Not getting the job unless you submit a bid so low that you’re not sure how you’ll actually do the work? It’s probably time to shift out of the low-bid procurement grind. Pros say it is possible, though it takes a mind set change, along with patience and perseverance. Read on for advice about how by bidding less frequently, but more planfully, you can break out of the business as usual cycle.
Stuck In The Low Bid Trap?
Bidding and losing is exhausting, and the trap of low bidding and winning is exhausting too. These are truths most construction professionals can readily empathize with. At Well Built Construction Consulting, Matt Verderamo observes that the first step out of the low bid trap is a mindset shift, and offers this encouragement:
Some companies believe there is not a better way to win work, and so they give up trying. They keep bidding everything and hoping for the best, but don’t take action toward escaping….You must believe that your company can change the status quo and start negotiating work, otherwise you never will….Experience and quality matter, but they are not enough to negotiate work….Every contractor says they have experienced staff who build with high-quality….If the buyer views you as the same as your competition, then they base their selection on price. So, you’ve got to do more to differentiate than simply say you are better. You have to actually be better and get good at selling it.
For many contractors, the vicious cycle of constantly hitting bid deadlines probably means not enough time is being spent on selling and winning, and as Verderamo reminds us “At the end of the day, your goal should never be to bid; it should be to win!” Begin shifting away from the low-bid trap by asking these strategic questions:
- Are we bidding too often?
- What do we do that is better and different than our competition?
- Do we have a solid go/no-go that makes it clear what projects are in our sweet spot?
- What relationship development efforts do we have going on? Do we have anyone (or multiple people) whose responsibility is to develop relationships?
- Do we have a sales system? Or just a bidding system?
To successfully shift to more negotiated work, it’s important to have a clear picture of both your ideal client profile and your ideal project. In other words, be ever more strategic about the kinds of clients you love to work with, and those you avoid. Knowing where you can truly add value enables you to stop chasing bad projects that distract from winning great work. Once you have a renewed focus on the clients and projects you want, you’re ready to win more negotiated work, following these pointers from Verderamo:
- Develop a go/no-go: If you get your ideal client and ideal project right, then you should use that information to develop a go/no-go criteria. You will be shocked by how clarifying it is to start saying “yes” to the right projects and “no” to the wrong ones.
- Create a culture of business development: Relationships matter for negotiating work, and most contractors don’t do nearly enough business development….Create a culture where BD is everyone’s job. You’d be amazed by the benefit of having everyone on your team consciously build relationships….Get everyone involved.
- Train estimating staff in basic selling principles: …Teach them how to use leverage, negotiate, run high-quality sales meetings and use the power of influence to get more projects awarded at your target number. You’d be shocked by how your hit rate changes just because the team starts to see the big picture — and focuses on winning, not bidding.
Poised For Growth?
Remember, bidding, in and of itself, does not position your business for growth. At Well Built Construction, Chad Prinkey reminds us that marketing and sales are vital and often overlooked functions for most contractors, and encourages these best practices:
- Quickly evaluate and separate the wheat from the chaff. You probably don’t have unlimited sales and estimating resources to effectively chase every project so focus on the ones that fit your business and have a high potential of converting to a sale.
- Create interactive conversations with your buyers. In most cases, humans are making buying decisions, and without talking to them you’re just another number.
- Gather essential information about the project, buyers and competitors. A little key information goes a long way to help your team highlight key differentiators beyond price in your proposal.
- …Close the deal. You need an opportunity to present your unique approach to the project and your team’s ability to deliver optimal results. You should also plan to field questions from the customer to put their mind at ease. Without this opportunity, your bid is all the information available to your buyer to make a decision.
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