In the earlier blogs we spoke a lot about Revenue, Cost, Billing Models etc.
While we were speaking, I had two questions which came to mind.
Why are we doing this? What happens after discovering the Price Point?
In the quest to find out the answers, I got to know how a company wins business.
IT IS USUALLY THROUGH RFP!
But, what does it really mean and what is the process for this?
The RFP stands for Request For Proposal, and I will break this down into its composite parts below
For the purpose of understanding, let’s call the company which gives business as “Client” and the company which wins the business as “Vendor”.
- RFI (Request For Information)
This is more like the client asking “Tell us about yourself” to different vendors.
Here, the client is merely seeking information about the vendors so that they can decide who could be their potential partners based on the information provided.
This is mainly conducted to understand the market trend and different types of business strategies which the client can choose.
- RFQ (Request For Quotation)
The RFQ is a detailed document which details the exact requirements of the client and quotation for the same from Vendors.
While the RFI says “Tell us about yourself”, the RFQ says “Tell us how much are you going to charge for this”.
Here the client already knows about the potential vendors and the market trend.
The Price Points which we saw in the earlier blogs will be very useful for the RFQ purposes.
- RFP (Request For Proposal)
This is the main topic here. Now, we understood the RFI and RFQ.
The RFP can be considered a Mixture of both RFI and RFQ along with additional solution.
The client would give the Vendor a detailed document of the requirements.
According to the requirement, the vendor has to analyse the type of business and the Price Point being offered.
Along with this, the vendors should also give information about their company and additional solutions to improve business outcomes.
So, in short, the RFP gives information of the company, the Price Point of the process and additional solutions which is to be offered by the vendors.
For example, the client may not have a universal agent concept and the vendors will suggest it , which is to be supported with a reduction in the Price Point.
This way, the vendors analyse the business, build WFM and Finance Models, build additional solution models and propose the same to the client.
Finally, the Bidding
All the potential vendors will submit their proposal to the clients along with solutions and price points.
Now the client may have different strategies to select a vendors. Some of them are mentioned and explained below.
Here, the client will look only at the lowest price and will go with that respective partner.
Here, the client may select their potential vendors basis the feedback what they receive from other clients regarding the vendors.
The clients may have multiple criteria with certain weightage assigned to them. The highest scored vendor will bag the business.
Example Weightage System
Price Point – 50%
Quality – 25%
Feedback – 15%
Additional Solution – 10%
The normal flow of any new company would be the RFI followed by RFQ and the RFP.
Thank you for reading!!