10 Best Practices for Writing Winning RFP Responses — Life and P&C Insurance
Coretech solution providers: Is your RPF response process maximizing opportunities with new clients?
An RFP gives solution providers an opportunity to showcase their offerings in compelling ways, and helps buyers articulate goals, expectations, and critical requirements. Though sometimes derided as a necessary evil, an effective RFP process helps lay the foundation for a successful implementation.
Introduction
Most solution providers would like to avoid RFPs. They are difficult, time consuming, require multiple contributors, often feel fruitless, and demand tight timelines. P&C and life insurers looking for a new solution recognize the challenge they are creating for solution providers and often build a process and timeline that test their ability to meet dates and a quality response. Despite the challenge of running the RFP production gauntlet, however, the RFP process gives solution providers the opportunity to show their offerings in compelling and unique ways. Solution providers must learn to strategically invest the time and effort into the RFP process to improve the overall number of deals they are likely to win each year.
The typical system selection process begins with insurers identifying potential solution providers that could potentially meet their need. They may look to industry associations, websites, colleagues on LinkedIn, AI tools, etc. to find possible providers. Solution providers often wonder whether they are being included in system selection efforts. They often lack visibility into whether other solution providers are winning deals that they were not aware were even in play. As a first step, it is critical that solution providers position themselves in the places where insurers will look to find possible partners. They must ensure that their websites, profiles on industry sites, and analyst portals are current and accurate to help ensure that they will be included in the early stage of system selection. Before sending out the RFP, insurers will often narrow the full list of possible providers to a more manageable number (generally less than six) using a short RFI, or deeper research project into each solution provider.
Once insurers have developed the shorter target list of potential solution providers, insurers embark on the formal RFP process. An associate on LinkedIn recently made the claim that implementation starts with the RFP. This statement accurately reflects that for many organizations the creation of the RFP helps stakeholders articulate their dream and begin to define expectations and success criteria for the deployment of the new platform. For many insurers, the RFP development process helps them to discover and document the functional and strategic priorities across multiple stakeholders and leaders. Furthermore, the RFP process helps insurers understand the strengths and weaknesses of each solution provider, making it easier to plan for a successful implementation.
Insurers then send the RFP to potential suppliers with instructions on successfully completing it. Solution providers are provided with strict guidelines and timelines for completion and solution providers would do well to adhere to these to ensure they will be considered. From the RFP responses, insurers will generally select three or four solution providers to move to the next step which often includes a demo and presentation and could include a limited implementation, test system access, or proof of concept. Solution providers are invited to provide detailed pricing information and implementation plans for the potential customer to approve. As insurers near a final decision, they will often limit their communication with solution providers which is often frustrating for solution providers. During this stage solution providers should stay the course, continue to do the required work, and not panic. They will likely be unable to affect the final decision by acting outside of the guidelines established by the insurer.
Best Practices
1. Use caution when attempting to convince potential customers to avoid the formal RFP process
Many solution providers believe that they can influence the buyer to avoid a formal selection process and RFP by establishing relationships, building rapport, and helping insurers to shape the definition of the business problem. Solution providers often utilize this approach to attempt to reduce the time, effort, and risk associated with closing the deal.
While stopping or influencing the RFP process can sometimes be an effective strategy, this approach has profound risks as well. As noted above, the RFP process helps insurers refine their priorities and helps to get all stakeholders on the same page. It also defines insurers’ internal deadlines for action and decision. Finally, it reflects that the insurer is committed to taking action and establishes timelines and goals for successful deployment. Solution providers must recognize that if they try to win the deal without a formal RFP, they are:
Stepping into a deployment situation where stakeholders and leadership may or may not be fully bought in to partnering with a solution provider or have varied expectations on their goals.
Potentially embarking on an implementation where their own capabilities have not been vetted against the customers actual needs and requirements.
Engaging with a customer that has not created and agreed upon a definition of success.
Risking a sales process that drags on and on with no stated finish line.
Risking taking on a customer outside their core competency.
2. Qualify the prospect
When they receive an RFP, solution providers should carefully qualify the prospect and be selective about the RFPs that align with organizational goals and objectives. Assess whether the potential customer is well aligned with the current offering and future development of the product to assess the likelihood of winning the deal. RFPs are time-consuming and can be disruptive for multiple team members and it is important to make a go/no go decision for each RFP, ensuring that everyone is in favor of responding with a thorough understanding of what will be required to win the deal.
3. Identify decision makers and understand their pressing challenges
Insurers can have a host of challenges driving them toward an RFP process. They may determine that they lack business agility, are bearing the costs of legacy solutions, lack business growth opportunities, cannot deliver compelling customer or agent experiences, etc. A well-written RFP should include a thorough context that describes the business challenges that have led the insurer to issuing the RFP. It is vital that solution providers understand these pressing challenges to position their solution effectively.
In addition to these overall business reasons for a new solution, each stakeholder and decision maker within the insurer will have their own goals and objectives for a new solution. While supporting the overall organizational needs, they also have goals for their own department that will become a part of the RFP. Often, insurers are not overt about the hopes and dreams that each stakeholder may have for the solution. It is incumbent on solution providers to interpret the RFP to better understand the nuanced needs of each stakeholder. One approach to doing this is to look for areas within an RFP which appear to have too many questions about a particular topic area. For example, if the prospect is asking redundant questions about support for the deployment of new products, or security protections, they likely have slow time-to-market with new products, or recently have experienced a security incident. Knowing this gives solution providers an advantage by positioning stories and content that connect directly to these customer pain points. Listening to each stakeholder will also provide insight into what each stakeholder cares about in order to craft responses and interactions appropriately.
4. Understand the prospect’s decision-making bias to better position the offering to win
Solution providers need to recognize as early as possible in the RFP process the reasons why the potential customers are choosing to select a new platform. Often insurers will have a stated reason for a solution evaluation, such as bringing a new product to market, reducing technical debt, or providing better customer experiences. Solution providers need to understand the underlying decision bias beneath the stated reason, to better position themselves to win the deal. For example, some insurers look to their RFP process to validate their own beliefs or to validate the ongoing use of an incumbent solution. Others use RFP processes to settle disputes and divisions among decision-makers. Still others look to RFP processes to gather and consolidate a comprehensive data set that will differentiate providers and help them determine the best solution to meet their needs.
To effectively understand the underlying biases, the solution provider should create a list of stakeholders and note the motivation of each. While these motivations might be difficult to obtain initially, it will become clearer as the deal progresses by listening to the objections and questions of each stakeholder. Solution providers should document the possible biases of the different buyer stakeholders. These might include:
Do nothing bias – In this case the RFP is used to validate the belief that the existing solution is sufficient, and the insurer should not invest in doing anything at this time. Solution providers should emphasize to these stakeholders that doing nothing will put the buyer well behind their competition and will place them at a strong competitive disadvantage going forward.
Incumbent solution upgrade bias – In this case the RFP is used to validate that the insurer should keep an existing solution and upgrade it to their most current version. This perspective is often driven by a fear of internal disruption that deploying a new solution could create. To address this, solution providers should emphasize the simplicity of transitioning to their platform and illustrate that upgrades of existing solutions can be equally, or even more disruptive to internal teams than new platforms.
Follow the competition bias – Some stakeholders will believe that using the same solutions as their competitors has lower risk and that they can bypass or shorten the evaluation process to simply select the solution with the most existing customers. Solution providers that are working with a prospect’s competitors can capitalize on this bias and show how they are the chosen provider for the industry. Solution providers that do not have a host of the buyer’s competitors, should position their offering as a way for new customers to leapfrog their competitors with emerging technologies and lower total cost of ownership.
Objectivity bias – These stakeholders choose to reserve judgement until all the facts are in. They will be committed to preserving the integrity of the RFP process and will defend their actions to limit communication and hold firm to deadlines. Their focus is on accurate scoring and analysis to determine the right solution for their needs. Solution providers should do everything they can to win the RFP on its merits and demonstrate how they can successfully perform across all decision categories.
5. Highlight compelling and transformational outcomes
One critical function of an RFP is to differentiate the capabilities and offerings of solution providers. It is exceedingly difficult for potential buyers to create apples to apples comparisons of possible solution provider offerings from simply reviewing websites and talking with trade show exhibitors. It is incumbent on solution providers to successfully differentiate their capabilities in the mind of their prospects through their RFP response. Solution providers that highlight a strategy, approach, insight, solution, or action that has transformed a customer’s thinking or experience is an effective way to clarify the unique capabilities of the offering. The compelling story must align with the needs expressed in the RFP. Coretech Insight has found in some cases, solution providers are so enamored with their own capabilities they fail to connect their achievement to delivered value to customers. For example, instead of simply listing capabilities, a solution provider might include, “Our customer originally wanted to upgrade their current system, but we demonstrated our data migration approach and showed them how investment in our system would provide 2x the financial benefit over the next three years.” This helps the potential customer see that the solution provider brings unique deployment expertise. Or instead of simply listing AI components or use cases, a solution provider might connect their capability to value with a response like, “Our AI specialists identified three separate use cases within the new business process that cut new policy issue times in half.”
6. Stay focused on insurers’ immediate needs with an eye toward transforming the industry
Solution providers must, at a minimum, show how they can successfully solve insurers’ immediate functional needs, make their customers happy, and make heroes of the stakeholders that selected their solution. Winning by focusing solely on the short-term requirements of customers, however, is often insufficient to sustain solution provider wins over the long term. As AI, IoT, medical technologies, autonomous vehicles, robotic process automation, and a host of other transformational technologies have emerged over the past 5 years, they have created new opportunities and challenges across the insurance landscape while continuing to increase insurers’ fear, uncertainty, and doubt regarding their futures. Solution providers that can deliver immediate value to customers while also helping customers transition themselves into a technology rich future will land more deals while also getting more attention from analysts and pundits. It will also help solution providers from becoming a legacy burden to their customers as they continue to upgrade and enhance their solution and help them remain on the forefront of reshaping the insurance industry.
7. Include targeted content and questions to reveal competitors’ weaknesses
Solution providers should include content in their RFP response that they know will be difficult for their competition to respond to. While not calling out competitors specifically, solution providers should provide intriguing or enticing capabilities that highlight their competitive edge. This is particularly true if they determine that the RFP was written to provide an advantage to a specific respondent. It is vital that solution providers create a strategy to specifically address the message of the suspected preferred solution provider by asking questions and providing content that challenges the assumptions in the RFP. Solution providers can do this by telling customer stories, sharing capabilities, and describing learnings that raise doubts about whether the preferred solution provider is truly best to win the RFP.
For example, if an insurer needs support for variable life or annuity products and it is clear that the preferred solution provider simply pays lip service to supporting these products, it leaves an opening for those solution providers that can reduce the risks to deploy variable products. Solution providers might share challenges related to staffing projects with the right expertise, highlight lessons learned, describe challenges they have helped customers overcome, and reference satisfied customers to prove vital expertise. Solution providers could take a similar approach with line of business support, distribution channel implementation, cloud deployments, expertise in AI, IoT, RPA, other emerging technologies, and so much more. Remember, part of a solution provider’s role is to help insurers discover what they may not already know and select the right solution for the best outcome.
8. Use “why,” “what,” and “how” statements to fully align with what insurers value
Over the last two decades, the author has reviewed hundreds of solution provider pitches and RFP responses. One of the most common mistakes for solution providers is failing to find the right balance of “why,” “what,” and “how” in their marketing messages. These different statement types each serve a different messaging purpose. Here are some examples.
Why statement – “Our solution gets you to market 30% faster…”
What statement – “Our product configuration tool gives you the ability to design…”
How statement – “We bring the product features, business rules, calculations, correspondence schedules, and other characteristics of your products already in production to product designers when designing new products.”
Often solution providers provide too many “how” statements about their solution with technical discussion how the solution is constructed or how it operates. While this can be important, “how” statements must always connect to the value delivered to customers. Conversely, solution providers will often make “why” statements which are insufficiently linked to either “what” or “how” statements, leaving them incredible and often dismissed by insurers.
For example, consider a solution provider that wants to appeal to an insurer’s desire to identify market opportunities for innovative products. A solution provider might discuss their AI model that equips insurers with product features, pricing, or distribution recommendations based on market data (an example of “what”). They might go on to describe their technical prowess in constructing an AI model that eliminates market noise and uses validated sales data (an example of “how”) to provide actionable insights and product recommendations that predict sales outcomes with 80% accuracy (“why”). The combination and effective use of these three types of messaging ensures that the technical capabilities of a solution provider consistently connect to the value insurers seek.
Insurers are hungry for a well-defined and consistent set of outcomes. These desired outcomes are the “why” statements that solution providers must connect their “what” and “how” statements to. These are:
Growing the business
Lower risk in project implementations and decision-making
Reduction of technical debt and legacy infrastructure
Getting to market faster with innovative products
Digital customer and agent experience with greater ability to deliver personalization
Improved data insights to support all aspects of the business
Opportunities to leverage emerging technologies such as AI, intelligent chat, robotic process automation, IoT, and others for 10x improvement
Significant reduction of cost and a need to dramatically increase margins
9. Customize your value proposition to effectively differentiate
Coretech Insight’s research of solution providers reveals that solution providers serving both the life and P&C insurance industries have chosen very similar messaging on their websites and in their marketing material. Repeated themes include digital transformation, customer satisfaction, end-to-end processing, operational excellence, growth, speed to market, reducing risk, and reducing technical debt, leaving little clarity on how solution providers differentiate their solutions. While these messages are in many ways aligned with insurer desires, solution providers must find unique ways to differentiate their value in their RFP responses to win the deal. The key is to adapt existing marketing content and previous RFP responses to create a clear connection between the buyer’s problem and the proposed solution to meet both immediate and longer-term needs.
10. Demonstrate partnership from the very beginning
Successful solution providers effectively demonstrate their willingness and ability to partner with customers from the very start of the relationship. If done successfully, solution providers can elevate their brand in the mind of insurers before and during the selection process. Developing effective and long-lasting partnerships comes from listening to potential customers and responding to their needs. This can be particularly challenging during a system selection process as the same behaviors may be perceived as helping at some points in the process and unhelpful at other points of the process. For example, helping an insurer write RFP questions, pitch to key internal stakeholders, or recommending possible solution providers might be perceived as showing partnership early in the process when an insurer is still determining whether to move forward with a new solution. Those same activities might be perceived as undermining the selection process during the RFP review stage where established rules and guidelines are well established and communicated. Understanding what the customer is looking for and helping them achieve it is fundamental, and knowing when to step in and when to step out is critical to growing a partnership. Furthermore, potential customers view the selection process as indicative of the experience they will have with a solution provider. Solution providers that fail to respect or follow the rules will create the impression that they are difficult to work with and have difficulty listening to customers. In short, being a good partner during the RFP process will make it easier for solution providers to demonstrate a strong partnership going forward.
Recommendations
Solution providers should:
Adapt the current RFP development process to align to these best practices. Every RFP response should describe differentiated value, especially in situations where content has been provided from multiple authors and areas of the organization.
Train sales and marketing teams to adhere to these best practices to ensure sales success.
Research and document where your organization has created profound innovations and transformational outcomes for customers and where you are fundamentally changing the insurance industry in positive ways.
About the Author
Steve Leigh has served the insurance industry for nearly three decades in senior roles with leading companies such as Zurich Insurance, Gartner, and Microsoft. While with Gartner, he authored multiple Magic Quadrants on the life insurance industry. At Microsoft, he focused on creating solutions that enable Fortune 1000 organizations to capitalize on emerging trends and technological advancements. His work at Microsoft also extended beyond insurance to commercial and retail banking.
Email Steve at steve.leigh@coretechinsight.com or contact him via phone at +1 (719) 440-8710
About Coretech Insight
Coretech Insight is an independent advisory firm focused on insurance core technologies. We serve insurers and coretech solution providers who need to grow their business and want to find their ideal customers and tech solution partners. Our experience as insurance coretech customers, industry analysts, and solution providers has given us a unique and grounded perspective. We provide research and professional services that connect leading insurers and coretech solution providers to accomplish great things.
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