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Even though it’s what everyone seeks, finding more leads to bid may not be the best way to grow your business. There’s a good chance it will produce a low return on investment. The reason is simple math. When you understand the math, you can make better decisions about how to grow. Unfortunately most companies leave a key variable out of their win rate analyses, which leads to poor decisions and lower growth. See also: ROI Let’s start with the basics. If you submit 20 proposals and win 6, you have a 30% win rate. If you are bidding all of your leads, something is wrong. It means you’re not being selective. So it probably took 30 leads to get you to 20 proposals. Creating a mathematical model for your pipeline is critical for understanding it. If you don’t have the real world data you should, you’ll have to start off with assumptions and replace them over time. If you don’t start doing this now, you may never get around to it. After you identify a certain number of leads, as you qualify those leads you will lose interest in some (and that’s a good thing). This is a percentage you should track. You will lose some more when the RFP is released and you make your bid/no bid decision. This is also a percentage you should track. This leaves you with a number of bids. You will lose some of what you bid. The percentage you win is your win rate. Your win rate depends on your market and effectiveness. I’ve seen it as low as 10% and as high as 87%. Most of the win rates I see are around 30%. If you start with a number of leads, multiply it by the percentage you anticipate will be qualified, then multiply that number by the percentage you expect to bid, and then multiply that by your win rate, you’ll get an estimate of the number of wins for that number of leads. This equation is critical to understanding where you should invest in order to grow. However, it’s not complete. Let’s say you want to double the number of leads you pursue. If you can do that, will it increase the size of your company by 100%? The answer is probably not. It may not increase it much at all, even if you are successful. The reason is mathematical. The impact of your win rate percentage is greater than the impact of adding more leads. You can easily try different numbers at either end of the equation and prove it for yourself. If you pursue twice the number of leads without improving your proposal capacity, you can expect your win rate to go down. What’s missing from the win rate analysis above is a percentage for the change in win rate. Consider: We’ll start with the numbers above: 30 leads, down to 20 bids, resulting in 6 wins. If you double the number of leads, but the win rate goes down to 20%, instead of the 12 wins you’d expect, you only get 8 wins. Doubling your leads and the number of proposals submitted, and presumably your pursuit costs, got you only two more wins. A 30% increase is nice, but not when it takes double the effort. Now let’s try something different. Start with the same number of leads, only increase your win rate to 40%. You get the same 8 wins. That 10% change in win rate produced just as much revenue as doubling your number of bids. And it did so without doubling your pursuit costs, giving you a potentially even greater boost in profitability. The key takeaways are: The data that drives pipeline math may very well be the most important asset your entire business possesses. If you are not tracking it, then you’re not really in business. You’re just gambling. If you care about growth or return on investment, you either need to become an expert in pipeline math or get good at gambling. Doing things without considering the impact on your win rate is a great way to run your business into the ground. In fact, if you’re looking for ways to quickly double your leads, you’ve probably already done that. Not only must all your decisions related to growth involve a win rate analysis, but you need to add the percentage for what the anticipated impact might be to your win rate. You shouldn’t over invest in lead generation until you’ve invested in maximizing your win rate. This is the path to the best ROI. Tracking is as important as analysis. You will never have all the data you’d like to have when it’s time to make decisions. And predicting the impact of a course of action on your win rate is a guessing game. That’s why it’s critical to track your actuals against your projections in as close to real time as you can get while considering statistical significance. If you are betting that something will or won’t impact your win rate, you need to isolate the variables as best you can and track events as they happen, in case you need to change course while you still can. Consider a football analogy. Which is the better way to end the season with the most wins? Would it be to double the number of games you play, or would it be to focus on playing better? If you double the number of games, what will the impact of fatigue, injuries, and personnel quitting have? Will you be able to fill the stadium seats for that many games, or will you see reductions in profitability, even if wins go up? How will next year’s play be impacted? Will wins go up a little and then crash back down in a way that will take years to recover from? The biggest reason people focus on lead generation is that they don’t know how to increase their win rate. And even if they do, the best investments in win rate improvement take time to pay off. When their numbers are going up, most companies ignore win rate and related data tracking. When the numbers go down and don’t come back up, then suddenly they focus on lead generation, looking for the quick turnaround. When things get to that point, it’s often too late. But the good news is that if you can force uncomfortable change, there are things you can do to boost your win rate with the potential to increase revenue faster than identifying and pursuing new leads. But it will involve taking on some sacred cows, forcing some discipline, and worst of all having the endurance to see things through. In the face of this, most companies opt for the path of least resistance and target lead generation as their path to growth.

A lot of companies do exactly the wrong thing when faced with a must win opportunity. They try to make sure they don’t lose. They give the customer exactly what they ask for in the RFP. They may even make improvements here or there, if they can do it within the boundaries of the instructions. They try to be exactly what the RFP says the customer wants. They never realize that they are setting themselves up to lose. When your goal is to write a good proposal, here is what you get: Meeting (probably) all the requirements while claiming you exceed some without actually itemizing which one's you've exceeded A little better on specifications, but not enough to increase your cost A little better by teaming with other companies so you can claim their qualifications even though it won’t impact what the customer actually gets A little lower on price with a little trimming such as on how much you pad your estimates, but not so much that you lose money on the deal. All while claiming to be best value A little better on staffing by trying really hard to take whoever you can get quickly enough Offering a few more years of experience with no way for the customer to know whether your staff will actually do a better job The problem is that “a little better” means a little better than what the RFP asked for, and not necessarily a little better than your competitors. You’re counting on them facing the same constraints, and hoping your picks will be “a little better” than theirs. Sometimes you win, but most of the time you lose. Maybe if you win 1 in 3, you can make it up in volume. All you need are more RFPs to respond to. And your job is secure because you didn’t make any mistakes — you followed the instructions precisely. When you only win 1 in 3, you better not make any mistakes. Your proposal will be good. But you are who I want to bid against, because you are easy to beat. You lose 2 out of 3. Here is how I’m going to do it: See also: Great Proposals I’m going to win by giving the customer better results. Even if we’re bidding the same thing, I will do a better job of talking about results instead of approaches. Because my results will be explained, the customer will see that I understand them better than all those proposals that simply say “We understand you.” And a better description of the results will also prove that we deliver a better value, as opposed to all those proposals simply saying “We offer the best value.” I’m going to offer things that matter and explain to the customer why they matter. The result will be a proposal that matters more to the customer. I’m going to offer insight into the trade-offs so they can see why what we propose is the best approach for them, and not just a little better. And why all other bids have negative trade-offs. Depending on the bid, I’ll either team with no one, or a lot of other companies. I’ll either win with better, more direct management or way more resources. It won’t just be your small collection of companies vs. my small collection of companies. I’m not trying to win after a difficult deliberation and detailed comparison. My proposal will be so different that it won’t even be a difficult decision for the customer to make. I’m going to offer a clear choice and then show why we are their best alternative. I’ll change the rules on the pricing by changing the scope. Forget shaving bill rates by a nickel — I’ll change the number of staff needed by changing the nature of the project. And I won’t do it by giving something up. I’ll do it by giving them something better, just less labor or resource intensive. If the RFP specifies a pricing format that forces me to compare apples to apples, then it’s all about value. I’m going to make sure that the customer can evaluate the value of everything we do that adds value, and I’m going to make sure that there’s a lot of it. When I’m done there will be a clear difference in what they get from us, but most importantly the customer will know what it’s worth. I’m going to do a lot more than just fill the hours or give them bodies. I’m going to give them something tangible. I’m going to give my people tools. Procedures. Resources. Access to information. Ways to solve problems. Oversight. Advice. Surge support. The customer is going to know that our people will not show up empty-handed or be on their own. They’ll know we’re all hiring from the same labor pool. But regardless of who shows up, our people will come with an advantage. And most of these things won't add anything to my cost. I’m going to win by showing that we’re much better to work with. We’ll be more responsive, more transparent, easier to oversee, and a better partner. All proven with specific features that can be evaluated as strengths. The result won't just be that we're competent and cover all the management plan bases. They will like the way we work and want to work with us more than anyone else. In a formal, point scored environment I’m not going to try to earn points here and there to outscore you. I’m going to trash the grading curve. I’m going to redefine what strengths and acceptability mean so that all the scoring is done by seeing whether anyone else measures up to my proposal. By putting my differentiators up front and making them crystal clear, my proposal will be the one they are comparing everyone to. I am going to win all of the points and not just a few more, because my proposal will make it clear why our approach is the only one that is acceptable. I love to compete against people who write good proposals. Because my proposal will be extraordinary. While you’re aiming to follow the instructions and be a little better, I’m going to be overwhelming and great. I’ll comply with the instructions too, but I’ll use them as a starting point and not the goal. A good proposal sometimes wins because the other proposals made mistakes or didn’t rack up quite enough points. A good proposal’s best chance is to win on price, which usually means winning by being less profitable. Because of the bell curve, you can get by like that. A good proposal will beat all the other proposals that aren’t as good. But you are ignoring the competitive range. All of the proposals that make the competitive range are qualified, compliant, experienced, and well staffed. None of those things are differentiators. They are good. But they are not enough to win. You manage to eek out a 1 in 3 win rate because there few bidders and maybe even no one else in the competitive range. On that one. On the other 2 out of 3 you need to show up ready to beat everyone in the competitive range. And if your win rate is 1 in 3 you're losing to more competitive companies. Unless I totally misread the customer, I’m going to steal away your business. Because I have no fear of losing. Because I will not play it safe and try to just be “a little better.” I am going to submit a great proposal, and good just can’t compete with that. Do you want to compete with me? If you’re at the kind of company where losing a proposal gets punished and everyone is trying to cover their tails, you won’t be able to do it. But if you are at a company that’s willing to take some risks, think outside the box, and treat creating an extraordinary proposal as an extraordinary investment opportunity, then it’s going to get interesting. The winner will be the one of us that best understands what the customer wants. The winner will be the one that best uses that knowledge to matter more to the customer. I wonder which of us it’s going to be...

Most people write their proposals by doing things that add up to nothing. Instead of thinking through what it will take to win, they just start piling on positive sounding attributes. They might even be legitimately positive, but if they don’t fit the way the customer makes their decision, they won’t add up to much. Probably nothing. The problem is that a collection of positive attributes, even if the attributes are relevant, is not what a customer really wants. They want results. The attributes may or may not be a part of what they need to get what they want. If you explain how your attributes lead to them getting what they want, it adds up to something. If you just describe yourself, all those positive sounding statements won’t impress anybody because that’s not what they really want. So the next time you start describing yourself, ask if what you’re saying is a result or something the customer will get. Is your experience or your size a result? Is a response to an RFP requirement a result? What do those things lead to? What do they add up to? Why do they matter to the customer? The next time you want to show that you understand the customer and you find yourself describing their mission or telling them about themselves, ask yourself what that adds up to? Similarly, you should ask what restating the requirement adds up to. If it adds up to the same thing as a copy and paste, it does not imply understanding. It adds up to nothing. See also: Themes Instead, write about how you’re going to do something that helps them achieve their mission, relates to what you know about them (mission, goals, needs, wants), or fulfills that requirement in a way that matters. Keep at it until it adds up to them reading about what they want to get instead of reading a description of something they already know and adds no value. Never describe. Never describe yourself. Never describe what you are going to do or deliver. Descriptions add up to nothing. Instead, explain how what you are going to do leads to what they want to get. Don’t describe a better approach. Explain how your approach produces a better result. Make your proposal add up to the results they want. If you give the customer a credible approach to getting what they want, it adds up to winning. But if all you do is describe how you'll fulfill their requirements, that adds up to nothing, because that's not the result they really want. Figuring out what they really want is critical to winning. The results you deliver should be extraordinarily special. The combination of results and the credibility of your ability to deliver them should be unique and differentiated. This can be achieved, even when the RFP forces everyone to deliver the exact same thing, because you can deliver it in a way that is special and be more credible. When you are planning what to offer, focus on what it adds up to. Don’t offer the customer fulfillment of the requirements. Offer them results, one of which is compliance with the requirements. Before the RFP is released, focus on what your differentiators add up to. When the RFP is released, add how your response to the requirements leads to that result, and you'll end up with a differentiated proposal that tells a winning story. If the RFP is formally evaluated and point scored, it is tempting to list as many positive attributes as possible as point bait. This strategy only works against lame competitors. Piling up points only works won’t work against a competitor who says what matters to the customer. The best results, supported by a credible, differentiated approach to delivering them aligned to the evaluation criteria and RFP language is a superior strategy. So make your proposal about proving to the customer that they will get better results by selecting you, and let your competitors describe their response to the requirements.

The way most companies go after new business is not based on what it will take to win. It’s based on the people they have. Even if they are good people working hard, we all have gaps in our expertise and experience. The way this plays out is that you’ll see companies where the proposal manager is really a production manager, the business development function treats the proposal as a simple hand-off, or where one person “does the proposals.” People tend to distribute the work based on their capabilities, interest, and availability. The result is that capturing new business is based on people and circumstances instead of what it will take to win. Some small businesses fall into this trap, but so do the largest ones. The way you avoid this trap is to define how you capture business with a full perspective of what it will take to win, instead of what individuals think about it. Instead of sweeping gaps under the rug, you need to call them out and recognize them as roles that are currently unfilled or “dual hatted” and impediments to your company’s competitiveness that you are trying to grow out of. You may not be able to solve them today, but you should organize everything you do around solving them over time. That way you build your company around one integrated way of winning. If you don’t set things up to grow into it before you have multiple people at multiple locations involved, you may never get there and be doomed to competing below your potential. It helps to consider what it will take to win and look at the things that need attention, separately from whether anybody focuses on them currently or how. You need to think in terms of what needs to be done and not who you have to do it. It helps to break out of your workflow and instead of thinking about things sequentially, think about them functionally. Here are six functional areas where people need to put some attention to win new business: See also: Winning Offering. If you are designing your offering by writing about it, or if you don’t start until the proposal phase, you can’t compete with companies that have a smarter offering design process. You should structure the way you design your offering around figuring out what you will offer before or separately from writing about it. Content. Who is responsible for the content? How do you separate the effort and responsibilities between subject matter experts, writers, offering design, management, review, and production? Someone has to create the content for all those other functions. But all those other functions are involved or related to content production. Is creating proposal content a silo or an integrated function? Who decides and how does it get implemented? If you have one person preparing your proposal content, you don’t have an integrated approach to preparing winning proposal content. So how are you going to grow into it? You need to know what you are trying to grow into first, and begin changing your culture now. Message. It’s not enough to have proposal content. It has to be positioned in ways that matter to the customer and optimized against how the customer will evaluate the proposals. This requires having messages, a story, themes, or whatever you want to call them. Whoever decides the messaging, decides how the proposal should be written and is making a judgment about what it will take to win. Does that person have a relationship with the customer? How can they do the job if they don’t? Is messaging one person or another integrated function? When and how is it implemented? Who decides when people disagree? The Business Development Growth Trap turns this into a territorial squabble. Messaging gets decided at the back end, but has to start at the front end. This almost always makes it a shared activity. How it should be shared should be defined by the organization early, even if one person is wearing all the hats. Process. Who decides what the process should be before the RFP is released? Who decides what it should be after RFP release? Who decides how to integrate the two? You don’t actually have to have a process to decide who. Identifying who makes these decisions will imply who will become responsible for developing the processes, and who their stakeholders are. Done right, this sets you up to phase in more mature processes that are fully integrated. Production. Who gets the document after it’s complete to format, finalize, and deliver? Is this what your “proposal specialist” does? Do they also do process, messaging, content, and offering design? Does it make sense that they should? Define the various roles now, even if they are assigned to one person, so you know what responsibilities and authorities that person should have and can separate the roles as your company grows. Graphics. Producing graphics is not one thing. With a hat tip to Mike Parkinson of the 24 Hour Company, conceptualizing the graphics is very different from rendering them. And the two are often performed by different people. Since we’re talking about what it will take to win, visual communication has to be part of the mix. This means you should task conceptualizing and rendering graphics separately, even if today you don’t have any graphics specialists. That way, as you grow into having graphics specialists, you’ll know what type you need, who is responsible for what, and can approach your graphics as an integrated part of the message, with responsibilities shared by all producing that message. A lot of it comes down to defining roles that aren’t based on staff availability, org charts, or locations. Both before and after RFP release, business development, capture, and proposal roles should be defined functionally and based on discovering, assessing, and articulating what it will take to win. Over time you will need to define your processes, both before and after RFP release, but that will be easier if you already have the roles defined. If you wait until you have a lot of people or multiple locations involved, it will be like herding cats to get everyone to agree and comply. But if the roles are there, then it will clearer who gets to decide what, and who the stakeholders are in those decisions. This sets you up to grow into an integrated process while you are still too resource-constrained and busy to think it through. It sets you up to add people without having to structure. It enables you to still work like a team as you grow. It enables people to grow into specializations. And it also sets you up to grow incredibly fast.

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The following links provide references and additional information relevant to our white paper Radically Improving the Efficiency of Business Development. Products Mentioned Creating a bid strategy re-use library Should you purchase a database for business development? Winning By Asking The Right Questions, With 9 Sets of Examples How do you get the most out of inexperienced BD and proposal staff? 10 Critical Winning Habits Your Company Needs to Develop The number one reason why proposals lose... is a lie How to win on price without losing money What is the MustWin Process and how is it innovative? The MustWin approach to being ready to win before RFP release Do we share the same vision for winning proposals? Template Alternative: Proposal Cookbooks Case Studies and Examples: Proposal Re-Use Library Large Scale Dispersed Proposal Training Two Days of Onsite Proposal Training A Tale of Two Proposal Assessments Services that we provide: Are we a match? Our approach to services and support. Lead Identification and Pursuit Proposal Development Support Proposal Content Planning Proposal Reviews and Quality Assurance Support Training Contacts: CapturePlanning.com/PropLIBRARY isiFederal