Archive for February, 2010
An article in today’s New York Times describes a possible change in the way federal contracts are awarded, and it specifically calls out facility service contracts.
Plan to Seek Use of U.S. Contracts as a Wage Lever
The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan.
By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.
Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class. It would affect contracts like those awarded to make Army uniforms, clean federal buildings and mow lawns at military bases. (read the full article)
How might this effect Facility Service Contractors?
Is this good or bad for contractors, those going after federal contracts? Why?
Obviously, this is for federal contracts only….at the moment. If this change were successful with federal contracts, would city, county and state be far behind?
What about the private sector? Specifically high profile firms like those in consumer goods, banks and academic institutions. Their purchasing decisions already pay attention to maintaining a good public image.
I’ve started asking contractors what they think about this change and here’s the first response.
I think it would be great if we could all compete on an even playing field with hours, wages and benefits set in advance. I believe our company (IH Services) provides the type of work environment, management expertise and forward thinking that could get us more contracts in this environment. We do not have employment violations because we follow the rules, not like some of our competitors.
Taylor M. Bruce, Jr., President, I H Services, Inc.
What are your thoughts?
What do you think? Share your comments in this post. I’m very interested to hear your perspective on the future.
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Chris Arlen
President, Revenue IQ
February 26th, 2010
Is the only benefit of sales personnel their ability to secure a signed contract?
Consider this; you’re the one responsible for bringing on new business, you’re boss oversees your sales efforts as well as all other business performance.
As a result, your boss looks at the bottom line performance of sales, which means what’s been sold this month.
But when you don’t hit all the expected sales goals for the month, can your sales efforts still add value to your firm?
That would be a resounding yes. Read further.
Benefits Beyond Signed Contracts
Here’s how sales efforts add value beyond signed contracts, they can:
- Develop customer relationships for continued contact after the bid process, and that:
- Gain the pre-bid info needed to win the contract
- Build brand reputation through a great showing as a 2nd place finish in the bid process
- Gain industry knowledge of market pricing & common issues facing other prospects
- Raise customer awareness to your firm’s abilities as a potential alternate
Marketing through Selling
These benefits are significant to contract service firms.
Why? Because traditionally many of these activities would be carried out by a fully staffed marketing department.
However, the norm for contractors in the facility service industry is to carry selling personnel, and not specialized marketing resources. So, marketing falls on the shoulders of the sales resources.
Gaining Recognition for Marketing-Selling Efforts
This academic understanding probably doesn’t help you with your boss.
Here are a few thoughts about how to bring your boss up to speed about your contributions that don’t immediately show up in signed contracts.
1) Make it Personal
Bring your prospects in to meet face-to-face with your boss, either to your offices or at a lunch. Even though these prospects may not have signed a contract you can make it tangible for your boss by showing these people really exist.
Your prospects will appreciate the time and effort you’re showing them when they’re not an immediate contract. That’s relationship building, isn’t it?
2) Take it to the Trade show
Bring your boss to a trade show where your prospective customers are exhibiting. Let your prospects know you’re coming so they’ll be aware.
Introducing your boss to your prospects at their trade show will definitely make it more real for your boss. Additionally, your prospects will be that much more impressed with your commitment by coming yourself and bringing your boss.
3) Create a Pipeline Scale
Moving prospects along a path to an eventual signed contract can take years.
So define the steps it takes to get them there, and then show your boss so she/he understands the steps in the process.
Define the major steps, three minimum, but no more than five. Keep it so your boss can easily understand. Clarify in writing, and in your mind, what it means when a prospect is in a particular stage so there’s a minimum of ambiguity.
Color code the thing, or assign symbols, or name levels. Whatever it takes to make your boss understand quickly and easily where prospects are in the process. Remember, your boss is busy with many other aspects of business performance as well as monitoring your sales.
4) Report Pipeline Status Frequently
Frequently and routinely publish and report on the status of prospects in your pipeline.
This means creating a simple 1-page pipeline report (of course tracking status within your CRM, ACT or Outlook) and presenting briefly but concisely in regular meetings with your boss. Best not to wait for a quarterly review. Better to present monthly, if not weekly.
5) Don’t Fake It
Save yourself the aggravation of over reporting a false optimism. Be brutally honest with yourself first. Then report that concisely to your boss.
Once you recognize the true state of prospects in your pipeline, you’ll be motivated to take action and won’t have to wait for your boss to tell you to.
Good luck & good selling (inside and out)
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Chris Arlen
President, Revenue-IQ
February 18th, 2010
I asked a contractor-friend of mine what his biggest pain in contract sales was.
His answer was “not getting the opportunity to make a presentation after submitting a proposal in response to an RFP.” After all, he’d spend 20+ hours preparing a proposal and then not get the chance to present.
Wasn’t there an implied reciprocity with customers that he’d at least get the chance to present it in person? He felt he should be showcasing his firm’s differentiation, he had the better service and knew he was cost competitive.
He knew how important making the presentation was because he measured it. When his firm was able to make a presentation they won 88% of the time (and that’s very impressive).
However, when his firm didn’t get to present, they only won 15% of the bids (less than half the industry average*).
So, it’s obvious. Get more presentation opportunities.
But customers didn’t always see it his way – they saw it their way.
How to Get More Presentations
The number of presentation opportunities you get is determined by two factors:
1) Your customer wasn’t planning to allow a presentation – no matter how many hoops contractors had to jump through
-or-
2) You, as the contractor, didn’t make the cut. The customer judged, and they judged you lacking.
Overly simplistic, yes, but this is reality. Let’s look at each of these and see what can be done.
1) Your customer didn’t allow presentations
This happens because:
1.1) Inexperienced customer – they’re too green and didn’t know they should have held a presentation (doesn’t happen often, but it does happen)
-or-
1.2) Customer intentionally chose not to hold presentations, because:
* They decided to make a decision solely on the submitted proposal
-or-
* They were not really going to make a change, but had to fulfill a rebid compliance issue. In other words, they were going through the motions and it was a Hollow RFP.
What to do if a customer wasn’t going to allow presentations?
Even a small increase in the number of presentations can reap huge rewards. And you know there are no sure things, but consider trying the following. These tactics are in 2 scenarios, depending on your situation:
Scenario A) They’re not likely to change their minds and allow presentations:
* Get out before you spend the time and effort writing up a proposal. This means qualifying the heck out of them up front, which really means:
* Asking tough questions during your first contact and getting firm, unambiguous answers to how they work their bid processes
* Asserting yourself to get their commitment to hearing your presentation if you provide a proposal
* Doing both the above without upsetting the customer contact and making an enemy for life
-or-
Scenario B) You believe you can change their minds:
* Get them to see the value in holding presentations. Of course, if you persuade them to take your presentation you’re also probably getting your competition the opportunity too. But why not? Your persuasive aren’t you?
2) What to do if you didn’t make the cut?
Unfortunately, this probably happens more often than our egos care to believe.
The good news is that it means the customer was at least going to hold presentations. And it’s also good news in that contractors can work to improve this area.
If you don’t make the customer’s short list for presentations:
* Get outside yourself. Have new eyes to look at your proposal responses and get their help.
* You can do the above with a team of trusted colleagues from your firm. Task them with reviewing, rating and critiquing your latest proposals. Heads up: this path can be political and time consuming although it won’t cost you anything.
* Get an outside consultant to do an assessment (a bit of self-serving promotion here) to find areas of improvement. Heads up: this will mean investing money, but it can happen faster and with a greater insight into the industry than your in-house colleagues may have.
* The bottom line in this situation is to improve the persuasiveness of your proposal document. As importantly, to improve your sales intelligence gathering skills to acquire the essential customer info needed for a persuasive proposal.
RFPs always lead somewhere
It’s true, but you just may not want to go where they lead. So to the best of your ability, figure that out at the start. Then if you do decide to take up the challenge, make sure you’re doing it with the best chance of success.
Good Luck
* This is a very rough industry average based on an informal survey we did several years ago. If you think it’s a good idea to recheck that number and would like to participate in a new survey, let me know. If there’s enough interest we’ll try it again.
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Chris Arlen
President, Revenue-IQ
February 9th, 2010
Here’s a customer-contractor situation that, although it doesn’t happen too frequently, is extremely dicey when it does.
Your customer wants a non-contract service from you, but the project isn’t in their budget.
To pay for your project they need an amount from you so they can find a place to allocate that unplanned spend.
You provide an estimate to be billed on actual per-unit-pricing because you know the scope of this particular service varies hugely. Not because you’re a poor estimator or a sloppy provider, but because customers always get excited and want more, or your customers’ end-users want more.
Either way, your scope typically increases substantially from the original estimate and that’s why you provide pricing based on a per hour or item basis.
But here’s the rub. Your customer took your estimate as an absolute, and communicated it upstairs for approval. Without your knowledge your estimate is now a fixed fee.
Sure enough, you get started with your non-contract service and your customer gets excited and scope expands.
You believe it’s all covered because you priced it on a unit cost and your customer is happily increasing scope.
Unfortunately, once the work is done and your bill arrives, your customer changes from ectastic with your results to letting you in on their little failing. Your estimate became their not to exceed budget.
Customers do that sometimes. Either because they feel they can’t get their pet projects funded, or don’t want to upset their bosses with a larger, more conservative number in the first place.
To keep it under the radar your customer presents the financial picture in it’s most humble light. They figure they can sort it out after the fact. And of course that means you’ll help them figure it out.
What to do?
At this point in time almost every solution will be uncomfortable, for you and/or your customer.
The following are some possible ways out, but they’re not for everyone. If any of these make you feel uncomfortable, by all means skip them.
Bill overage onto 2nd smaller invoice
Spreading actual amounts above the estimate onto a second smaller project your customer can get through on a different Purchase Order (PO). Customers usually have other projects and some will have a little left over space on another PO.
Of course you only take this approach with your direct customer’s full knowledge and approval.
Carry overage onto 2nd project
Hold off billing for the overage on this project and include it on the next project. Ask your customer to guarantee the next project and get a start date. However, if projects are competitively bid it’ll be tough to cover overage costs this way.
And again, you only take this approach with your direct customer’s full knowledge and approval.
Eat the overage & not bill
You can take the loss and not recapture your billing. It’s the least palatable for you but may be required depending on your customer relationship. Also, the size of the overage will also dictate whether you can live with this option.
If you go this route, make sure your customer knows what you’re doing. Hopefully it’ll be worth the brownie points.
Hold fast & bill full amount
This may be the least palatable for your customer. But if you submit your bill with your written proposal that clearly states billed per actual unit then you’re telling the customer “you made the mistake, you sort it out”.
This option depends on your customer relationship and the overage amount in question. Also, even after approval, your payment may take a while to get paid if your customer is no longer willing to shepherd it through their A/P process.
Educate & communicate with a hammer before doing the work
The best solution is always to avoid the problem in the first place. When asked to provide a pricing, consider your customer may likely consider that a budget amount. Since you can’t reasonably provide a fixed amount, you’ll need to educate the customer to why you’re pricing the work on a unit basis, to bill on actual incurred:
Try:
- Communicating the variables beyond your control
- In person or on the phone, explicity cover the per unit pricing & how those variables impact total spend
- Always confirming everything in a written proposal/estimate
- Adding text to your proposal/pricing confirmation in bold & caps THIS IS AN ESTIMATE, NOT A FIXED PRICE, BILLING ON ACTUAL INCURRED
No Guarantees
Customers sometimes are wild, unfathomable beings. As contractors we can only do our best. In this budget vs. estimate situation, being proactive and a good communicator is your best defense.
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Chris Arlen
President, Revenue-IQ
February 1st, 2010
