Tender wars: is price an excuse?

Tender wars: is price an excuse?

  • Blog Post
  • Posted on 10 November 2015

The issue of pricing is hot topic amongst firms, from sole practitioner to large multi-nationals, as they all face a market in which competition and client purchasing power are growing at an increasing rate. The 2015 ALPMA Summit served up a large number of very relevant and contemporary sessions for the attendees who ventured to the Gold Coast this year. It goes without saying that the seminar, “Sustainable Profit Improvement Through Better Pricing”, delivered by Allens’ Chief Pricing Officer, Pier D’Angelo, was overwhelmingly popular.  

By Matthew Hollings, Business Development Manager

Throughout his presentation Pier focused on providing specific, practical examples of how his firm has sought to improve its approach to pricing and client engagement. Interestingly, a large focus was placed on Allens’ efforts to shift the conversation away from pricing. Two of his main points are summarised below.
 
  1. Increased client engagement and discussion
Pier said one of those most important things to do before submitting a tender to a client is to actually engage in a meaningful discussion about the client’s needs and expectations.  The clear message was to engage early, and engage often; the more you know, the better equipped you are to submit a tender that holds real value to the client.

A specific example highlighted by Pier involved a tender lost by Allens; one that he considered “the best he has ever submitted”.  The prospective client readily agreed and acknowledged the high standard of content provided; simply stated, the successful bidder had taken steps to meet with them on several occasions prior to submitting their final tender.
 
If you fail to engage with your prospective client, how do you know what they really want or need? You lose the opportunity to justify why you should be chosen, even if your price is higher than a competitor.  Pier did acknowledge that the initial client engagement does involve an element of “selling” and appreciated that this is a practice lawyers are traditionally reluctant or unfamiliar engaging in, instead preferring to focus solely on the practice of law.

However, such a position is becoming increasingly untenable in today’s competitive market, and lawyers must adapt.
 
 
  1. Creating value for the client
As a result of engaging with a prospective client you can begin to gain an understanding of what they want and expect, and accordingly, you are able to pinpoint what they value.  However understanding what the client values is only the first step, it is vitally important that the content of any tender aligns with what the client values.

A direct consequence of failure to create value, cited by Pier, is a potential loss of revenue not only through loss of a tender but even if a tender is successful.  An example of this is bundling a suite of “complimentary services” into a tender that have no perceived value to the client. It may be the case that they would instead prefer to pay for those services but receive some other aspect of the service complimentary or at a reduced cost.

As a mechanism to ensure you are always looking to create value it is important to consistently ask:
  • How am I helping the company?
  • How am I helping the individual?
  • What makes your offer superior to competitors?
To summarise Pier simply, you have to give your potential client a reason to choose you over a competitor, as opposed to letting the client make up their own reasons as to why you should be chosen.

It’s safe to say that Pier was in high demand following his presentation with many delegates staying to discuss the popular topic at length which demonstrates, at the very least, that the desire to change is upon us.



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