I hate RFPs. I’m sure I’m not alone in that thought, but service firms continue to participate in a process that handicaps their business development abilities. The latest snafu is the agency review for the Zappos account. You can read Adweek’s account if you don’t know the story.

So what’s wrong with this picture. Zappos is a high profile account with a $7M budget, not a huge client, but a sizable budget. They send out an RFP and over 100 firms respond! Zappos narrows it down to 22 agencies that will each give 90 minute presentations. Let’s say that the average RFP response takes the equivalent of 40 hours to prepare. Does that seem like a lot? Look at this quote from the Adweek article:

“One shop that failed to advance submitted a reply to the RFP that totaled nearly 80 pages. Ten to 15 agency staffers worked on the submission during a two-week span, including three creative teams, said a top executive at the shop.”

So using my guess of 40 hours at a cost of $100/hr that’s a cost $4000 per RFP response, or $416,000 worth of agency time (remember there were 104 responses) just to get through the first round. Now they are bringing in 22 agencies for a 90 minute presentation, and likely a 3rd round after that. It wouldn’t surprise me that when all is said and done these agencies collectively spent over $1 million to win $7 million dollars in business. This is crazy.

But let’s look at it from the side of one agency. If I have some spare bodies that aren’t busy, why wouldn’t I put 40 hours into pitching Zappos? Well, let’s assume that all 104 agencies have equal shots at the business (a crazy assumption, most that don’t already have a relationship have a much lower percentage) that means that the likelihood of any one agency getting the business is less than 1%. Are you telling me that there is nothing better you can spend your time on than a pitch that has a 1% chance of success? That’s like saying that there’s nothing better I can do with my money than buy lottery tickets!

But we still haven’t looked at this from Zappos side, the client is poorly served in this equation too. They received 104 responses, they can’t possibly review each of them with care. (That’s the source of Ignited executive creative director Mike Wolfsohn’s gripe.) If they spent 30 minutes looking at each that’s 52 hours of review, per person doing the review. Now what criteria will those reviewers use to scale and grade these submissions?

When you hire a service firm, of any type, there is a lot of trust involved. You are hiring this firm because they are (presumably) better at this than you are. The client needs to trust that the service firm his their best interests in mind and maximizes their effectiveness. But how to do you evaluate whether a firm is trustworthy in an RFP process? The RFP process is supposed to allow apples to apples comparison, but does it? The more standardized you force the responses to be, the more all the providers look the same, so price becomes the differentiating factor. But is that really the most important factor in the decision?

RFPs are broken, we just need to decide not to play.

You may be asking, “What are my alternatives?” Stay tuned, that’s the subject of a future post.

---

Brad Farris is a small business advisor with Anchor Advisors, Ltd. in Chicago, Il. Since 2001 Anchor Advisors has been helping creative professional firms to grow, by helping them clarify their purpose, get the most from their people, keep their eye on key performance measures, and implement consistent processes.