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Winning when all the customer cares about is the price

Establishing minimum acceptability

Price always matter. But some customers define price as value. They are willing to pay more to get more. Other customers want the lowest possible price. And the lowest possible price depends on what is the minimum they will accept. One term for this kind of evaluation is low price, technically acceptable (LPTA). In an LPTA evaluation, no matter what you say or do that's better than the minimum acceptable, the customer will not care. It looks like all the customer cares about is the price. And while this is mostly true, there is one thing other than price that the customer may pay attention to.

A good strategy for winning an LPTA evaluation is to influence what “technically acceptable” means. This is far easier to do before the RFP is written, when you can discuss with the customer what they need to do to ensure they get what they need despite the award going to whoever lowballs the price the most. The end user is likely to be receptive to language that will prevent cost-shaving tricks.

But what do you do after the RFP is released? How do you write a proposal, when what you say in the proposal hardly matters? In an LPTA evaluation it does not matter if your approach is better. It only matters if an approach is good enough. What can you do during proposal writing that will make a difference when the customer will only be evaluating minimal compliance?

Try writing about what minimal compliance means

See also:
Pricing

Define your minimum standards and explain what happens when they are not met. Explain why they are your minimum standards.

You want to provoke the customer into making a comparison and asking whether the other bids meet that standard. You want the customer to decide that if a company doesn’t meet that standard, their bid is not acceptable. 

The customer will not do this just because you think they should. They will only do this if the problems that result from failing to meet the standards you describe can’t be tolerated or lived with even a little bit. They will not do this if there’s a chance that something unacceptable might happen if the standards are not met. 

I’m not a big fan of selling by scaring the customer. But in an LPTA evaluation, you need to inform the customer about unacceptable things that can happen and motivate them to accept the standards you describe.

If an award is made without discussions, then your definition of minimum acceptability must be clear, quotable, and result in any bid lower in price than yours getting thrown out. This is a long shot. But you know the subject matter, and you know what opportunities to look for to make your case.

If the customer responds with questions or requests for clarifications before making an award, there’s a much larger chance that the issues you raise will become questions sent to your competitors. When a company receives a question from the customer asking if they meet a certain standard or have accounted for something, it’s hard to say “no.” You want those questions to trigger your competitors to raise their prices in order to meet those standards. 

In defining minimal acceptability, look for things that may cause your competitors to raise their prices. You must do this so many times and in enough magnitude that your proposal is not only the only one technically acceptable, it is also the lowest in cost.

How do you implement this approach in your proposal?

At every opportunity, preferably in every paragraph…

  1. Position everything you do that might be more expensive than a competitor’s approach as being absolutely necessary for success. Prove this point.
  2. Explain why your minimum standards are the absolute minimum for acceptable performance.
  3. Stay objective and avoid qualitative values like “less risk” because the customer has no way to evaluate qualitative differences in an LPTA evaluation.
  4. Avoid things that are improvements above the minimum requirements. You get no credit for being better. You get no credit for adding value. You only get credit for being acceptable. If you must propose an improvement, then it must be something that is necessary (and not just better) and you must prove that.
  5. Explain the trade-off decisions you made. But remember, there is no “better.” All trade-off decisions must be between unacceptable and minimally acceptable.
  6. Prompt the evaluator with everything that your competitors should account for in order to be minimally acceptable.
  7. Articulate things to give the customer the wording to use in justifying a claim that another bid is not acceptable, or to ask a competitor whether they meet a standard or have accounted for something.
     
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