A Winning Contract Renewal Strategy
In Ireland less than a third of incumbents have their public sector contracts renewed once the service they provide goes out for tender. Why? It can only be because they adopt a complacent and conservative mind-set of “what we have we’ll hold and let’s see if we can get away with doing sweet F.A. over the next few years.” I’ve seen it numerous times. People tell themselves that because they get on well with the client and are delivering what was asked, there’s no point in shaking things up. This approach may work every so often, but that renewal statistic is damning.
Once you win a contract it pays to consider implementing a strategy that helps you to do all in your power to defend it. Your competitors will do all they can to rip it away from you when the next tender is issued. If they’re good they’ll gather enough intelligence about your service that gives them a good idea of your pricing, cost structure and approach to product and service design. They will be in the buyer’s ear showing them what they can do, and how they’ll do it better than you. They will also have the guile to develop a list of his or her needs, concerns and frustrations.
It’s easy to lose sight of the fact that while you are busy delivering according to your mandate your competitors are at their most creative and dangerous. According to U.S. Consultancy Strategyn “people will not switch brands or pay more for products that only get a job done 1 or 2 per cent better. Winning products and services must get the job done 20 to 30 per cent more or better.” While there isn’t a study that validates this statement in relation to the Irish public sector tendering, it’s hard not to draw a conclusion that the lethargy and complacency displayed by losing incumbents leads to vastly inferior solution design compared to the winning designs of their competitors. What can you do? Firstly, adopt a mind-set that accepts that any renewal process will be hard fought, transparent, and unlikely to favour you over the competition. You then need to set out a strategy that not only helps you defend what you have but results in a more compelling offer.
It’s helpful to break the contract into three phases. Phase one involves setting up and finding your feet. Phase two is the middle of the contract where everything should now be running smoothly while with phase three you’re on the home straight and gearing up for the renewal competition. Let’s have a look at each phase in more detail, and discuss the issues involved.
Phase One – Contract Set Up
The initial phase of any contract is tough as you will be bedding in the new service, hitting your SLAs and getting to know the personalities on the client side. Any design shortcomings will become apparent early on, and it’s important to release key resources to tackle them swiftly. This phase is primarily about you and your service delivery staff keeping your heads above the water until all issues are ironed out, as well as gaining the client’s trust.
Phase Two – Mid – Contract
As you move into phase two you will have access to a lot of information about what works and what doesn’t. You will now have a treasure trove of intelligence under your nose, and it’s important to analyse it and put it to good use.
One of the reasons why incumbent companies don’t innovate is because the people involved in service delivery don’t have the time, energy and skill set to be creative. It’s therefore important to have a number of analysts and design professionals on your staff who are able come up with the necessary service enhancements and innovative designs.
As you refine the process make sure that the client is aware of the improvements that result. If you don’t show the value that you bring, they won’t be aware of it.
Now that a decent interval has passed since contract award it’s a good time to think about what the service could potentially look like after the renewal process. It stands to reason that with the passing of time and market changes the client will have a different expectation. If you don’t develop the service it will atrophy just like your body does without enough exercise.
By now you’ll have built a level of trust that should allow you greater access to other decision makers. With the right approach your team of analysts and designers should identify and surface a number of unmet needs and outcomes that could significantly enhance the service.
While your analysts and designers are coming up with new ways of working, your service delivery team should be executing according to plan and keeping things as fresh as possible. Little things count. Make sure that they change their client meeting PowerPoint templates from time to time. The message may be the same but it’s important that the client notices the change. Likewise, don’t use the same room for every meeting. If the client is amenable look to switch managers in and out of your contract teams in order to keep things from stagnating.
Phase Three – The Home Straight
Now is the time to give your customer a hint of what you could potentially offer them for the next contract. Politically it’s a good idea to invite them to any design workshops as they’ll appreciate being consulted on the potential design. It also shows them how you work, and that you are proactive about addressing their needs. If the customer likes what they see, they are more than likely to include aspects of the design as requirements in the eventual RFT. This means that you are driving the service design agenda – not your competitors.
Make sure that your finance and design teams collaborate on service and product design. Often design teams work in isolation only to have their eventual solutions trumped by finance. It’s important to foster a creative dynamic and tension between the pair that leads to you presenting cost effective and progressive solutions.
When you rebid you will be writing your response from a strong position as the proposal will not resemble your previous submission. The client will not be surprised when they see your new solution. They will have seen how you work, and noted your capability for refining the service as well as coming up with something new that addresses their unmet needs.
Hopefully this piece will help you with your thinking around what type of strategy to adopt when entering a government contract renewal competition.
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