How much should you invest in your pursuits? How much time should you put into them? When should you hire more staff? When should you outsource? If you are deciding on a case-by-case basis, you are probably missing the big picture. With the right kind of analysis, you can make sure that you are putting the right resources into business development and proposals, improve your win rates, and maximize your return on investment.
About eight years ago we created a spreadsheet model for one of our customers and we have been refining it ever since. We use it to answer key questions. They started with “How many leads will it take to hit your revenue target?” Then we added lots of other targets to show things like recompetes vs. new business, prime vs. subcontracting, and individual markets.
Our most recent addition has been to add pursuit budgeting based on anticipated award values and spread that over the phases of activity. This enables you to see how much to invest in lead identification vs qualification vs pursuit. Or how much to invest in your proposals, on average. You can even weight the numbers based on the value of the pursuits.
First you start with a percentage based on award value that gives you confidence that across all your pursuits your return on investment (ROI) will be profitable. Then by intelligently allocating that to individual pursuits across phases, you can ensure your ROI remains positive. By correlating your investments with your win rate, you can improve your ROI over time.
We use the spreadsheet model to do a lot of “what if” analysis. For example, you might see that if your win rate is 25%, it takes three times the change in the number of pursuits to match a change in win rate. Or said another way, you can exceed your revenue numbers without changing the number of leads by focusing on what impacts your win rate.
You can also translate your budget into time. When we do this, we discover some really interesting things. For example, we can see how many hours, on average, you should spend on a lead in each phase of activity. And again we can correlate that with your win rate, to see whether more time means more wins or not (which in turn indicates your efficiency and the effectiveness of your approaches). When you do this kind of analysis, instead of trying to hold back every penny, you may realize that if you don’t commit the right level of effort, it’s not even worth bidding. You start to look at what you bid and how you allocate your resources very differently and you can quantify your bid/no bid decisions.
Forget about “rules of thumb” and conventional wisdom. What we see is that every company is unique. Every company is an exception. Your unique combination of offering, markets, and internal culture impacts the numbers in ways that are often counter-intuitive. Sometimes the numbers confirm what everybody expects. But there are almost always surprises that create opportunities for significant improvements.
None of this is rocket science. Calculus is not required. It’s almost all basic multiplication and division. But it helps to know how to set up a spreadsheet so you can look at the numbers from different perspectives and make doing “what if” analysis easier.
When you add in the leads you are tracking, you can compare your actual results against your targets (and refine your targets over time). You can also see how your pursuit efforts and resource needs stack up over time. Are you going to need the most resources in the third quarter or the fourth quarter? And how many resources should you anticipate? This is the kind of hard data you need to make hiring decisions. The spreadsheet model can tell you when you should hire staff and when you should have outsourced resources available. And you can correlate those resources with your win rate and target fulfillment to make sure they are delivering the right ROI.
This is one reason why our favorite customer engagements usually start with a pipeline assessment. It not only helps our customers make better decisions, but it helps us make better recommendations. And it helps take the opinions and guesswork out of it. We both develop a deep understanding of what needs to be done, the best way to go about achieving it, and how to allocate the required resources.
And perhaps the best part is that since we have a mature starting point, it usually only requires a day or two’s worth of effort to do a customized pipeline assessment. We spread them over a few sessions and conduct them through online meetings with screen sharing software. That way we can make some recommendations, give you a chance to gather some data so we can customize the model, and then take a look at the results together. Strategic business development is very different from hunting and hoping, and it’s far more reliable.
We do demos. If you’d like to see how this works in action, contact us through PropLIBRARY or reach out to me on LinkedIn. Tell me something about your company, your goals, and your targets and we can see what it looks like and what a full assessment might show us.
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The materials he has published have helped millions of people develop business and write better proposals. Carl is an expert at winning in writing. He is a prolific author, frequent speaker, trainer, and consultant.
In addition, the groups Carl moderates on LinkedIn provide a place for tens of thousands of business development and proposal professionals to discuss best practices and network.