5 Strategies to Win More RFQs
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Every forwarder wants more freight, and most often the best
opportunity to do that is to earn it through winning more RFQs and
tenders.
Sounds simple, right?
The challenge is that winning RFQs is easier said than done, and
there is a real cost to your business by participating in bids – with no
guarantee of winning anything. For forwarders, all RFQs are at best
time consuming. At worst, they can be frustrating and extremely risky.
The truth remains that bids are a vital part of every forwarder’s
growth strategy, and with the right approach can be the greatest
driver of new business for the company. But, first you need to win.
In order to be the winner, your company must engage the client, find
any potential land mines, and clearly communicate your value
proposition. Clients are pickier than ever, and their expectations are
much higher. Requests for proposals are a tool they use to eliminate
providers, and then compare the rest. It is all the more important your
company can respond with a proposal that answers the client's
unasked questions, describes how your services will solve their
problems, and sets forth the costs for your service in an
understandable way.
To that end – we’ve created a list of 5 strategies forwarders can use
to win more RFQs.
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Strategy 1: Work Smarter, Not Harder
Responding to an RFQ is an arduous task full of time consuming
manual processes that leave precious little time to build an actual
relationship with the client. Long spreadsheets and countless origin/
destination pairs are the norm. Plus, there is the added pressure that
if you spend too much time on one client's RFQ, you are missing out
or not doing your best work on another’s.
Not surprisingly, new technology can help you respond to bids faster
by standardizing the process and managing rate data. Software like
Springboard by Catapult allows you to import customer RFQs, store
your rates in a centralized system, map the rates to the RFQ, and
export your proposal in the customer's format. Technology that
manages your tenders may be the best way to work smarter.
Strategy 2: Be Accurate
Since no one is ever guaranteed to win a bid, most forwarders will
feel the need to respond to as many bids as possible with the belief
this will increase their chances of new business. With this mindset
you cannot afford an RFQ process that is slow and laborious – in
other words you need to work smarter, not harder.
Clients looking at multiple proposals can quickly tell which providers
they want to do business with. Disorganized responses containing
errors or omissions are a clear indicator of an unqualified vendor.
Make sure this is not the perception you leave with potential new
clients.
Chances are it’s a good time to review and overhaul your response
process. A hard look will reveal at least a few bottlenecks for sure.
Errors can be a problem in another way. Misquoting can win
business at low or negative margins that you don’t actually want.
Here are 4 ways to work smarter:
Here are 4 types of errors to look out for when
responding:
• Use technology to save time by eliminating manual processes
• Document a plan to better manage master data
• Store rates centrally, make them accessible (think of it as a rate
hub)
• Eliminate silos in your company to increase communication
between departments
• Typos and spelling mistakes
• Incorrectly calculated rates
• Similar lanes bid at significantly different costs (i.e. Shanghai to LA
and Nanjin to LA)
• Missing costs or accessorials
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The consequences of inaccurate proposals can be severe. If you
forgot to include a cost, your margin could be off-set once that cost is
corrected. Asking the client to increase your bid on a lane is awkward
and off-putting. If you duplicated lanes, you could lose out on a chunk
of volume. Keeping track of your rates will help you avoid
overbidding on similar lanes. Because your rates and surcharges will
span a large number of lanes, having software that keeps them
organized is key to being accurate. Once you are working smarter, it
will be easy to be accurate and impress the client with a
well-organized and complete response.
“
Keeping track of your rates will help you
avoid overbidding on similar lanes.
Because your rates and surcharges will
span a large number of lanes, having
software that keeps them organized is key
to being accurate.
”
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Strategy 3: Know Your Margins
Keeping your rate and contract data in a central location that is
easily accessible is an important step. Above all else, it makes it
simple to know your costs and where your margins need to be. With
a firm understanding of your rates and margins, you gain an
advantage over other companies.
With this control, you will know these 3 important things:
• Potential revenue and lifetime customer value (LTV) for a bid
• How to target specific lanes with more or less aggressive bids to
maximize overall bid profitability
• Any low or negative margin lanes
No company can survive the long-term by guessing at their margins.
Knowing your break-even point and profit or loss on lanes puts you
in control of the discussion and helps you communicate what you
can and cannot do when discussing the bid with the client. When
you identify lanes with poor margins, it is much easier to investigate
ways to reduce expenses and improve those margins.
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Strategy 4: Bid the Right Amount
Do you always bid the right amount? Reaching that magic number is
a delicate balance of expense, price, and profit. Contrary to what the
client may tell you, they do not always want you to bid the lowest
cost.
Why?
• People are suspicious of very low bids. As the saying goes, if it
seems too good to be true, then it probably is.
• Clients value stability and are willing to pay for it. Stability means
that you bid the amount that will always get their cargo booked.
Nothing is more frustrating to clients than to have a contract in
place only for the service provider to reject loads due to low
margins (or whatever excuse a forwarder may give them to cover
up that fact).
• Clients understand that you must make money to stay in business.
They can often tell when a bid is so low you are losing money –
and realize that is not sustainable.
In the end, bidding the right amount is often as much art as it is
science. Success with RFQs relies on your company's ability to
create a relationship, uncover problem areas, and adequately
explain the value of the rates the client will pay (even when they are
at a premium to your competition). Having the right process and
technology to respond to bids is the science which will enable you
to focus on the art.
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Strategy 4: Bid the Right Amount
It’s an obvious point that the bid you submit today will stay with your
company throughout the contract period. Be prepared even before
you see the RFQ by keeping abreast of the market outlook for rates
and by being aware of other factors that will affect costs. Ocean
shipping is especially exposed to unexpected market rate
fluctuation due to GRIs and other surcharges, so make sure their
potential changes are accounted for.
Know your market outlook by:
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Reading industry trade publications
Attending conferences like the Trans Pacific Maritime Conference
Networking
Staying aware of any changing governmental regulations
Tracking disruptions like port strikes, weather, congestion, or
foreign holidays
Nothing will impress clients more than helping them anticipate
disruptions or communicating insightful information about the
current market conditions. Be the expert they expect you to be, and
you will be trusted with more freight. As part of your relationship
building, do not forget to ask the client about their concerns for the
market outlook or for specific issues they are experiencing on lanes.
This gives you the chance to differentiate your company as a
partner in their business and increase your lane award by offering a
solution to their issue.
Once you have differentiated your company by working smarter and
positioned your bid as accurate, reasonable, and forward looking,
your proposal will stand out from the rest. Streamlining your manual
processes through technology will enable you to respond faster
while keeping your proposal free of costly errors. Use this extra time
to build your relationship and a trusted partnership with your client.
Follow these five strategies and you will win more freight.
“
Nothing will impress clients more than
helping them anticipate disruptions or
communicating insightful information about
the current market conditions. Be the
expert they expect you to be, and you will
be trusted with more freight.
”
How can we help you?
For further information and to discuss how our teams
can assist you, please email [email protected]
.
Visit www.gocatapult.com