By Brad Douglas, Shipley Associates

Spending adequate time making a bid/no-bid decision is critical but generally doesn't require exhaustive effort. The key is consistency in your approach to evaluating each opportunity against critical success factors for your organization.

Make sure you have a chance to win

Use the bid/no-bid decision process to verify that the opportunity fits your organization's sales strategy and that you have a clear chance of winning. Before you make a decision, answer the following questions about the sales opportunity that you're considering:

• What are the customer's key business initiatives? How high a priority is your service or product for the customer?
• What is the customer's financial condition? Have they budgeted for this product or service?
• Is there a compelling reason for the customer to make a decision? If so, what is the impact of the buying decision on the customer's organization?
• What are the customer's decision criteria? Do they use a formal or informal buying process?
• What is the state of your relationship with the customer?
• In what ways is your organization better than the competition?
• Is a formal written proposal required? If so, when does the customer plan to release a Request for Proposal (RFP)?
• How will you respond to the RFP? Do you have a response team in place?

Sales managers must press sales representatives on these key questions to be sure that there is a real opportunity to win the deal. If a sales professional cannot answer these questions and build a case for competing for the deal, it's better to walk away without bidding.

A bid decision tree adds structure and discipline to the sales opportunity evaluation process and can help you to identify deals that should be pursued.

Is the deal worth winning?

You must evaluate the return to the organization when studying a competitive sales opportunity. And you must be able to answer these questions:

• What is the value (revenue) of this deal?
• Is there potential future revenue? If so, how much and when?
• Does the profitability of the deal fit within your guidelines?
• What could cause the deal to fail?
• What is the strategic value of the opportunity beyond the initial revenue?
• Will this opportunity help you to improve your products or services and enhance future sales?

The cost of winning a deal might be too high. For example, the solution that your team proposes might be very risky, or it might involve excessive internal expense, such as taking internal talent away from current work to develop the winning proposal. The showstoppers that you need to address in the bid/no-bid decision-making process include:

• Requirements that you cannot meet.
• Unacceptable terms and conditions.
• Unreasonable delivery schedules or expectations.
• Unacceptable warranties or penalties.
• Reliable information that the buying decision for this sales opportunity has already been made.

Identifying these showstoppers early facilitates a good bid/no-bid decision. Winning the right business is key to managed sales growth.

Make decisions promptly

As a sales leader, you need to act promptly on bid/no-bid decisions: Your sales force depends on it. Establish clear guidelines and time limits with your sales force early on, and make decisions within those guidelines. Delaying a decision or being tentative about it can quickly deflate your sales team and may lead to losing the deal.

Tailor the process

You need to tailor your bid/no-bid decision process to your organization. This means taking into account the nature and maturity of your products, services, and sales force. The process for deciding which sales opportunities to pursue isn't cut and dried; it is, however, one of the most strategic processes required of any successful sales organization.

About the author   Brad Douglas is vice president of sales and marketing with Shipley Associates, a professional services company focusing on sales and business development consulting, training, and process improvement.