SPJIMR

ITBD (PGDM 2014)

Proposals & Contracts
- & Pricing

J une 29, 2014

The opinions expressed in this
presentation are my own and
do not necessarily reflect those
of my employers.
Todays Agenda

Recap

Proposals & Contracts

Examples - RFP / Proposal / Contract

Q & A

Any other issues
Coverage
Understanding customer fundamentals

Proposals

Negotiations some basics

Contracts

Good Relationship Manager an overview
+ Q & A

Recap -

The Sales Cycle



The Sales cycle
Understanding market
The Sales cycle
Understanding markets
Business Planning
The Sales cycle
Understanding markets
Business Planning
Pre-Sales process
The Sales cycle
Understanding markets
Business Planning
Pre-Sales process
Sales process
The Sales cycle
Understanding markets
Business Planning
Pre-Sales process
Sales process
Post-sales process
The Sales cycle
Understanding markets
Business Planning
Pre-Sales process
Sales process
Post-sales process
Proposal
The Sales cycle
Understanding markets
Business Planning
Pre-Sales process
Sales process
Post-sales process
Proposal
Contract


Objective




Information to the prospect
Whats to be done ?
How to do it ?
Who is to do it ?
How much will it cost ?
Whats the benefit of doing so ?
Why A Proposal ?
Understand the customer
Know the problem
Figure out a solution
Conceptualize the proposal contents
Pen it down
How to get going ?


Know thy customer




Understanding the customer
Who is the true customer & whats the approach ?











Understanding the customer
Who is the true customer & whats the approach ?

Railway Reservation System
Sales Force Automation (Pharma)
eGovernance (State Govt.)
Disaster recovery / Business continuity (FMCG)
eLearning services (Hospitality)


Understanding the customer
Who is the true customer & whats the approach ?

Railway Reservation System
Sales Force Automation (Pharma)
eGovernance (State Govt.)
Disaster recovery / Business continuity (FMCG)
eLearning services (Hospitality)

User, Top Mgmt., Purchase, Finance, IT
Insider Info
Real need, Budget, Time frame,
Decision making process, competition

Collaborate the solution - with KOLs (Key Opinion Leaders) - before
the proposal

Pass on as much info as possible to customer
Understanding the customer
- some critical success factors


The Contents




Background (client, requirements)
Problem identification thereby eliminating any gaps in
understanding
Proposed solution with assumptions
Objective & Scope of work boundaries clearly identified
Methodology
Deliverables with samples (esp. s/w. devlop.)
Limitations i.e. what does this not cover and what
are the dependencies
Time schedule
Tools to be used, if any
Solution teams bio-data
Customer and solution providers responsibilities
Terms and conditions

Benefits of assignment and choice of solution provider
Price, taxes, payment terms
Validity period
References
Summary


A few critical aspects




Review content especially problem and solution
Recheck the financials
Have the benefits been highlighted properly ?
Are the customer guidelines met properly esp. tenders
Technical Commercial bid separation
Earnest Money Deposit
Project personnel profiles
Is the summary good enough for prospect to read further ?
Checklist: pre-submission
Clarity & comprehensiveness
Should hold attention from first to last
Have the buy-ins of the KOLs
Peer reviews eliminates biased / involved thoughts
Submission on time
Some key success factors in proposals
Proposal
- Some questions
Is a proposal different in a tender situation ?
Is a revised proposal required after agreement in the
negotiations with customer issuing a PO subsequently?
Is a proposal required if a contract is to be signed ?
Is a proposal required for a repeat order ?
Should a proposal be charged for ?
What should be the format for an unsolicited proposal
?


Negotiations




Scope and deliverables Vs Cost
Time Vs Cost
Contract terms
Customer sign offs / approvals /
responsibilities
Project closure
Negotiations
- Some important considerations
Aim is Win-Win
No deviation from proposal (unless
required) but flexibility essential
Apparent Transparency


Contracts




Customers standard contract Vs Solution providers
standard contract
Definitions IPR, Services, Prototype, Go-Live,
Training Vs Hand-holding
Responsibilities
Confidentiality of Information (NDA)
Project Teams (+ Steering Committee)
Warranties

Indemnification
Limitation of liability
Termination i.e. exit clause
Jurisdiction of legal action
Force Majeure
Arbitration
Contracts
When are contracts essential ?
Should price be a part of the contract ?
How do you measure success of a contract ?
Which is superior - proposal or contract ?



Relationship
Management



First meeting impressions
YOU NEVER GET A SECOND CHANCE
TO MAKE A GOOD FIRST IMPRESSION





First meeting impressions


Dress - advantage of formal dressing ?
Ability to speak on a wide variety of subjects
- but only when required
Listen - and never interrupt your customer
Spout jargon - but avoid making it a waterfall
Never criticise competition
Meet commitments always
- give customer bad news well before he asks for it
Be in touch - order execution & peace time
Follow the customers rules & etiquettes for
telephone / mail / letter / tenders / negotiations









Never criticise competition
Meet commitments always
- give customer bad news well before he asks for it
Be in touch - order execution & peace time
Follow the customers rules & etiquettes for
telephone / mail / letter / tenders / negotiations
Customer is Always Right
- Especially When he is Wrong



Pricing




Products Services
Fixed costs Fixed costs
Variable costs Variable costs
Profit Profit
Pricing
Products Services
Manpower (R&D)
H/w, Tools Inventory (FM)
Packaging
Overheads Overheads
Costs Fixed costs
Products Services
Sales expenses Sales expenses
Promotion
Manpower
Admin (Travel, Training)
Costs Variable costs
Products Services
Standard Case-to-case
Impact past, future Impact - present
Change - complex Change simple
VALUE
Pricing Strategy
Customers willingness to pay isnt it value ?
How do you respond to competitors price cut ?
Should market share retention drive pricing strategy ?
Can you package uncertainty ?
What should be the response to an existing customer
going the eProcurement route ?
Some questions Pricing strategy
THANK
YOU

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