Win rate contradictions: why proposal win rates are vital and meaningless at the same time

I love talking about proposal win rates. They are vitally important and complete B.S. all at the same time. Because they are so important, proposal specialists talk a lot about win rates. They usually obfuscate the numbers because the numbers are B.S. We need to be concerned with win rates, but we just can't get around the problem of comparing apples and oranges.

Your win rate is vitally important because:

• A small improvement in your RFP win rate makes a huge difference in your profitability
• Win rates can tell you which of your business development efforts are working and which aren't
• Win rates can tell you whether you are improving your ability to win or not

If you submit a certain number of proposals at a certain cost, what is the difference to the company's bottom line between winning 30% vs 50% vs 70% of them? Compare how hard is it to increase your number of leads by 20% to how hard it is to increase your proposal win rate by 20%. When company leaders do that exercise with real numbers, they often become obsessed with win rates.

Unfortunately, proposal win rates are also meaningless because nobody calculates them the same way. Ask for the formula used for RFP win rate calculation and everyone will tell you something mathematically equivalent to wins/submissions converted to a percentage.

What they won't tell you is what they left out of the number of submissions:

• Did they count every pursuit they contributed to?
• What counts as a contribution?
• Did they only count the ones they played a "major" role on?
• Did they only count the ones they had decision making authority on?
• Did they count recompetes?
• Did they only count the ones their company was the prime contractor for?
• Did they leave out the "unimportant," "minor," or "low value" bids?
• Did they count task orders as well as RFPs?
• Did they count the ones that weren't competitive or business obtained without a proposal?
• Did they count the ones that started late?
• Did they only count the ones where they were involved "from the beginning?"
• Did they only count the ones where they agreed with the "bid/no bid" decision?
• Did they count the ones that were cancelled before submission?

Whenever you see a proposal win rate, you should ask these same questions.

Of course they didn't count them all. It wouldn't make sense to count all of them. So they edit the number of submissions. They make subjective judgment calls regarding what "counts" and what doesn't. They have to in order to make the win rate calculation meaningful.

And let's not even talk about whether one company's proposals are similar to another's in size, complexity, duration, value, and volume. Or whether one company's customers are similar to another's in procurement strategy, evaluation practices, decision making, technical expertise, budget, culture, etc.

It is next to impossible to compare apples to apples when it comes to win rates. How can one person's subjectively fudged proposal win rate be compared to another's? They can't. Unless they count things the same way. Even if they did count every single one of them, you still couldn't compare one company's win rate to another unless they are in the same industry with the same customer.

This would probably be a good place to point out that, at a minimum, you need to calculate win rate twice. It should always be two numbers, and never one. You have to calculate it based on the number of submissions as well as on the value of submissions. And if you care about ROI, you might want to add a third that addresses profit margin.

If you don't have at least the number and the value, things can hide. For example, you might win a bunch of little bids but lose the big ones and still show a high win rate based on the number of submissions. Or you might win a huge bid, lose everything else, and show a high win rate based on the value. You need both to see whether they are in balance or something is hiding behind the numbers. An alternate title for this article might be "How to hide behind your win rate."

When win rates are used to compare companies, products, or consultants it's just marketing of the worst kind, completely lacking in credibility. I'm sure everyone who does it offers their win rate with complete integrity, believes it to be true, and has well-earned pride in their success. I'm equally sure every one of them has self-edited in a different way rendering the numbers meaningless and incomparable.

I'm much more impressed when someone explains what went into their win rate calculation than I am by the meaningless number they arrived at. What they included or excluded tells you a lot about their judgment. Or better yet talk about why they lost the ones they did. It may give you enough confidence to accept the number as an approximation, just not as a numerically comparable value.

And win rates should never be used to compare individuals, especially to assess their performance. How much of the proposal did each person contribute? How much of the win rate is to their credit or shame? You might assume it averages out, but that assumes we're all working in the same environment with the chances of winning only impacted by the skill of the participants. This is never true.

The most accurate win rate calculations are when an organization uses the same method of calculation on their own bids. Within this context, you can compare your present and past win rates, so long as the method of calculating the win rate has remained the same. You can use this to determine which of the things you do best correlates with your win rate, and what has caused your win rate to change over time. This is extremely valuable. But it is rarely done because of the difficulty of getting enough data over a long enough period of time for it to be statistically significant. I highly recommend it for organizations that have the discipline and endurance required.

But even then it's only useful for internal comparison and not for comparing to other organizations.

So win rates are both vital and meaningless at the same time. This makes them something we proposal geeks can discuss and debate all day long, going around and around in circles that lead nowhere. If you believe win rates are vital, then put the effort they deserve into creating numbers with fidelity and only use them in the right context. The amount of effort you put into calculating them and how carefully you present them tell the world a lot about how well you really understand them.