RFPs in a Connection Economy, or “Death by RFP”

I woke up today gearing up to write a proposal for a $25,000 project. It’s one of those tasks that won’t take very long once I get going, but not necessarily my favorite way to spend a beautiful day.Drinking a cup of coffee and pouring through the news on LinkedIn, I came across an Inc article titled “Death by RFP: 7 Reasons Not to Respond” by John Warrillow.

Great way to get motivated to write that proposal.

It made sense to me. To sum up Warrillow’s 7 reasons why RFPs are bad for your business:

1. Tendered business doesn’t stick: RFPs don’t lead to repeat business
2. RFPs dilute your differentiation: you get shoved in a box with “half-rate competitors who compete on price.” Ouch.
3. RFPs cut your margins: it’s all about how cheaply you can deliver on the specifications
4. They decide the rules, not you: you let the customer tell you how to do your job
5. They’re rigged: usually the decision has been made before the RFP is released
6. They send the wrong message to your people: your employees scramble around writing up a response, pricing out a budget, and if you’re really unlucky giving away your IP. They’ll wonder why.
7. RFPs undermine your company’s sellability: companies with a unique service or product are more likely to get repeat business than those selling a commodity.

Seth Godin talks at length about what he calls the connection economy in his most recent book, “Icarus Deception: How High will you Fly?” (2012). One of its core repeating messages is the importance of authentic relationships in business and life in today’s economy.

How much easier – and fun – is it to spend your business development time developing relationships with interesting people at companies that resonate with your purpose and values? I’d much rather have a client and a project emerge from a deep connection I’ve fostered than from a proposal I wrote to strangers not knowing much about their endeavor, the project, or what they are looking for.

What do you think about RFPs? What’s your favorite way to seal a deal? How much does the connection economy figure into your business strategy?