Why Incumbents Lose Tenders

WHY INCUMBENTS LOSE TENDERS

All things being equal (and given e.g. the incumbent’s previous performance, prior relationship with the customer, and knowledge of the customer environment, procedures and preferences etc), you would think that incumbents would have the advantage in tendering for ongoing contracts – and there is a saying around the tendering industry that non-incumbents need to undercut the incumbent by x% to stand a chance of shifting the customer from the current supplier).

However, incumbents can often be their own worst enemy and lose the re-tender through any one or more of a number of mistakes. Most often, those mistakes stem from over-confidence (“the tender is ours to lose”) or complacency and reliance on present performance on the contract, and an assumption that there is no need to present compelling reasons why they should re-win the contract.

Common mistakes include:

• Failing to describe their approach and capabilities in sufficient detail to satisfy the evaluators, assuming the evaluators will “know we can do it – we already do it”, or “already know that, we don’t need to tell them again”.
• Assuming the customer is looking for exactly the same solution as that provided to date, and thinking that “it’s all about price”.
• Not ensuring the tender gives the evaluators a clear understanding of the performance and achievements delivered during the current contract – as they matter to the customer.
• Failing to identify and confirm what really matters to the customer in this contract.
• Over-estimating their perceived performance on the current contract.
• Failing to provide enough innovation in their tenders, perhaps assuming that as they have performed well on the existing contract and the customer is happy, they don’t need to.
• Failing to identify where they could be adding more value. • Waiting until the release of the RFT/RFP to think about and develop new or improved solutions or innovations.

A forthcoming article will show how to avoid or overcome these mistakes and put in a compelling tender. If you have a tender coming up in the meantime, we can help.