Expect a significant increase in Request for Proposal (RFP) activity in the coming years. Many brands that postponed reviewing their Email Service Providers (ESPs) in previous years are now initiating the process. This surge presents a major opportunity for vendors, but for brands, the selection process remains complex and fraught with potential issues.
To navigate this landscape successfully, a strategic plan is essential. Let’s explore best practices to ensure a smooth and effective RFP process for your brand.
1. Negotiate a Contract Extension Before Starting the RFP
A common and problematic mistake brands make during the RFP process is misjudging the timeline. The vendor selection process is inherently lengthy and complex. Rushing through it often leads to critical steps being skipped, increasing the likelihood of making an unsuitable choice.
If your current contract is nearing its expiration within the next six to twelve months, it’s imperative to initiate your RFP without delay. Waiting can put you in a vulnerable position, especially if your contract expires in the first quarter of the year and you intend to switch vendors. It’s highly unlikely you will complete a thorough RFP, select a new partner, and migrate to a new platform before your current contract ends. Your existing ESP is well aware of this tight timeline.
Even if you believe you can defy these odds, there’s no downside to being prepared. This is why it’s a critical best practice to negotiate a month-to-month (preferred) or 3-month (at minimum) extension with your current vendor *before* issuing an RFP. While your current email provider still believes they have a chance to retain your business, they are much more likely to be accommodating.
The moment your current provider perceives you are leaving, their flexibility will significantly decrease.
Some vendors, however, may be unwilling to grant extensions shorter than a year. If you are with such a vendor, you must allow yourself a full 12 months to select and onboard a new partner. If you are within six months of expiration with such a vendor, it might already be too late for an immediate switch; plan for a transition further in the future. Understanding your current vendor’s typical policies regarding extensions is crucial for strategic planning.
2. Engage an Outside Resource to Guide Your RFP
Another frequent mistake brands make is including ESPs in their RFP process who are not a suitable fit. The vendor landscape is more complex than ever, with a diverse range of platforms offering different strengths and specializations.
Understanding the Differences Among ESPs
There are significant differences between Email Service Providers (ESPs) that profoundly impact their suitability for your brand. Most email marketers may not immediately discern these distinctions, partly because sales teams often present their platforms as universal solutions, and analysts sometimes rate vendors without fully emphasizing their unique characteristics.
Avoid the Herd Mentality in Vendor Selection
A “herd mentality” sometimes influences email marketers, leading them to invite ESPs to pitch simply because other brands are considering the same few “hot” vendors. This lack of understanding, combined with a tendency to follow trends, can result in an RFP with 6-8 vendors, where only 2 or 3 are genuinely good fits. This significantly diminishes the odds of making the optimal selection.
Prioritize Channels Crucial to Your Customers
It is vital to understand which channels your customers *most frequently use* to engage with your brand. Some ESPs are “mobile-first,” others are “email-centric,” and some are truly “omnichannel.” A mismatch between the chosen ESP’s focus and your customer behavior can lead to significant dissatisfaction for both your team and your customers. Getting this right is paramount.
Bringing in an experienced outside consultant can significantly increase your chances of making the best choice. Consultants specialize in understanding vendor differences and ensuring you only evaluate those that truly align with your needs.
3. Utilize a Scorecard for Objective Decision-Making
Stories abound of RFP outcomes being swayed by personal preferences rather than objective evaluation. For instance, a brand might select a vendor that is a personal favorite of a senior executive, only for the platform to be disliked by the team using it and the IT department. When that executive inevitably moves on, the company often finds itself revisiting the RFP process just months after a major migration. Such scenarios underscore the importance of depersonalizing the selection.
It’s natural for individuals involved in an RFP to have favored vendors, perhaps due to prior experience or industry reputation. However, this becomes problematic when one person’s preference dictates the final decision. Ensure diverse perspectives are considered, including input from legal, IT, and marketing teams.
Implementing a Scorecard System
The most effective way to prevent subjective decisions and ensure a well-reasoned ESP selection is to implement a scorecard-driven process. This allows for direct, side-by-side comparisons of competing vendors based on predefined criteria.
Develop comprehensive scorecards covering features and functionality, services, and pricing. This approach offers two critical benefits:
- Mitigates Bias: When everyone’s scores are weighted equally, no single person can unilaterally force an outcome, even if they strongly advocate for a particular ESP.
- Promotes Shared Ownership: Involving all relevant team members in the scoring process ensures collective responsibility for the chosen vendor. When everyone has a stake in the selection, there’s a greater commitment to making the partnership succeed.
4. See Your RFP Through to a Definitive Decision
The path to a successful new vendor relationship is often marred by RFPs that never reach a conclusion. Numerous factors can lead to an RFP stalling, but the outcome is consistently negative: no one is satisfied, and the brand misses out on a potential improvement. Common reasons for an RFP failing to conclude include:
- Running out of time, forcing an extension with the existing vendor.
- Reaching a point where no truly viable options seem to emerge.
- The project team losing momentum or energy to continue.
Managing an RFP is a significant undertaking that requires considerable time, often on top of existing day-to-day responsibilities. This is where external consultants can be particularly valuable, taking on much of the logistical and analytical heavy lifting.
Stay Focused on Your Initial Objectives
Sometimes, an RFP can drag on for so long that the original motivation for starting it gets lost, or the individual who initiated the process may no longer be with the company. If an RFP is not going to be completed, it’s crucial to formally conclude it and inform the participating vendors of the decision.
The worst approach is to leave vendors in the dark, pretending the process never happened. Strive to prevent the RFP from reaching this stagnant point. Keep pushing towards a decision. Remember the initial reasons for launching the RFP – don’t lose sight of those fundamental objectives! This might involve re-evaluating platforms, features, and functionalities to ensure they align with your evolving needs.
Unfinished or unending RFPs primarily benefit incumbent vendors. They retain your business without needing to make significant price concessions, as they recognize you are unlikely to switch.
5. Understand Essential Contract Terms (and What Can Be Flexible)
When entering a contract with a new ESP, it’s unrealistic to expect every single detail to be 100% perfect from the outset. Instead, focus on diligently securing what is absolutely critical. The following areas are non-negotiable:
1. Limits on Liability
It’s important to note that this discussion is not legal advice. However, in contract negotiations, vendors typically include clauses that limit or exclude damages a client can claim in the event of a breach of contract. This is a reasonable protective measure for them; without such limits, there would be no financial cap on potential damages.
Vendors will aim to set this limit as low as possible, often capping it at the total value of the contract. Conversely, client legal teams will typically seek higher limits. As the client, you must understand the potential financial consequences of a breach for your company, which can certainly exceed the contract value. This is frequently the most contentious part of contract negotiations. It’s imperative that legal teams on both sides address and resolve this upfront. While challenging, a middle ground can often be reached if both parties are committed to a resolution.
2. Service Level Agreements (SLAs) and Penalties
While related to liability, Service Level Agreements (SLAs) and their associated penalties address operational issues rather than catastrophic breaches. SLAs cover metrics like platform uptime, campaign turnaround times, and other daily performance expectations. These are distinct from, for example, data breaches.
It is crucial to define your expectations clearly within the contract and attach meaningful penalties for non-compliance. These penalties should be substantial enough to incentivize the vendor to meet the agreed-upon SLAs consistently. Both parties will likely begin from very different positions, so anticipate negotiations to find a mutually acceptable compromise. Remember to document every promise made during the pitch, as these should ideally translate into contractual obligations.
3. Contract Termination Clauses
It’s generally accepted that a breach of contract allows a client to terminate an agreement prematurely. The more complex area is “termination for convenience,” which permits a client to end a contract without cause. Vendor financial teams typically dislike these clauses, while client legal teams favor them.
From a vendor’s perspective, a three-year contract with a 90-day termination for convenience clause essentially becomes a three-month contract. Vendors often offer pricing concessions based on the perceived length of a contract, knowing that upfront costs (like migration support) can be amortized over the full term. Consequently, they will strongly resist termination for convenience clauses. On the other hand, client-side legal counsel prefers not to be bound by contracts that lack an exit option. This creates a standoff where the email marketer is often caught in the middle. Experienced advisors can often help bridge the gap, guiding both sides toward a workable compromise.
Once these three critical items are thoroughly addressed, you can recognize that it’s not always necessary to perfectly nail down every other aspect of the contract.
Consider Services and Support in Your Contract
Regardless of how “self-service” you perceive your team to be, you will invariably require some level of services and support. However, you only need to approximate your initial needs if your contract is structured correctly.
When negotiating contracts, consider including provisions that allow for an audit of actual service hours used approximately six months after the cutover to the new vendor. This provides ample time for both the client and the vendor to establish routines and accurately assess the real need for support.
If the client is utilizing more hours than contracted, they can either adjust their expectations from the ESP or add more hours to the contract moving forward. Conversely, if fewer hours are being used, the retainer can be adjusted downwards, ensuring fair value for both parties.
It’s an Excellent Time to Conduct an RFP
Despite the complexity and occasional confusion within the vendor landscape, it is currently experiencing unprecedented innovation and the emergence of new players. You are likely to be impressed by some of the latest offerings.
Many vendors that might not have been on your radar previously have significantly enhanced their capabilities, introduced new features, and integrated entirely new channels. By adhering to the best practices outlined in this article, you will be well-equipped to make the most informed decision for your company and negotiate a mutually beneficial agreement.
Keep these guidelines in mind, and you’ll be off to a strong start in your RFP journey!