How to Prepare a Winning Proposal

by: Stratford Managers

Before there were websites, even before there was an Internet, the place where “conversion” occurred was on the pages of a well prepared proposal. Even today for many B2B companies, the customer proposal is the final and most important step in converting customer interest into a contract. So what makes a winning proposal?

Like a well designed website, a winning proposal takes a target audience on a buyer’s journey, hopefully resulting in a purchase. It requires an understanding of the audience’s pain points and their buying process. An effective overall structure for an unsolicited or directed proposal (as opposed to an RFQ response with a pre-determined format) often includes the following sections:

1. Current State or Situation Analysis

This is where you show your understanding of the customer’s issues, priorities and constraints. It’s where they see that you’re familiar with their challenges and, most importantly, that you’ve been listening. Spending the time to play back what you’ve heard from the client during the sales process shows your interest in their business and builds your credibility as a partner.

Believe it or not, many proposals are won in this preamble. All things being equal, it is the supplier that displays the best understanding of the problem that will win the chance to solve it. Getting the client’s situation straight in your head ensures that you’ll put the right solution on the table. In fact, if you’re not prepared to spend the time on perfecting this section before jumping headlong into your solution, let me suggest that you actually care more about your product or service than solving the client’s problem! If there is one thing you could improve in your current proposals I’ll wager it is this section.

2. Proposed Solution or Statement of Work

At last you get to talk about your product or service! But first, explain your philosophy, architecture or methodology. This shows you have the chops to evolve your solution and, if appropriate, customize it to the client’s situation. Once again, you’re communicating that you’re not just pushing a canned product or service, you are offering a partnership with a supplier who has the depth to solve their problem.

This is also where you demonstrate fit, value and differentiation. You should be matching solution features to quantifiable customer outcomes and benefits. But don’t list every feature. You’re trying to get the client to focus on the things that best address the requirements you’ve set out in the Current State Analysis, particularly the things that differentiate your solution from potential alternatives (competitors or internal substitutes). Put all the other details in an appendix.

3. Project/Implementation Plan

Now it’s time to put your solution into the context of the client’s reality. Show that you’ve put yourself in the client’s shoes by thinking through the messy details of implementation. Be clear about deliverables, milestones and metrics for success. You’ve done this sort of work enough times that you know the drill, right? The more specific you can be the more credible you become as a partner in their success. Let the client know they will be in safe hands.

This section is also a chance to set expectations (avoid scope creep), identify risks/dependencies (especially client responsibilities) and establish milestones for billing purposes. Developing a high-level project plan during the proposal phase also ensures that your team is clear on the scope of the effort and you are able to control your profitability. In fact, while a lot of effort often goes into setting the right price, the ultimate profitability of a contract is often determined in this section of the proposal.

4. Pricing and Commercial Terms

By the time you get to writing a proposal, you should already have a well-honed pricing structure with standard value-based pricing models that ensure target profitability. In the proposal you apply these models to respond to the competitive situation and the client’s known budget or cash flow constraints. Keep in mind that in this section you are speaking to two audiences – the client decision-maker who holds the budget and is taking the risk, as well as the client’s finance or procurement people who will be considering other factors unrelated to the merit of your solution.

While you can adjust pricing levels, you can also play with timing to address the client’s cash flow or budget constraints. For certain businesses, the price mix between equipment that can be capitalized and services (installation, training, maintenance, support, etc.) that can be expensed is important. Finally, there may be a risk-reward element to your proposal pricing. Will you place all the risk on the customer by quoting an open-ended price based on effort (eg. billing for time or usage), offer a predictable fixed price, or a “shared risk” price that’s contingent on some client outcome like revenue or savings? Finally, in highly competitive situations, factors like payment terms, warranty period and price guarantees can be the difference between winning and losing a deal.

A lot of effort can be spent preparing the pricing section of a winning proposal. Sometimes it feels like you’re negotiating against yourself! While you want to win the deal, you also need to be able to live with the profitability. Don’t commit to pricing in the heat of the proposal that you’ll regret after you win. If you have an effective sales process you should be able to set pricing with greater confidence based on an understanding of the customer’s financial requirements. Also, by demonstrating your value and differentiation in other sections of the proposal you help justify your price.

A final note: don’t be ashamed of your price! Lay it out clearly. Don’t bury it. The customer wants to know. And you deserve to be fairly compensated for the value you provide.

5. Credentials

People buy from people (and companies) they trust. Nothing builds credibility like your relevant experience and track record of success. Share resumes and case studies that speak to the specifics of the project and the client situation (in particular, their industry or application). Good case studies include quantified benefits. Again, use summaries and put the details in the appendices.

6. Appendices

There is an art to deciding what should be in the body of the proposal and what should be relegated to the appendices. Address the reader’s key decision criteria within the main sections of the proposal while including relevant supporting information in the appendices. You want to keep the reader focused on your strengths and differentiators without drowning them in detail. Appendices should be referenced within the body of the proposal and a table of contents provided. Avoid stuffing the appendices with unnecessary content. Everything should be there for a reason. Customers rarely buy based on the weight of the proposal document.

7. Executive Summary

Although it should be the first section in the proposal document, you do this last. Once the body of the proposal is complete and the appendices are in order, write an executive summary or integrated cover letter that boils the whole thing down to its key points. The executive summary is the brief guide that tells the reader what to look for when they read your well-crafted proposal. For all but the most complex deals, if the executive summary is much longer than a page you’ve missed the point. While the executive summary is worth some effort (after all, it’s your chance to make a good first impression), it should be relatively easy to write. Otherwise perhaps you need to go back and clarify your proposal. If you, as the author, can’t easily summarize the key points of your own proposal, how do you expect the reader to figure out your message?

Once you’ve learned the basics of a winning proposal, a great way to achieve higher win rates is to audit your past work for successful “best practices”. These may include:

  • Trials, pilots or “wedge” services to achieve initial account penetration
  • Upsell/cross-sell/bundling strategies
  • Incentives for extended (eg. multi-year or retainer) purchase commitments
  • Additional services and support as differentiators
  • Terms and conditions to expedite the client’s purchasing process
  • Improved clarity and presentation through the use of illustrations, formatting, etc.

Even the choice of when during the sales process to issue a proposal is important. Often a “draft” proposal early in the sales process can help co-opt the client into contributing to the preparation of a final winning proposal.

In any busy company, there’s often a constant trade-off between effort spent preparing proposals and delivering other projects. A high-performance process uses established structure, proven boilerplate content, strong project management and clear organizational roles to optimize the work to get a well-presented, compelling, profitable and winning proposal out the door. Whether you’re selling equipment or professional services, the investment in continuously improving your proposals creates competitive advantage and will pay-off handsomely in customers, revenues and reputation.

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