Every time an exhibit house chooses to bid on a project, it's playing Russian Roulette with its budget.
Four months ago, I issued the 2017 RFI/RFP Survey to obtain some insight into requests for information (RFIs) and requests for proposal (RFPs). While the results of that survey published in last month's issue, there's one stat that's still keeping me up at night: Only 5 percent of exhibit managers routinely issue RFIs before they issue an RFP.
When I queried exhibitors regarding their rationale for skipping that all-important step, most fell into one of two camps. They either felt issuing an RFI would take too much time, delaying the debut of their shiny new booths, or they wanted to see the renderings created by all competing firms before eliminating any potential new partners. But eschewing an RFI will cost you in the end.
The point of issuing an RFI is to eliminate firms that lack the necessary expertise or don't offer the services required. Rather than stringing along a company that can't deliver what you need, an RFI culls the herd, allowing you to move forward with only the prospects capable of meeting those requirements. As a result, you can focus your time on firms with the potential to become long-term partners, invest more effort into briefing them during the RFP process, or invite them to present their proposals in person so you can actually meet the individuals with whom you may end up working.
Furthermore, the results of our survey indicate that the average cost of responding to a typical RFP for an exhibit worth at least $100,000 is $6,404. If, for example, you send an RFP to six different companies, you've generated nearly $40,000 worth of investment into your project – but only one of the responding firms will ever see a return. And while most custom houses understand that expense is just the cost of doing business, it also inflates your cost of doing business.
Every time an exhibit house chooses to bid on a project, it's playing Russian Roulette with its budget, especially considering 13 percent of RFPs are issued by companies that have no plans to replace their incumbent partner but need a minimum number of bidders to satisfy corporate policies. Just a dozen or so non-winning bids quickly adds up to $100,000 in wasted capital. And while you might think those costs are magically absorbed by the bidding firms, there's no such thing as a free lunch.
If an exhibit house wins, say, two out of every 10 RFPs it respond to, those two new clients end up footing the bill for the more than $50,000 spent on developing proposals for the eight exhibitors who chose other firms. Bottom line: You're paying more than you need to because too many exhibitors are issuing RFPs without the intent to purchase – and inviting too many competitors in the first place.
Don't get me wrong. I'm the king of shopping around, and I wouldn't expect anything less from an exhibit-marketing professional. So what's the solution? How can we keep exhibit-house margins under control while still engaging in a rigorous selection process that allows evaluation of a number of prospective partners?
Issue an RFI. Sure, even replying to an RFI represents an investment of time and money on the part of participating firms, but the average cost of responding to an RFI is $2,449, or
62 percent lower than the expense associated with responding to an RFP.
Issuing an RFI might seem like a needless step in the vendor-selection process. However, it will minimize the investment required to compete and keep you from stringing along unsuitable firms. And if, over time, it becomes the norm to give potential partners the courtesy and respect of vetting them via an RFI before dangling an RFP in their faces, we just might be able to cut the cost of doing business, tighten those margins, and leave you with a little more of your budget to spend on something that will benefit your bottom line. E