opment process or with the working relationship with a new client. These
documents are described here:
176 The Front Office: Driving Sales and Growth
â€˘ Request for information (RFI): An RFI is a document issued by larger
or governmental organizations that are seeking to establish their short
list of vendors for evaluation. RFIs are sent to 8 to 15 or more firms for
completion, requesting general information about the vendors, with in-
formation organized in such a way that facilitates comparisons.
The first time a firm completes an RFI, it is a time-consuming pro-
cess. But future RFIs take less and less time because they are often sim-
ilar in structure.
â€˘ Request for proposal (RFP): An RFP can follow an RFI process or be is-
sued standalone. An RFP usually provides a fair amount of information
about a projectâ€”the premise is to provide enough details so that firms
are able to develop a proposal in response. However, there are usually
holes in the RFP that must be discussed with the prospect.
RFPs are widely used in public workâ€”federal, state, and munici-
palâ€”where formal processes are in place to try to guarantee objectivity.
They are also used in the commercial sector. Because of the nature of
RFPs, responding blindlyâ€”without establishing a relationship with the
buyerâ€”results in low conversion rates. Make every effort to make con-
tact with the buyer and assess the opportunity before walking down this
path, which can be costly and rarely yields new business.
â€˘ Master services agreement (MSA): An MSA is used by many service
companies that do business with clients regularly over the long termâ€”
consulting firms, IT services companies, marketing companies, and so
on. The document governs the overall terms of the relationship be-
tween the client and a vendorâ€”issues such as ownership rights, fees,
payment terms, termination, confidentiality, and so on.
The MSA is effective because it allows clients to call vendors and
request support quickly and easily without having to issue formal pa-
perwork. Many of my firmâ€™s MSAs specify that any piece of work that
requires fewer than 30 hours can be completed based on a telephone
call or e-mail, whereas projects that require 30 or more hours require a
statement of work.
â€˘ Statement of work (SOW): An SOW describes a specific project being
completed, along with its details. For example, when Pixel Bridge con-
tracts with a new client to build a new web site, it executes two docu-
ments: an MSA, which governs the general terms and conditions of the
relationship, and an SOW, which describes the specific web site devel-
An SOW provides a blueprint for the project, describes how a proj-
ect will be completed, and assigns responsibilities. In the web site de-
velopment example, if the proposal requires 1.5 pages to describe the
project and how it would be completed, the SOW requires 6 to 10 pages
because of the additional detail.
Proposal and Reference Management
â€˘ Change order: A change order is issued when something changes during
the project that falls outside the SOW. This generally happens when a
new requirement is added to the project, such as a new system feature,
or the project is expanded to include an additional assignment outside
the original scope (e.g., instead of recruiting one sales executive for the
client company, why donâ€™t we recruit two while weâ€™re at it?).
Change orders have enormous importance in the professional ser-
vices industry given the prevalence of scope creep. When clients are
managed properly, scope creep is readily apparent and easily accounted
for through the use of change orders; when projects arenâ€™t documented
properly from start to finish, getting clients to pay additional fees for