Competition

In my last post I wrote about a company that I recently worked with.  When I began working with them in early Fall 2011 we discussed a proposal that they had submitted to a client back in July 2011. This proposal was for a project that the company had experience in delivering and while not a proprietary solution the company felt they were ahead of their competition in being able to deliver this service. The value of the proposal was over $15 Million CAD.

When questioned about follow up activities since submission I was told that they had sent an email and had not been able to get a response from them. This surprised me because it is only common sense that a client is unlikely to buy a solution based on a proposal and an email. I suggested that we should travel to visit the client and follow up in person but the company did not want to spend the money as this client was not in North America. Again, I was very surprised because if an investment of approximately $15k for travel to follow up with the client wasn’t deemed to be a good investment how did the company expect to win this piece of business? In fact, if they weren’t willing to invest in the travel to follow up why did they bother to spend the time preparing a $15 Million proposal.

As I dug into this situation I reviewed the details of the proposal and learned that the company had decided to price the proposal at a gross margin approximately 2.8 times their normal margin. This was done in the belief that they were the only company able to successfully deliver this solution. While other companies around the world had the capability to deliver this solution my client was the only one who had successfully delivered such a solution. This is a good competitive advantage for sure.

The first lesson from this situation is about follow up. If it is worth spending the time to prepare a proposal then you must be convinced that it is business worth winning and must be prepared to do whatever it takes to follow up with the client.

The second lesson is that competition is not just about your competitors who work in the same field. Competition can be your potential client not proceeding with the project.

Competition comes in many forms so always be thinking of how you will find competition, its not always obvious, and how you will deal with it.


Dave Speed