Advisor Deal Dynamics
Sourcing Advisors manage the largest RFPs in the market. Of the 1500+ service providers, only a few dozen make it onto a recommended provider list, and of the ones that do even fewer are placed on a long list.
Competing to be included in just the first two phases of an advised procurement process is a task worthy of the Olympics and you haven’t even gotten to the shortlist or final selection.
We regularly speak with executives who just aren’t aware of how challenging and competitive the Advisor relations game can be.
In this post we’re going to explore:
- How do you get there?
- This isn’t an easy game
How do you get there?
First, there are some brutal statistics…
There’s no sugar coating it, if you’re a smaller firm this is a hard game to play. Of the hundreds of advised RFP’s which are put out into the market each year the vast majority go to companies with over one billion in annual revenue. This is a competitive landscape where you may have to re-think how you define “small” and “large” companies.
Only about twenty percent of all advised deals are won by firms with under one billion in annual revenue. Of those, roughly a quarter (~ 5%) are won by firms who fall under the five-hundred-million annual revenue mark.
What this means is, if you’re a young energetic company who’s looking to make a mark on the industry, you’re going to have to play in a pond with some very, very big fish.
Why do big companies out compete small ones?
As a Sourcing Advisor, your reputation in the market is absolutely everything. When they manage a hundred-million-plus RFP, the expectation is the project will be designed and executed flawlessly. So, when that advisor is recommending service providers there’s a strong incentive to pick firms who have well-proven track-records of capability and reliability, even if they’re offering the more expensive solution.
Size is a huge asset. Lean mean operations may help your firm in other areas, but they can hurt you here. The deal sizes here are so large that they can easily swamp smaller teams who lack the bench of talent and resources that larger firms can muster. Advisors often preclude service providers from bidding on a deal if that deal would represent more than five percent of your annual revenue.
Finally, big companies are often easier for advisors to work with. Major players will have a well-established Sourcing Advisor Relations team who know how to play the game and play it well. Those SAR teams will be backed up by a robust deal pursuit team with tried-and-true processes for executing on very large deals. The complexity inherent in deals of this scale will be no problem for really big players.
All of this combines to paint a pretty daunting picture for smaller firms who want access to some advised RFP’s. However, while the big guys do hold most of the cards, they don’t have all of them.
How can you win?
Preparation is key here. You need to be ready to make the most of it when you’re invited to a long list because you won’t be offered every deal you might want. It’s critical to have processes in place that will let you capitalize on the opportunities you do get and show the advisors just how capable you are. One great way to build that competency is to bring in outside coaching to help your team prepare.
Build a laser focus on your unique selling propositions. You’re not going to beat the big players by offering the same service with a smaller team and a lower price point. Being able to clearly articulate three to five places where no competitor can match you can help differentiate your offering. However, they need to be truly unique, sourcing advisors work with these deals every day, generic uncreative USPs will be obvious to them and will hurt your chances at winning the bid.
Where the large players are winning based on the scale of their teams, smaller players need to focus on innovating. This is where being lean, and mean can actually help you craft a resonant value proposition. Big companies have a harder time cutting through the bureaucracy to create truly groundbreaking solutions. Capitalizing on that advantage will set you apart and show the advisors that including your offering in their long list can give the customer access to more variety when selecting a solution.
Lastly, none of this is a replacement for experience. One of the biggest indicators you can give the sourcing advisor about your team’s ability to execute on large deals is a strong track record. Effectively messaging your history of successfully delivering large projects will reduce the perceived risk of selecting your solution.
This isn’t an easy game
It takes time to start winning deals.
Everything we’ve talked about so far has focused on getting onto a long list. But, that’s just the beginning. Being included on a long list is like making it onto a national Olympic team, you’ve made it past the trials and proven you’re one of the best, but now it’s time for the real competition to start.
Going from the long list to the shortlist and on to winning RFP’s doesn’t happen overnight. This discipline has Relations in the name for a reason, relationships are critical, and those take time to deepen. Expecting to win deals immediately is a pathway to heartache. It’s important to understand that Advisor Relations is a game where persistence and consistency win the day. You won’t win every time your team is up at-bat. The important thing is to keep showing up to play.
Clear messaging is critical
It may sound obvious, but Advisor Relations isn’t like Public Relations or Analyst Relations. When talking with advisors you have a lot more rubber meeting the road. It’s important to avoid the theoretical or philosophical lingo which might serve you well elsewhere. Stay practical and keep a focus on concrete ways in which your unique selling propositions will create a tangible impact for the customer.
Staying pragmatic will help position your firm as a solid dependable option for winning the deal. You need to clearly convey to the advisor where you’ve done deals like this before, demonstrate that you can comfortably handle the complexity, and back that narrative up with strong customer references.
Being small has its benefits
Large firms have some clear advantages in the eyes of customers and sourcing advisors. Their stability, track record, and bench of team members make them into the safe, if expensive, choice. But smaller firms aren’t without their own strengths.
When it comes down to it, Advisors are consultants, and they charge by the hour. That means that they need to constantly demonstrate value to their client at every stage in the vendor selection process. Rehashing a top 10 list is something a client can do themselves by reading an analyst report, so Advisors have a strong incentive to include smaller, specialist firms into an RFP process to provide some good options.
Highlighting your team’s ability to flexibly innovate, your dedication to customer alignment and your lack of an unwieldy bureaucracy creates a compelling value proposition. You won’t be winning a lot of deals at first, but the more times you give yourself at-bat, the better your odds become.
It’s important to set reasonable expectations for your Advisor Relations program, understanding that firms under $1 billion in annual revenue are playing at a disadvantage. However, that doesn’t mean you can’t leverage some of your strengths to improve your chances of winning a deal.
For smaller firms, Advisor Relations is a game of patience and perseverance while you build awareness and understanding of your place in the market. But when you do start winning deals, the payoff is massive.