If you had two opportunities, one a potential contract with a client you’ve been after for some time and one a bit of business you’ve had for 10 years, where would you and your team be focusing?
Does that seem like an unfair question? In fact it’s probably a judgement you are making subconsciously every day, possibly without realising it.
In a series of articles I’ll be looking at some of the issues around being an incumbent supplier: how you should make the most of your advantages when rebidding, and some of the pitfalls of being an established supplier.
Losing a contract is tough
Sometimes businesses know that they’ve been underperforming and in some cases businesses have been looking for a way out of an unprofitable contract; but in most cases businesses approach rebidding with confidence. There’s no doubt that being the incumbent gives you an advantage, change means risk and it’s often easier for clients to stick with what they know. That’s why failure often comes as a shock – it’s rare to find a business that genuinely ‘saw it coming’.
When businesses lose contracts that they’ve had for some time it can be traumatic. And when the dust settles and the recriminations stop what you’re often left with is a picture with some common features.
When trying to work out what went wrong here’s what I often find:
- A business that is highly focused on growth and winning new contracts.
- A business that believed it had developed strong relationships will all of the right people in the client’s organisation.
- A business with marked demarcation between operations and business development teams.
- Warning signs that were ignored or downplayed but should have been flagged-up and dealt with ahead of time.
But before we go on it’s probably worth reminding ourselves why retaining existing contracts is so important:
- Staff morale. This is more than just job security (although that clearly matters to your team). Even staff not directly involved with the lost contract can become concerned about the future of the business when an established contract is lost. Personal development and promotion opportunities can also be undermined.
- It was work you knew how to do. You have the team in place and they are all properly trained. Winning new business at the expense of existing contracts could mean recruitment and retraining costs.
- There are many more unknowns involved with new contracts than there are with existing work. Every unknown is likely to impact on the margins you had budgeted for. Has any brand new contract ever worked out exactly the way you envisaged?
- Being an established and stable service provider allows you to negotiate better terms with your supply chain.
- Losing existing contracts can dent your reputation and standing in your marketplace.
- Existing contracts, where you know the business well, provide an opportunity experiment and innovate that might be too risky with a client or business area you know less well.
- Retaining contracts proves that you deliver on your promises and can work well with your clients.
But probably the most persuasive reason is that the cost in time, energy and resources of retaining business is much smaller than for winning new contracts. And each new contract means another steep learning curve that you’ve already climbed with your existing work.
So the question for all businesses is how much effort goes into rebidding opportunities compared to opportunities with new clients?
The thrill of the new
We all like the buzz of securing a new piece of business with a new client, and businesses need to expand and diversify their customer base, but I’d make a strong argument for treating each bidding opportunity as though it were new. Alongside this I’d also put processes in place to ensure you gain the maximum possible advantage of your position as the incumbent. This approach gives you the best of both worlds.
Ask yourself this: Where do your most talented account managers and business development staff focus their energy?
In the next article I’m going to explore in more detail the benefits of being an incumbent and look at the ways you need to capitalise on these benefits during contract delivery and when it comes to rebidding.
The important message for now is to reflect on what it would mean if you lost one or more of your biggest contracts. And then look at your strategy for retaining that work – which actually means much more than just delivering what you are contracted to do.
It’s quite likely that your competitors will be aware of when contracts are coming up for renewal – particularly if they were unsuccessful bidders the last time. What have they been up to in the meantime; waiting around? Or have they started to cultivate relationships with your client? Learning the lessons of what they did wrong so they can make a better pitch next time around?
Never assume that the business is yours to lose.
If you have a rebidding round coming up I can help ensure you're leaving nothing to chance. Call me on (01963) 240555 or email Hugh@thebidcoach.co.uk for your free initial consultation.