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Attention executives: 8 ways you might be leaving money on the table because of how you approach winning new business

If you are treating winning business as an expense, you may be leaving money on the table

If you are treating winning business as an expense, you may be leaving money on the table. Here are some signs that you may have fallen into this trap and recommendations for what to do about it:

See also:
ROI
  1. Are you closing the leads you have? If you are not winning enough of what you pursue, either you are pursuing the wrong leads or you are not pursuing them effectively. If you’re not winning the majority of your pursuits, you are probably leaving money on the table. If you are winning enough to get by and have found a comfort zone it may be encouraging you to keep doing things the same way, and looking for more leads to grow instead of winning more of what you pursue. It’s human nature to avoid change. However, investing in the changes that will improve your win rate can easily return far more than it costs. And make you a lot more comfortable. Do the math.
  2. Do you have enough leads to hit your numbers? Companies always think they need more leads. But the better your win rate, the fewer leads you'll need to hit your numbers. Sometimes chasing too many leads lowers the win rate for all, and you should invest in better lead qualification. Sometimes the leads you have are the wrong leads and you should invest in better strategic planning. But if you have enough leads and they aren’t closing, you might need to invest more in capture or proposals.
  3. Would increasing your win rate pay for the staff you need to make the improvements? What would the return on a 10% increase in win rate be for your company? It’s often an order of magnitude or two more than what it would cost to hire staff to make the improvements. And all the rest of it goes into the corporate coffers. By not improving your win rate, you may be leaving that money on the table.
  4. Should you gamble on prospecting or gamble on capture? Why is it that companies find it easier to gamble on hiring another business developer than it is to gamble on doing the things that increase your win rate (like adequately staffing the proposal, process improvement, capture, etc.)? Depending on your circumstances, the same investment can have a much larger return when it increases your win rate. The place to start is by assessing how many leads you need to hit your numbers. When you do, note the very strong impact your win rate will have on the outcome. Then decide whether to focus on more leads or win rate.
  5. Are you trying to discover your bid strategies by writing about them? If you get an RFP and immediately start writing, you are probably making your proposals unnecessarily expensive and lowering your win rate at the same time. One problem is that you aren’t figuring out what your differentiators, approaches, and positioning is before you start writing so you can prove them. When you start the proposal and you don’t already know what your differentiators, approaches, and win strategies are, it's usually a sign that you aren’t doing capture well and are starting unprepared. The other problem is that writing and rewriting until you stumble across a good proposal is expensive. And you probably will run out of time and submit what you have instead of something more competitive. 
  6. Are you producing proposals or capturing them? Are you writing, compiling, formatting, and preparing files for delivery? Or are you gathering intelligence, assessing it and converting it into win strategies, discovering what it will take to win and then building a proposal deliberately around it? Is your approach to crank out low win probability proposals and make it up in volume or is it to invest in a high win rate and measure your ROI?
  7. Are you staffing your proposals based on capacity instead of win rate? While you can increase efficiency by having fewer staff do more proposals, you will lower your ROI with this approach. And this is only true if you measure proposal efficiency the wrong way. Instead of having the fewest staff do the most proposals possible, you should be looking for the sweet spot that maximizes ROI. The sweet spot is where increasing the win rate is no longer profitable. And you will never get your win rate that high or cross that line unless you sell something where the gross profit is lower than the cost of writing the proposal that closes the sale. If this is the case, you should be avoiding doing business that requires proposals. 
  8. Are you shifting effort from high cost staff to lower cost staff? It doesn’t make sense to have your most experienced and expensive staff doing things that could be accomplished by lower paid staff. Shifting formatting from subject matter experts to production staff makes complete sense. But what about writing? What about managing the process? What about your efforts that directly impact your win rate? If you go cheap in the wrong way you could be losing more money than you are saving by lowering your win rate.

Business development, capture management, and proposals should all be separately and collectively considered based on ROI. You should manage them as if they are a profit center, since a small change in win rate can return more profit then almost anything else you can do as a company. When a company with a 20% proposal win rate increases it 10%, they increase their revenue by 50%! That’s what you are potentially leaving on the table.

The challenge is to understand whether the problem is in lead generation, preparing to win in the capture phase, or creating the proposal document. The place to start is to begin disaggregating and prioritizing the things that impact your win rate. Be careful here because the rules of thumb about what impacts win rate are all from other companies in other circumstances and may not apply to you in the slightest. Don't assume you know what impacts your win rate the most. Become data driven.

What it will take to win in your circumstances is a combination of the nature of your offering and your customer’s expectations. Business development, capture, and proposals all play different roles in translating those two things into winning business. Set your priorities by what impacts your win rate the most and invest according to what will provide the greatest ROI.
 

Let's discuss your challenges with preparing proposals and winning new business

 

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Carl Dickson

Carl is the Founder and President of CapturePlanning.com and PropLIBRARY

Carl is an expert at winning in writing. The materials he has published have helped millions of people develop business and write better proposals. Carl is also a prolific author, frequent speaker, trainer, and consultant and can be reached at carl.dickson@captureplanning.com. To find out more about him, you can also connect with Carl on LinkedIn.

Click here to learn how to engage Carl as a consultant.

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