Would you pay to respond to a tender?

The words had been thoughtfully picked out for me by the sender in yellow, but it would have been pretty striking without the highlighter. It was notice for an invitation to tender, and it contained the interesting condition that for anyone choosing to enter a cost of up to 2,000 Euros would apply.

Now perhaps I’ve lived a sheltered existence, but I’ve never seen an invitation to tender issued before where prospective vendors have to pay to take part. This was a condition of an invitation to tender for CRM development services. We don’t provide CRM development services, and so have no specific interest in this tender other than this ‘pay to play’ practice strikes me as wrong in several respects:

It’s unfair – It’s tough enough anyway for vendors. Responses to invitations to tender can involve weeks of work soaking up the time of people throughout the business. Should the vendor be lucky enough to be short-listed they have another round of work putting together presentations, demonstrations, and reference visits. The costs of this process can be huge, and given that by definition most prospective suppliers will be unsuccessful, it strikes me as morally suspect to ask vendors to stump up an additional ‘entry fee’.

It’s open to abuse – While I’m sure in this specific case things are above board, however if this practice is more widely adopted what’s to stop organisations requesting payment to enter tenders that are never awarded, or where the there was only ever going to one winner. It’s already commonplace for organisations to go through a tendering process to meet internal purchasing policies, when the decision’s already been made as to who will win.

It’s bad business practice – I imagine the aim of the pay to play practice is to reduce the number of ‘speculative bids’. However I can’t believethis justifies a 2,000 Euro charge. How long does it really take to weed out the prospective suppliers that don’t have a valid offering? What I’m sure it will do is reduce the number of good suppliers that bid, and why would you want to do that?

When we run tender processes we want the best suppliers to bid because we want to work with the best suppliers because they help ensure a successful project. Smaller suppliers are likely to baulk at a 2,000 entry fee, so one presumes the intent is to discourage them, even though in my experience I’ve seen little correlation between the size of a business and the quality of the CRM services they provide.

The top suppliers, the ones in real demand, the ones who can choose who they work with, I would imagine would share my distaste for this approach and decline to bid. What would happen if you advertised a job at your organisation with the terms that anyone submitting their CV had to pay a 2,000 fee? I’d imagine there wouldn’t be so many applicants. Perhaps a few that were sufficiently desperate, but the top folks, the ones in demand, the ones you really want, will go elsewhere.

Finally, I hardly think it makes for a harmonious working relationship with the selected supplier. Asking someone to stump up a fee for entering the process is likely to set a negative tone for the remainder of the relationship, making for a bumpy ride for all involved.

As distasteful as I find this practice, and ultimately self-defeating from a business perspective, I wonder in tough economic times if this is just a one off, or whether it’s the start of a trend.

Time to replace our CRM software?

He was the last of the Mohicans. As I watched him he followed the prescribed process. The system hadn’t been well set up, so it was a prolonged and laboured procedure, but he followed it to the letter, key stroke after key stroke. This would have been great if everyone, or maybe even anyone, was doing the same. But they weren’t. His hard work was in vain. A waste. The system was long since obsolete.

I was there to answer a simple question, but I was actually answering a different, slightly more complex question. The simple question: ‘what should we replace out current CRM software with?’ The more complex question: ‘how can we make CRM software work for us?’

As I continued looking it was clear that there were business issues that needed solving. Leads were not being followed up, the marketing department was reliant on expensive advertising campaigns rather than the more cost effective direct marketing they wanted to do. Service procedures were long-winded, error-prone, and customer satisfaction low.

The problem wasn’t the choice of CRM software, it was how the software was being used. There was an easy solution, and it wasn’t new software. We simply took the CRM software the client already had and re-implemented it to better support their operations. There was no need to invest heavily in new software, we simply helped them take what they had and made it work. Investment = minimal, return on investment = huge.

I mention this because I often get asked what I think of product x as a replacement for product y, and it’s not a question I can easily answer.

The problem with most CRM software is that it isn’t set up, and/or used, in a way that will generate beneficial business outcomes. The technology itself is often not the problem. But unless this is understood, organisations investing in replacement CRM software are destined to make the same mistakes again, and in a few years time will again be looking to replace their CRM software.

All too often we dispose of software that’s more than capable of getting us where we want to go. Applications are unfairly maligned because the set up was wrong, the usage patterns were never established, or through lack of knowledge of its capabilities. And, at the same time, we are lured by the siren song of the software vendors into believing that new software is the answer to all our problems.

The answer is to forget technology for a while and focus on what we are trying to achieve. If we can answer that question, the technology question should answer itself. With clarity as to our end objective and how we will get there, we can make an informed judgement on whether our current platform is help or hindrance.

The outcome of taking this approach is that for many organisations making better use of what they have already may prove the most attractive option. Not good news for the CRM software industry perhaps, but the bottom lines of CRM software users may well benefit.