Producing a formal RFP can be a lot of work. Why go through all the effort?
Isn’t it just as easy to call your beverage reps and let them send you a proposal? Why not work off of the early renewal offer that your existing partner throws your way? Won’t that save a lot of time and work and allow you to focus on other pressing matters?
You can… but it’s not a good idea.
Here’s why:
6 Reasons You Should Release a Formal Beverage RFP
First, some vocabulary: RFP = “request for proposal”. For purposes of this article, RFP can be used interchangeably with RFT (“request for tender”). Now, on to the content:
Level Playing Field:
It’s important that every competing party has an equal opportunity to put forward the best proposal possible. Ensuring everyone has access to the same information — including the organizational objectives, deal parameters, decision processes, expected volume, and potential brand exposure — is critical to providing an objective opportunity.
In a similar vein, a formal RFP also helps insulate you and your organization from any accusation of foul play in awarding the business based on dishonest or unsavory means.
Sending the Right Message:
Not only is actually providing a level playing field important to the process, appearing to provide a level playing field is critical. For challengers, a well-written and well-structured RFP signals that they have a legitimate shot at winning your business. For incumbents, a polished RFP puts them on notice that they cannot take your business for granted.
If one party feels like they never really had a shot at the business, they are not going to put in the energy to lobby the powers-that-be in their organization to fight for real investment in your business. They can only fight those battles so many times, and they’ll pick and choose the ones they believe they can win. For a beverage rep, offering a customer a standard program is the path of least resistance. A compelling RFP that tells the right story can motivate your account team to make your opportunity a priority.
Framing the Opportunity:
An RFP is your chance to frame the opportunity in a way that steers the beverage companies towards your goals. Much like the concept of “anchoring” in negotiations, proactively characterizing the potential partnership at the start of the beverage proposal process can impact every single discussion to follow.
Are you offering pouring rights or a beverage marketing partnership? There’s a difference. When valuing their investment levels in your business, should the beverage company consider you alongside your other peers in your industry, or is there a reason this partnership should be evaluated in a different light? Certain industries tend to attract more investment than others. An RFP is your chance to paint the narrative for the beverage companies.
Engineering Efficiency:
By putting a little effort into the start of a process, you can avoid a lot of work on the back end. Anticipating questions and addressing them in the RFP lets you avoid having to answer the same questions repeatedly from all competing beverage companies during the process.
Will it make your analyst’s job easier if the beverage companies each submit their analysis in a specific format? An RFP is your chance to specify. Will the responding parties need to agree to adhere to certain standard contract terms and conditions? Including this in the RFP can eliminate a lot of negotiation and lawyer calls in the future.
Gaining Organizational Alignment:
Large organizations very rarely have a singular goal and a singular decision-maker in initiatives like a beverage partnership. The process of drafting an RFP allows for every stakeholder in the organization to vocalize their goals. The decision team can then come to alignment on what’s most important in the beverage agreement.
In an RFP’s we release, we recommend including a scoring framework that weighs the various decision factors and clearly explains how the proposals will be evaluated. In addition to focusing the beverage companies on what’s most important to your organization, it also has the added benefit of ensuring your organization is internally aligned on its priorities.
Nipping the Run-Around:
Savvy beverage reps know how to get around your organization (and they should). Whether taking the C-Suite to The Masters, sponsoring a charity event of a board member, or providing free product and promotional items to an influential operator, beverage reps can find ways to foster champions within your organizations in hopes they can gain an inside edge to influence the decision-making process.
A formal RFP sets boundaries around how a beverage company is to engage in the proposal process. It can also stipulate a communication protocol to eliminate attempts to back-channel with influential individuals in your organization.
Does it ever make sense to avoid a formal RFP?
Every rule is made to be broken, and there are times when it makes sense to avoid a formal RFP. As a general rule of thumb, however, you will receive the most competitive offer when you allow a full, formal, and comprehensive RFP process to run its course.
Need to Develop a Beverage Agreement RFP?
Our team drafts and delivers dozens of beverage agreement RFP’s every year. We’ve developed a framework to ensure every possible scenario is uncovered and then addressed in a formal RFP document (and, sometimes, a corresponding video and presentation). We do all the heavy lifting, ensuring that each stakeholder has a voice in the process and that the RFP is crafted to bring to life the unique story of your organization.
Interested in learning more? Contact us today.
Additional Resources:
The Ultimate Guide to a Beverage Deal
Why Hire A Beverage Consultant?
How to Speak Beverage Deals: A Running List of Beverage Acronyms
