Why do incumbent suppliers lose competitive tenders?

Have you ever been the incumbent on a large ‘must win’ contract, and lost it during a competitive tender process?

We often have clients come to us because they have lost a key, long term contract, and they are devastated, and keen to make sure they don’t lose another one. Oftentimes they are shocked that they weren’t re-awarded the contract they’ve held for years, stating ‘the client loved us’, ‘we don’t know what we did wrong’, or ‘we’ve been there for years’.

Recently we were approached by a supplier to a large restaurant chain in the UK, who had been required to tender on an existing contract that amounted to approximately 40% of their revenue. It would have a significant impact on their business if they lost this contract.

Our client had a strong relationship with their customer and had held the account for almost ten years, expanding the scope as they went and growing the respective relationships together.

Unfortunately, a change to the senior leadership team had resulted in a procurement consultancy being engaged to help the company find reductions to their overall operating costs as they looked to expand nationally.

As I explained to our client, the competitive tendering landscape has changed significantly over recent years. Procurement processes are getting more robust, more intelligent, and much more structured. And whilst their account contacts may have been incredibly happy with the working relationship, key performance measures and all supplier outputs, sometimes the procurement process marches on anyway.

When you’re responding to a request for tender, there are a few key things to keep in mind. It is no longer entirely about who you know, or what relationships you’ve established. Of course, these things still play a part, but not to the same degree they perhaps once did.

The advice we give to Pitch This clients is that it is now a combination of relationships and process that come into play for a successful contract retention.

Incumbent bidders should be mindful of the following three audience types:

Assessor – increasingly, companies are engaging formal procurement personnel to run their tender processes. This individual or team may consist of internal resources, or an external consultancy, and their focus is on process.

They will often have a set of pre-agreed weighted criteria that they are looking for when reviewing the tender responses. This stage is often used as a first sift to shortlist respondents, before moving tenders through to a more operational focused review.

Account Team – the account team are your key contacts, who – along side your contract management team – run the contract from the client side. They are not always involved in the initial procurement analysis exercise, and this is a really crucial thing for incumbent bidders to understand. Just because your contact loves you, doesn’t automatically mean that you will successfully get awarded the tender if you don’t provide a high scoring bid.

As the incumbent, your role is to help ensure that you back up the confidence the Account Team has in you, with a full and thorough response document that scores highly in the assessment process. Once your tender has been shortlisted, the Account Team will become more involved, often inviting presentations from remaining bidders, to ensure they can see workable solutions from bidders.

At this point, prior history and working relationships will come into play and help propel your proposal across the line if you know that the client is happy, or have offered additional innovation and improvement.

Advisor – whilst it is crucial to understand the procurement scoring and assessment process, it is also important to understand that there are still informal influences that occur during the process. This audience may consist of members of the senior management team or specialist and trusted advisors. And they will most likely never read the full tender response you’ve submitted.

They may, however, have the opportunity to read the executive summary, letter of introduction, or quickly scan through the document. So it is important to make sure the layout and formatting of your bid highlights the win themes and key points, in a way that captures the attention of this audience.

Don’t lose a contract in the initially assessment phase. Make sure your tender response meets the requirements of the weighted criteria, in order to get shortlisted to the next stage.