You’re the supplier of a large dollar service contract, successfully delivering for 3 or more years. Now it’s going out for rebid and, unfortunately as incumbent, you’re saddled with some heavy baggage.
It seems that customers get a little itchy to change suppliers after 3-5 years. They get downright scrabbly to get rid of their incumbent after 10 years.
Doesn’t matter how good a job you’ve done. If you’ve been there 3,5 or 10 years, that number will be their magic number to change suppliers. Here are 4 rebid prejudices that if not addressed, may make your contract terminal:
#1-Customer is unaware of your contributions
You’re often a victim of your own success. When you’ve been reliable, proactive, and taken care of your customers they forget you. You’re taken for granted.
Even if you start out communicating your successes in review meetings several times a year, being good can trap you. When you’re customers are well taken care of, they trust you. They should.
However, when your contact says “You’re doing a great job. We don’t need to hold these review meetings anymore” your valued contributions become invisible. Therefore, they don’t exist.
#2-Customer staff comes on-board after you
This doesn’t necessarily mean you get a new contact person. These new customer staff can be your contact’s direct reports, or future decision-makers in procurement, finance, HR, etc.
They weren’t around when you were selected. You weren’t their decision. It’s easy for new staff to feel the incumbent has too much power. Possibly they have a favorite supplier they’d like to bring in. Either way they’d like to put their own mark on things. That may mean selecting any supplier other than you, the incumbent.
#3-Procurement can’t believe you’re that good
Procurement’s role is to constantly test the market for better, faster, cheaper versions of you. They may believe suppliers can’t remain the best-in-world-class-industry-leader after “x” years.
They’ve seen you for years now, that may make you old, tired, and slow in their eyes. Even if they were around when you were selected years ago, they’ve not monitored how well you’ve delivered. “Familiarity breeds contempt”.
#4-New normal high expectations
After you’ve accustomed customers to great service they come to expect that from you. They should. However, when rebid time comes around they start with these high expectations that are now their normal ones.
Something interesting happens at rebid time. Contract rebids have a way of getting customers’ juices up. They want more, they want better and they want it for less than what they’re paying you.
So as they begin to prepare for the rebid you may see their expectations increase. And this new higher level can make incumbents look old, tired and slow. Here are several changes in customer expectations that suppliers face before or at rebid time, suppliers are seen as:
- Too tactical, not strategically looking forward enough
- Too reactive, not proactive enough before being asked
- Too complacent, not innovating with the best & latest
What can incumbents do?
Prepare for the inevitable, start early, before the rebid. Take a look at “We are Forgettable” and the Pre-bid Goals in “Incumbent-itis”.
An incumbent supplier can overcome these rebid prejudices but only through the extra work. This is on top of performing at best-in-world-class-industry-leader levels. But incumbents have had the revenue, profit and pride of serving their customers. Now it’s time for the extra mile.