No-bid letters: How deciding not to tender can actually help you win.
By David Lunn, CP APMP, MCIPS.
In a previous blog, I covered the key reasons why you should include a cover letter in your tender submissions, along with a handy guide as to what an effective cover letter includes.
So, it’s probably no surprise that I also believe in the commercial value of another commonly underused letter in a supplier’s tendering toolkit: the no-bid letter.
First, let’s take a quick look at what a no-bid letter is and the context in which it’s used.
What is a no-bid letter?
In its most obvious sense, a no-bid letter is a formal communication to the buyer explaining that you don’t intend to submit a tender response for a particular opportunity. And yes, it really should be an official letter on your company letterhead.
Taking a step back in the process, a no-bid decision should always result from a rational and structured process. Knowing when to bid, and when not to, is a key skill that separates strategic tendering organisations from ad-hoc or tactical ones (Strategic Proposals, 2022), and the benefits of implementing a structured go /no-go decision-making process are too good to ignore.
So let’s assume that you’ve arrived at a rational decision not to bid. What do you do next? What form does your no-bid letter take?
Three approaches to no-bid letters
At BidWrite we have nearly 15 years of experience helping our clients collectively submit some 3000 tenders, quotes and proposals. Throughout this time, we’ve seen the following three common no-bid approaches:
- The ‘do nothing’ approach
Many organisations believe there’s nothing to be gained from submitting a no-bid letter (or any type of communication to this effect). They’ve decided not to put themselves in the running for the contract, so in their minds it’s case closed, move on. Our view is that this approach is self-centric, unprofessional and a wasted opportunity, especially in solicited tendering situations. Even in an open public tendering environment, we strongly advise against doing nothing. - The ‘Dear John’ approach
Other organisations see merit in submitting a no-bid letter but don’t appreciate the letter’s true purpose. They submit a poorly crafted effort, most often 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. This approach is more professional than the first, but still a wasted opportunity. - The strategic approach
Strategic sellers view no-bid letters as an opportunity to influence, with a specific outcome in mind which ties back to their well-considered reasons not to bid. For example, they may want to secure a change to the RFT parameters (e.g. a longer open period), which could then alter their initial 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 to better suit their approach without incurring the expense of producing an alternative tender.
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
When taking the strategic approach, there are four elements to cover in your no-bid letter:
- Thank you / acknowledgement of opportunity
A lot of effort goes into preparing Request for Tender (RFT) documentation. Buyers are people too, so taking the time to thank them for the opportunity will go a long way toward relationship building and the chance of something positive happening to you in return. - Your specific reason(s) for not bidding
Tell your buyer why you won’t be submitting a response. 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 and connect your reasons for not bidding to the outcome you seek. Great no-bid letters align your reason(s) with an outcome that’s beneficial for the buyer. For example, if 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, your request is more likely to considered. - 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. Close your letter out with client-centric persuasive writing elements, (such as reinforcing personalised key messages and quantified benefits or proof), 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 for some reason you need to issue it later, explain the delay (e.g. you were waiting on 3rd party pricing).
A golden opportunity to influence
Strategic sellers understand that tendering is not an administrative activity. They view it as a vital, revenue-generating sales activity and they treat it as such, following the ABC rule of sales – Always Be Closing. Strategic sellers are always looking for opportunities to position themselves in ways that stack the deck in their favour. With this perspective, they use no-bid letters as a means to exert influence, extending exactly the same approach to tender clarification questions. But we’ll dive into that another day!
The next time you decide to opt out of an opportunity, I hope you make the most of it by taking a strategic approach when formulating your no-bid letter… and you might just find yourself in a better position to win.
References:
Strategic Proposals. (2022). How the best win.
https://www.strategicproposals.com/images/easyblog_articles/241/How-the-best-win—2022—Strategic-Proposals.pdf