This is not a news blog or an advice blog or any sort of company blog. It's more of an opinion blog.

Tuesday, 8 April 2014

Auctions IV: How to Survive Better

In parts 1-3 of this series we established that a setting based on reverse-auction mechanics — where the buyer essentially controls the setting, all the more so if an RFP is involved — is not optimal for you as a freelance professional. It harms your interest by not just simply reducing your profit but rather making sure that profit is basically only for the buyer to make. Reverse auctions and especially RFP-driven procedures subject you to tedious bureaucratic marathons with no certainty of the outcome. They give all power to the buyer and have some serious potential to commoditise your work and encourage buyers to act in self-centred or irresponsible ways (waste your time, most notably).

But we also noted that it isn't really possible to avoid an auction mechanic in a real-life market where competition exists. If your competitors are not currently sitting at the negotiation table during your conversation with your potential client, then they are certainly just behind the corner or at least in some more distant background. Their offers affect how much you can expect to charge or even what you need to do and how if you want to find clients.

We have nailed down primary problems with reverse auctions (including RFP's):

  • buyer controlled environment (and we could finish here)
  • driving prices into ground, up to the point even winners may stand to lose
  • huge loss of time and little in the way of compensation even if you win
  • mental exhaustion and negative emotions
  • no opportunity to shine, be unique, profit from exceeding the requirements
  • difficulty winning when you aren't the lowest bidder
  • uncertainty even when you are
  • promotion of irresponsible behaviours and ignorance

Now let's look for some basic solutions:

  • First and forement – you can say no! This may sound a little silly on my part, but just because you've received an RFP doesn't mean you must submit a proposal.
  • See how much the deal really pays if you win, and what the return of your investment be (including the costs of preparing the RFP and maintaining your participation throughout the entire procedure). Don't compete just for the hope and satisfaction of winning. Pick your battles, fight for meaningful targets. You have a war to win, not battles to chase.
  • Assess your costs of participation and your chance of winning before you commit. Don't overcommit, e.g. don't spend too much time analysing where a rough estimate will do. Overanalysing is a huge part of what's wrong with the RFP-driven regime in the first place. You may want to put together a stable list of criteria and clues if you end up doing this often.
  • Know more or less how much you can possibly earn if you commit your time and other resources to something else than answering RFPs. If the alternative is better, forget the RFP. Resist the lure of chasing and winning them.
  • Before you even have an RFP on your table decide what chance of winning you're comfortable with, and what your comfort zones and bottomlines beforehand, too. You can use the Proz.com rates calculator to get a rough idea. Make sure you know that and why you can't go below to avoid indecision when you are tempted.
  • Just like in gambling, don't get hooked. Know when to quit, and quit when you know it's time.
  • Keep track of the time and other resources you spend answering RFP's. Adjust your estimates and your future decisions accordingly.
  • Be efficient. Automatise what you can, use cheat sheets, scripts, templates etc. Don't use over– or underqualified staff. Don't lose track of time perfecting irrelevant details. Ask a veteran for some tips.
  • If you already need to provide any diplomas, certificates, referrals and such like, you may as well pick up all the leftovers in order to maximise your impact while at it.
  • Search online (e.g. the Proz.com BlueBoard) and talk to people to learn whatever information is legal for you to get and relevant (just don't overdo it time-wise). Important details include any history of non-paying or otherwise being difficult.
  • Give your response a unique touch, just learn how to do it in a time-efficient way. Even canned responses when done right can be thoughtful and considerate and engaging and invoke good emotions in people.
  • Practice saying no. Preferably in a courteous, creative and engaging way, preferably an offer to do something else which has value for both you and your potential client, e.g. a paid-for but high-quality case evaluation. For example read Jonathan Wold's article at Smashing Magazine (Stop Writing Project Proposals, 17 February 2012), Alice Hendricks's at Jackson River (Why I Hate Your RFP), and you can probably find some more. Or just decline courteously but confidently, they may still contact you anyway, regarding the same or some other contract.
  • Read the whole RFPs carefully before you start preparing the response, as you don't want to invest time before discovering that you aren't eligible, after all. Stay vigilant and mindful and then double check your response before sending, run it through a second pair of eyes. You don't want to lose or be eliminated on a technicality after investing your time and effort, asking other people to send you documents if you're fielding a team, and so on.
  • Watch the buyer's act. See if the buyer is a reasonable sort. See what you can expect.
Injecting the opportunity to shine

It may be an uphill battle but also a rewarding and intellectually fulfilling task. Be resourceful and maximise the usefulness of whatever channels and space you still have left within the tight constraints of RFP response. Concise, clear and engaging writing would be ideal.

It won't always be possible to shake off buyer control, but in more informal settings (e.g. RFP-like rather than strict RFP) a well-landed tactical blow can change the rules of the engagement.

Make use of what NLP wizards call reframing, i.e. force the buyer to think outside the box, look at other perspectives, expose the dangers of the buyer's presumed safe position. Think of ways of putting the ball in the buyer's court or providing incentive to reach out to you more.

Don't be too subservient, it's hard to project professional confidence or authority from one's knees.

Don't overcommit your writing time, but it won't hurt if you can still stress the unique, individual character of your services.

Explaining why you won't play the game – a fight for a better future.

If a sufficient number of people refused to play the game and said why, somebody would change the change or some of its rules and others would eventually begin to follow the lead. It's actually in buyers' needs to attract reliable sellers, and some of the people who devise the hoops are still nice people who just simply can't see things too clearly from your perspective, but they possibly would if they could. So give them a chance.

If you decline to participate or especially withdraw after already submitting a response, make sure you state the reason why, in polite and constructive terms. Be very professional, courteous and perhaps uplifting but not flattering, brief but not short, concise and up to point, confident but humble. If you do it this way, your message will have more chance of influencing the buyer (or a sensible professional advisor the buyer may have).

Use language familiar to the buyer to explain why some things don't make business sense from your perspective (e.g. why you would be taking a loss because the costs of preparing a response would exceed the profit margin on a small job).

And remember what we discussed above about making a no more of an opportunity to try something different, better. If not, at least encourage the buyer to get back in touch with you some other time, e.g. when there's no tender or when the budget is more in line with your rates.

This has a much higher chance of working out in informal inquiries and recruitments than it does in formal RFP-driven procurements.

Don't burn your bridges, don't close your doors.

Regimes change, as do the people who call the shots. Those who don't, but like you, find work in different companies, talk to you about their new bosses or friends, or they are the boss who calls the shots now. So don't alienate people, especially those who aren't responsible for the RFP misery (e.g. it wasn't their idea or they had their hand forced).

Perhaps even actually write your proposals and other communication with such next times and collateral referrals and other surprises in mind, just like you always carry business cards (or should). As a minimum, you will have made some people know you exist (including your competitor, who may be larger than you are and themselves looking for a reliable subcontractor). Before, they didn't.

Mental exhaustion

As a freelance professional you need to take this factor in consideration. Don't push yourself too hard, or you will slip, errors will come in, you will lose reputation and incur liability. Try to alleviate the RFP misery by changing something in your approach, making sure you take breaks and don't forget your basic needs while jumping through the hoops. Definitely consider this also — and especially — when you declare any sort of guaranteed capacity. Speaking of which:

Guaranteed capacity, other deadlines and guarantees, other parameters

You'd better have it clear in writing whether the capacity you are declaring is your theoretical daily minimum, average or maximum or some sort of turnover you are effectively booking for the RFP'er — or for the company responding to the RFP if you're that company's subcontractor. Rigid unpaid bookings that you can't cancel are a very serious matter and you should really know what you're doing before you sign such a thing (though I can't personally don't think it's a good idea anyway).

Check any and all other guarantees you're expected to make. Any representations, statements and declarations requiring your signature. Any other parameters requested on you. Remember that RFP-driven procurements are not friendly settings to you, they often deal in bulk quantities, and the conditions are stiffer than in normal translation work. So inspect everything carefully.

Check all the contracts and commitments carefully anyway

Check the contracts, commitments and understandings and anything else you do or will need to sign in connection with the procedure. Contracts are too long a subject to discuss here — bad contracts in the translation 'industry' are a bottomless sack. If the contract is unfair, demeaning, puts you in a really awkward position or heaps risks on you — stay on the safe side. If you don't understand, then certainly don't sign.

Rose Newell and I talked about contracts a little in late January, you may be interested in taking a look (Zombie contracts: Translator's beware, Lingocode, 31 January 2014).

As a subcontractor for someone else, clarify your position and require clear communication

… Make sure that the company above you relays to you all of its client's requirements and all of the relevant communication, that it can and will ask relevant questions and pass answers to you. Clarify your position — e.g. whether the company will expect you to 'inherit' its obligations to its client or just simply hand in your job like normal. Watch out for poor quality sources or highly technical and complicated sources with tight deadlines. Remember that a job originating with an RFP has probably been optimised to turn in as much value as possible for as little pay as possible (value to price ratio for the client), which means that your financial return for the time invested is probably going to be passable at best.

Don't mistake rigidity and lack of willingness to talk to you for legal requirements

Don't mistake an our way or the highway approach for a strict procurement regime. Don't presume that some sort of unchangeable law is responsible when an agency or direct client can't do this or that or invokes our policy, declines to negotiate the contract, imposes unreasonable requirements and piles formalities on you and just won't budge. That's not the same a government spender who is legally locked up in a very strict formal procurement regime. If they don't want to talk about your relationship and work out somewhat agreeable terms, then they probably aren't the kind of people you'd like to work for if you can avoid it.

Know your position and assess how much buyers effectively need to compete for you

Like I said in Part 1, on the example of Proz.com job posting FAQ, people who run informal auctions and auction-like recruitments need to face the following dilemma:

maximising their benefit vs making their job still attractive

This is because those sellers — in our case: translators — who can afford to choose probably will. Almost everybody can afford to choose jobs within some margin. If you sometimes have more inquiries than you could handle, then you probably can afford to choose — which is to say even if you can't just go ahead and raise your rates you can at least choose which inquiries to give priority. Likely the ones chose are the most profitable or the most interesting or those from people you owe some favours.

Do your maths and hold job posters and inquirers to what standards and requirements you can afford to hold them to. Recalculate any exotic rates and deadlines into something more manageable, then compare with other offers (don't exempt them from the comparison). Include the time consumed by any special requests or requirements, such as a lot of material to read before you start translating or your participation in any quality assurance procedures, explanations and reports and cheklists and so on. If the client requests an outright financial discount, just recalculate how profitable the job is now, comparing the effective rate and not the nominal rate it was before the discount.

Bottomline: While you can't really run an auction to select the highest bidder to offer your services to, you can still compare alternative options and choose the best, without subjecting your potential clients to a bidding process.

Last year on Proz.com I wrote an article suggesting that job posters need to compete for translators too (Competing... for the translator?, 30 August 2013) and a follow up illustrating some possible job selection criteria (Competing for the translator. Follow-up: How I choose jobs, 11 September 2013).

The silver lining

While somewhat depressing to participate in, formal procurements from governments and public spenders, especially if the procedure is public and taking credit would not violate the NDA, can lead to some serious references and documented experience. Those, in turn, can be used to raise your profile and make your position stronger. Plus, while the pay may be poor, at least the flow is likely to be steady, which is not bad for any translator who faces some difficulties finding enough work. Which doesn't normally make the hoops and the bad pay worth it, but there may be some rare exceptions. Private procurements (e.g. from corporations) are likely to involve better pay and be more flexible, otherwise it's similar.

Afterward of IV, foreword of V

In the last instalment, I'll try to give you an upportunity to look at doing something better than just surviving, with a mind to avoid the RFP game totally and restrict the impact auction mechanics have on you.

1 comment:

  1. Additional read, covering many of the things I mentioned here and very illustrative:

    http://www.inc.com/magazine/20070501/salesmarketing-pricing.html

    ReplyDelete