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Winning the Bid Wars

Wednesday, June 17, 2020
Margaret Bastick

I’ve had more than one conversation with a frustrated contractor, including family members, who have just lost a bid that they put hours into dotting every “I” and crossing every “T” only to lose to a competitor for what they deemed inconceivable reasons.  

There is an art to winning the bid wars, but even once you learn the method to the madness you won’t win them all.  For most, there are crystal clear reasons you didn’t win – you just have to put your ego aside and do a bit of detective work to uncover those deciding factors.

The Rules of Bid Engagement:  How to Win

  1. Find your Niche.  It’s far easier to garner market share if you have a niche. That doesn’t mean generalists can’t be successful – it just takes more up at-bats to hit the home runs.  When you have a niche, you speak directly to your ideal client and you become known in that space as the go-to.
  2. The RIGHT Bids.  Top firms only bid on jobs that fit their business model.  In other words – they aren’t bidding on every job that comes across their estimator’s desk.  Going back to #1 – build your brand around a specific message and you will attract those clients.  Perhaps 80% of your business is residential and you decide to bid on a commercial job – chances are the bid will be won by someone whose business niche is commercial.  This isn’t hard and fast -but if you truly want to be known as the best residential builder – stick to that model.  If you want to expand into Commercial – then be prepared to be in the trenches and prove yourself for a bit. 
  3. Do Recon on the lost ones.  Failures are simply opportunities to learn. You 100% have to do recon on the jobs you lost if you want to learn why you lost them.  Just because someone undercut you by a gross dollar amount doesn’t mean that firm is doing it at a loss – they may just be far more efficient.  Do the recon – drive by the job site.  How far are they in the process, who are their vendors, how many workers – the more intel you can gather the better.
  4. Did you REALLY know what your customer wanted?  I see more bids lost because the firm didn’t do their homework on the customer.  It’s critical in the bid process that you know what the customer’s pain points are – is it price, is it quality, is it timing?  Is it a combination?  If you don’t address this in the bid narrative – you probably won’t win. 
  5. Let’s talk efficiency.  When you become more efficient you become leaner – and can operate on efficiency of scale model and then pass those savings onto your clients, if you want.  This is where bigger firms have the power.  Think Walmart versus the small independent store.  Same happens in construction, but smaller firms can be just as efficient by ensuring they have good safety protocols reducing injury and work comp rates, they can negotiate material pricing and find great vendors to work with.  Due diligence pays off.  The more efficient, the better the margins.
  6. Watch your reputation. What are you known for?  Quality and workmanship, low cost, top safety processes, and procedures?  If you’ve lost out to someone at a higher price – it will often come back to “They are just better”.  People will always pay more for something they deem valuable.  Back to Walmart – not everyone shops there – only the commodity shoppers.  What is your reputation? 
  7. Always low in will backfire.  It’s quite obvious that always coming in at cost is not a sustainable business model.  Many firms will low ball the bid with a new client just to get in the door – but you’ve now set an expectation.  What happens when the next job comes up with this client and now your cost is 30% higher?  Better to sell on value versus price.  Sell on price…lose on price. 

You’ll never win them all – but by stepping back and looking at the ones you’ve lost and doing some deep recon within your firm and at your competition you’ll identify the roadblocks to going from loser to winner.

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.