Are you in the services business? These days, most of us are. A World Bank study showed that in high-income countries, services represent 66% of GDP compared with only 35% in low-income countries. In Australia, services employ more than 8.6 million people, representing 76% of all employment.
As the people who deliver these services, we understand how essential they are. Yet services can be hard to understand and define, making them difficult for us to sell.
Complicating this is the issue that the people who buy our services often don’t understand them as well as we do. The “product” of a service is often the result of specialised experience and training. As a result, clients who lack this knowledge often have difficulty evaluating the value of service products.
This lack of understanding leads to commoditisation and unfair pressure to force our prices down.
Consider the impact of competitive tendering. Since the 1980s this system of buying has grown quickly, and now most contracts of any size and value are transacted through bids and tenders. In 2014-15, one of Australia’s largest buyers – the Federal government – spent $59.447 billion buying goods and services through Austender, and issued 69,236 supplier contracts.
In a competitive tender, you will be pitted against many competitors – sometimes a handful, sometimes hundreds.
And the competitive tendering system is particularly challenging for people who sell services.
Services are often complex and time-consuming to execute. Unfortunately, this also makes them complex and time-consuming to explain.
In a competitive tender, we are faced with word limits, page limits and character limits. This means we’re under constant pressure to get straight into unpacking our methodologies and implementation plans (what and how). This often comes at the expense of explaining the problem we are solving (why), which is the main reason why a customer actually needs us in the first place.
If you have no choice but to engage in competitive tenders, learning to communicate value – in a way that goes beyond the easier default position of “price” - is essential to stand out in this crowded, competitive environment.
|Robyn Haydon is a business development consultant specialising in business that is won through competitive bids and tenders. Her clients have won and retained hundreds of millions of dollars worth of business with many of Australia’s largest corporate and government buyers.|
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