How to Create an RFP in 5 Steps [+Free Template]

A request for proposal (RFP) is a formal document describing a company’s need for outside help with a project. It outlines specifics such as project scope, goals, budget, timeline, and selection criteria, requesting vendors submit bids. An RFP lets businesses evaluate a vendor’s strengths and weaknesses, helping them choose the best one for the job.

Once you hire a vendor, you’ll need a way to manage the relationship as well as a central location to share documents, project timelines, and contracts. Zoho CRM and its sister product, Zoho Projects allows you to do this as a powerful combined software solution. Find out more about Zoho’s capabilities by visiting their website and starting your free trial.

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Free Request for Proposal (RFP) Template

Links to Google Doc, Word, and PDF RFP Template

RFPs come in many varieties depending on the industry, the project, and the creator’s experience. No two are identical. However, the goal should be the same: Get relevant responses from qualified vendors that will help you evaluate their strengths and weaknesses to determine which one will be the best at solving your problem. To help do that, download our free request for proposal (RFP) template.

Before You Get Started

Before starting on your request for proposal (RFP) document, your sales plan should include determining who you’re going to send the request for proposal (RFP) to. To find companies, you can use the following: vendors you’ve worked with before, industry associations, internal recommendations, social networks (e.g., LinkedIn), industry analyst reports (e.g., Gartner), and a Google search.

How to Create an Effective RFP

Once you have your audience defined, you can start creating the request for proposal (RFP) document itself. This does not have to be a long document, but it should clearly explain what you are hoping to achieve, why your request makes business sense, how responses should be submitted for consideration, and your overall budget and timeline.

Therefore, sales management professionals should follow these steps to make RFPs as complete as possible:

1. Develop a Project Overview

Before getting into the nitty-gritty details of your RFP, provide your audience with an overview of who you are as well as the RFP’s purpose, including the problem you’re trying to solve. This section should provide enough information so that potential vendors can quickly see if it’s something they’re interested in and qualified in responding to. This step saves both parties time as ultimately, you want bids from companies that can help solve your problem.

To complete this step, you should do the following:

Provide a Short Company Overview

Provide a short summary of your business or institution, your website, and what you do. Be brief here. Give the potential vendor just enough context so they know if you’re in an industry that they can and want to work in. Ideally, you want a vendor that has experience solving similar pain points in similar industries. “We sell luxury vacation packages to high net worth consumers who are looking for unusual experiences. Please visit our site for more information.”

State the RFP’s Purpose

This is the brief “what” and “why” of your RFP. Explain what you are trying to do or, more importantly, what problem you are trying to solve. “We are trying to increase our customer base next year by improving our marketing efforts.” This lets the potential vendor know generally that the company has a goal (more customers) and a problem (marketing) they think needs solving. Keep this section at two to three sentences, as the goal is to pique interest or a quick pass.

2. Provide Company Background

Provide more detailed information on your company. Aside from listing company and contact information, this is your chance to describe who your customers are, how you help them, and how you fit into the industry (startup, mid-pack on a high growth trajectory, industry leader) so your audience understands the reasons they should do business with you. Finally, explain what makes your company different from the competition.

At a minimum, this section should contain the following information:

Provide Company & Contact Information

Most likely the vendors you reach out to won’t have heard of you. Provide your company website, physical address, and list any other pertinent information such as additional websites, parent company relationships, or other relevant locations. Include a contact for the RFP with name, email, title, and phone number.

Describe What You Do

Whether you work for a nonprofit, government agency, or corporation, your existence is based on providing something to someone. What products or services do you offer? How do you help your clients solve their problems? Do you have a case study to share that will sum up how you help your clients? Are there larger recognizable competitors you can reference that do something similar?

Explain Your Differentiators

Help a potential partner get to know your company better by explaining how you fit into your industry. What is your secret sauce? What do you do that your competitors don’t? Why do customers like doing business with you? Do you hold any patents? Have you won any industry awards? This will give vendors more context for how they can help solve your challenges, especially if they’ve helped similar businesses.

Snapshot from the RFP template

3. Define the Scope of Work

After summarizing who you and your company are, pull in internal or external subject matter experts (SMEs) to help you define the project. This is the list of all of the services (and products) you think the vendor will need to complete the project based on their recommendations as well as the stated goals of the project, and what you want to see from the vendor’s effort.

The important thing here is to keep an open mind and allow your vendors some creativity and flexibility so they can provide a plan they think will solve your problem—even if what they’re proposing differs from what you or your SMEs have defined. If their deliverables don’t exactly match yours but get the result you’re after, give it good consideration. Just make sure you’ve asked them to explain (in their resulting bid) their reason(s) for proposing something different.

Your scope of work should also do the following:

Describe Your Challenges

Discuss the particular challenges you’re experiencing as they relate to the project and to your overall business. Provide specific examples for both areas. For example, if your RFP is for a redesigned website, explain why your company decided to do this. Why now? Why can’t it wait? What are the consequences? The more context you can provide, the more relevant the solution responses will be.

Here is an example of how you can describe a challenge while providing context:

• Ecommerce is 70% of our business revenues.
• In the fourth quarter (Q4), we are releasing a new product line that will increase SKUs by 45%; we feel this will overwhelm the site.
• Our site is 10 years old and looks very dated compared to the competition.
• We want it rebuilt on a more customizable platform.
• The current platform doesn’t integrate well with our other software.
• Customer surveys indicate it’s hard to navigate.

List Project Deliverables

The project deliverables are the details you think will be required to complete the project successfully. These are the technologies, personnel roles, tasks, and deliverables needed based on your goals and your perceived understanding of the way to reach those goals. Use your SME information and any other research you’ve done to list the deliverables. It’s OK if you don’t know all that is specifically involved.

List your deliverables

Communicate Project Goals

State the outcomes of the project and any specific measurables you would like to see. The impact on those goals will vary depending on how much the vendor’s work can affect the outcome. For example, if you’re hiring an agency to develop and implement a content marketing strategy, you might list the following goals:

• Develop and implement an e-book campaign in the first quarter (Q1)
• Acquire 50 leads from a new persona in the second quarter (Q2)
• Increase marketing qualified leads by 75% in the third quarter (Q3)
• Acquire 15 new customers

In this case, the marketing agency’s work is directly responsible for increasing leads, but only indirectly responsible for the acquisition of 15 new customers. The agency can help bring in the leads, but it’s up to your company’s sales team to close them. Also, it’s nice to have specific, measurable goals (see our article of best smart goals examples), but beware of the vendor who responds with a promise that they can hit or exceed all of your goals. This is a red flag in my experience.

I once received an RFP from a coaching company with outrageous marketing goals—and they wanted a magical “guarantee” that our agency would achieve them. They were so over-the-top (and specific) I called the requester and asked him if they were correct. He immediately pushed back and said, “Why, can’t your agency hit these goals? We would do it ourselves, but we don’t have the time.” Right. The call didn’t improve from there so we passed on it.

For the projects you do end up taking on, you’ll want full-featured, intuitive project management software. Zoho Projects helps you plan projects, keep track of time, and collaborate easily with vendors. It also integrates with other applications such as Slack, Zoho Invoice, and Zoho Docs, making the entire project life cycle manageable from one location. Visit Zoho Projects for a free, 30-day trial.

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4. State Your Budget & Timeline

You should list your budget even if it’s just a range. A budget helps potential vendors know if they are a good fit. However, there may be some project requests where budget—even a range—can’t be articulated for various reasons, such as the project being dependent on a pending government funding request or because you don’t have a frame of reference for what the project should cost.

If you fall into this category, make sure there is a very convincing (stated) reason why a budget is not included unless you know it’s customary in your particular industry to not include this information. This is also a good place to include the project timeline, which, like the budget, helps vendors know if it’s something they can work with. It will also show you’ve done your homework and have set realistic expectations.

To make sure you receive the best quality bids from potential vendors, always do the following:

Research Pricing

If you have no idea what you’re requesting costs, don’t guess. This puts you at a disadvantage because if you shoot way too low, vendors won’t take you seriously (or worse, won’t respond); shoot way too high and you’ve set yourself up to pay for more than you need. Doing some research will put you on an even footing with vendors and let you know if your company’s budget for the project needs to be readjusted—or abandoned altogether.

List your budget, even if only a range

Include a Schedule or Timeline

Your project may be tied to a hard deadline such as having a new website live in time for your big annual trade show. It may also be more flexible. In either case, include a timeline and why you selected those dates. It’s a good idea to perform some research if you’re unsure how long a similar project is supposed to take.

If you provide a timeline of three weeks for the new website, for example, you’re asking for the impossible, wasting your time and the time of potential vendors. If you really do need a rush put on your project, it’s good to know that it’s considered a rush (but not unrealistic) by industry standards and that you can expect to be charged a premium.

Explain your timeline and the importance of the dates

I’ve reviewed RFPs where the submitter had no concept about the time it took for the services requested. In one case, they wanted services for a program that usually took six months to be successfully completed in two months. This showed me they didn’t do their homework, were driven by unrealistic top-down mandates, or didn’t really care about the success of the project. While you aren’t expected to nail precise timelines, you can get in the ballpark.

5. Define Submission Requirements

Get to know the different vendors and how they would approach your project. This is your chance to show what’s important to you, your company, and the project by explaining response requirements, stating need-to-haves, asking pertinent questions, and communicating the timeline. It’s where their differences, similarities, strengths, and weaknesses bubble to the surface as material to begin your selection process.

To complete this step, you will need to do the following:

Set Expectations on Required Information

Inform vendors you are expecting their responses to contain certain required information. What you specify as your requirements is up to you, but the clearer the expectations, the better your responses will be as they relate to the project. Include these items in a bulleted or checkable list.

Typically, most businesses request the following on all RFPs:

• Company background
• Relevant experience, qualifications, successes (e.g., case studies, sample work)
• Recommendations for the project scope
• Response to specific questions
• Managing the project (who, where, what, when)
• Pricing

Define Need-to-Haves

These are the things a bid must include in order to be considered, and are non-negotiables. They are the attributes, skills, and standards your company considers to be must-haves. They can be technical (e.g., AWS Solutions Architect certified), geographical (e.g., every team member must U.S.-based), industry-related (e.g., documented success working with software-as-a-service (SaaS) companies), or any other criteria you need from the candidates.

State your need-to-have requirements

List Your Like-to-Haves

It is also a good idea to list your like-to-haves. Unlike need-to-haves, your like-to-haves are negotiable, but they will also help reinforce what you feel is important. Again, these can be technical requirements, geographical, industry-related, or anything else you would like to see from a vendor. This list gives the vendor a rough idea of solutions you have already considered but also gives them the option to suggest alternatives that will work just as well.

Ask Questions to Be Answered in the Bid

This is your chance to ask questions—especially open-ended ones—to get an idea of how the vendors would approach, strategize, scope, staff, manage, and measure the project. Ask them what they feel will be the biggest challenges, ask about projects they’ve worked on with similar challenges, and ask how they feel about the goals listed.

Here are common topic areas to consider when listing out the questions:

• Company background: revenues, number of employees, company structure, and so on
• Team structure: employee location(s), employee roles and experience (bios), if freelancers are used
• Technology: software related to the project, other technology used for communication, project management, and so on
• Methodology: processes, approach to working on the different aspects of the project, overall project strategy, detailed response to the stated deliverables
• Miscellaneous: expected challenges with this project; projects completed successfully with similar challenges (case studies?), how they manage client relationships

Be sure to include open-ended questions

Explain How Pricing Should Be Presented

You’ve set your budget (or budget range); the vendor must respond with their overall pricing. This should also include an itemized quote based on your stated project deliverables and any other deliverables the vendor deems critical to the success of the project. Ask them to indicate their hourly rates, if applicable, and the estimated total number of hours.

Communicate Format & Timelines

Explain how do you want the responses to be submitted (e.g., PDF, Word, Google Docs, hard copy). What is the deadline to receive submissions? What is your timeline for reviewing and making a decision on the final candidate(s)? What is the intended project start date? What, if any, requests will be made of the final candidate(s), such as wanting to meet in-person?

It’s also a good idea to ask for the vendor’s standard terms and conditions. This will give you an idea of what the contractual relationship will look like, including things like payment policies, privacy, security, contract termination, and the like. Also, list your conditions on how long you require the proposal remains valid.

Provide specific submission guidelines

Pro tip: Before sending out your RFPs, call or email the vendors on your list to find out the contact information for the person who should receive it. Sending it to a company’s general inbox or sales email alias might be a black hole where your email is passed around like a hot potato (if anyone gets to it at all).

Frequently Asked Questions (FAQs)

How do RFP, RFI & RFQs differ?

A request for proposal (RFP) is a document asking vendors to submit solutions to a company’s problems. A request for information (RFI) is a document that helps a business narrow down the capabilities of vendors, or if a business needs more information because they are unsure about the requirements. A request for quotation (RFQ) has clearly defined requirements—usually for the procurement of products and not solutions—and is simply looking for a price.

Does the lowest RFP bid win the project?

Not always. It depends on how much weight a company puts on a budget. Other factors such as a vendor’s approach, their success record in similar industries, and simply the way they answered the RFP can add just as much weight. Your business will have to decide what factors are most important, assign values to them, and use this as a starting point for evaluation.

Bottom Line

A thorough, well-written request for proposal (RFP) will ensure that your company or organization receives relevant responses from vendors you’ve targeted. Perform research on your project, be very specific on your requirements, and ask questions that will show both the strengths and weaknesses of the potential vendors.

Zoho CRM and Zoho Projects are easy to set up, intuitive, and full of customization options, allowing you to manage your vendor relationship from one centralized location. The entire Zoho suite of services includes a CRM, app builder, accounting, HR, and help desk, providing growing businesses a range of application options. Visit Zoho today to schedule a demo or start a free trial.

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