No-bid letters: How deciding not to tender can actually help you win
According to bidding and proposal specialist BidWrite, one of the first things an organisation should do to improve its tendering outcomes is to implement a structured and rational bid/no-bid decision-making process.
You can read more about what that process looks like and why it’s so important here.
So, if you’ve looked at an opportunity and decided not to bid, what do you do next?
BidWrite is a strong believer in the commercial value of a commonly underused letter in a supplier’s tendering toolkit: the no-bid letter.
Let’s look at what a no-bid letter is and three common approaches to its use, before diving into how you can leverage it to influence your buyer.
What is a no-bid letter?
A no-bid letter is a formal communication to your buyer explaining that you don’t intend to submit a tender response for a particular opportunity. It should take the form of an official letter using your company letterhead.
Three approaches to no-bid letters
Throughout 15 years of tendering experience, BidWrite has seen three common approaches to a no-bid situation:
The ‘do nothing’ approach
Many companies believe there’s nothing to be gained from submitting a no-bid letter. They’ve decided not to put themselves in the running for the contract, so in their minds it’s case closed, move on. BidWrite views this approach as self-centric, unprofessional and a wasted opportunity, especially if you’ve been invited to submit a response. Even in an open public tendering situation, BidWrite strongly advises against doing nothing.
The ‘Dear John’ approach
Other companies see merit in submitting a no-bid letter but don’t appreciate its true purpose. They submit a poorly crafted effort, framed around the key message of ‘thanks, but no thanks’. Another version of this approach is to only complete the ‘not intending to tender’ compliance requirement – if one exists. While more professional, this approach is still a wasted opportunity.
The strategic approach
Strategic sellers view no-bid letters as an opportunity to influence, with a specific outcome in mind that ties back to their well-considered reasons not to bid. For example, they may want to secure a change to the request for tender (RFT) parameters (e.g., a longer open period), which could then alter their bidding decision. They may wish to build a well-positioned foundation for a future relationship with the buyer. They might test whether an alternative approach could be of interest to the buyer, or subtly seek an altered scope or change in requirements.
The takeaway here is that strategic sellers are always looking for opportunities to influence buyers in their favour. So why would you not take that same opportunity yourself?
Essential elements of a no-bid letter
If you decide to take the strategic approach, there are four elements to include in your no-bid letter:
Thank you/acknowledgement of opportunity
A lot of effort goes into preparing RFT documentation. Buyers are people too, so taking the time to express some simple gratitude for being given the opportunity will go a long way towards relationship building and the chance of something positive happening in return.
Your specific reason(s) for not bidding
Here are some common reasons not to tender:
- Limited availability to complete the tender response (time and/or people)
- Concerns about your capacity to deliver the contract
- Risks that can’t be effectively mitigated
- Reservations about the practicality or utility of the scope (but tread carefully!)
The outcome you seek
Politely request an outcome, connecting your no-bid reason(s) to the outcome you seek. Powerful no-bid letters align your reason(s) with an outcome that’s beneficial for the buyer (e.g., you believe the submission deadline is too tight and request an extension to the open period, so you can provide greater pricing accuracy or more value options).
Persuasive close and points of contact
Don’t just limp your no-bid letter to the finish line. If you’ve got this far, you’ve already committed to taking a strategic approach. So, close your letter out with client-centric persuasive writing elements, designed to influence the reader to take the action you seek. And make it easy for them to contact you.
When do I send the no-bid letter?
Ideally, your no-bid letter should be sent as soon as possible after you have made your decision not to tender. Sending it early in the open period gives you the best chance to secure a change that works in your favour. But if you need to issue it later, include a short note explaining the reason for the delay (e.g., you were waiting on third party pricing).
An opportunity to influence
Strategic sellers understand that tendering is not an administrative activity, but a vital, revenue-generating sales activity. So they treat it as such, following the ABC rule of sales – 'Always Be Closing'. Because of this attitude, they always look for opportunities to position themselves in ways that stack the deck in their favour.
The next time you decide to opt out of an opportunity, make the most of it by taking a strategic approach to formulating your no-bid letter. By doing this you might just find yourself in a better position to win.
BidWrite is a specialised, multi award-winning tender and proposal management services company, helping leading organisations across Australasia win more tenders, with less stress.