We have seen the big bid death spiral play out in multiple flooring companies.
It goes like this:
Salespeople default to the easiest option for new work. They go to the bid board.
This creates the bid frenzy death spiral:
1. Owner: “We need more work as our existing accounts have shrunk”
2. Salesperson: Goes to the Bid Board and randomly picks assorted bids
3. Throw bids over to preconstruction team resulting in dramatic rise in estimating and admin costs
4. Sales pipeline gets fat and bloated
5. We get complacent as we think we have a good pipeline
6. We discover our win rate is plummeting!
7. Management: “we need to win more bids!”
8. Salesperson: Panics under pressure from the boss and discounts to increase win rate!
9. We grow– our backlog is filled with low margin, high risk customers
10. We suffer for the next 12 months as this poor quality work flushes through our system.
This pathology can be avoided by using the following four ways to create revenue:
4R’s of Revenue Generation:
Reconnect: rekindling past client relationships
Reap: effective follow up of our existing bid pipeline
Reach: how to target new customers
Referral: turn one good job into many.
These methods are detailed further in the free download The 4R’s of Revenue Generation:
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