What a business development pipeline assessment can and can't tell you

I love starting off our consulting engagements by doing a pipeline assessment because it quantifies the reality of things and gives us both a better understanding of the true impact of the improvements we make together. It clarifies goals, budgets, and how to allocate resources. But the best part is that everything we do can be compared to a set of expectations designed to produce a measurable return on investment. But there are limits to what a pipeline assessment can tell you.

This article is based on what we've learned by doing pipeline assessments for our customers. Most people want something concise, clear, practical, and quantifiable. Those who want something quantifiable usually respond to how our spreadsheet model makes it all about the numbers, makes it more like science than art, and opens up insights. While we love to talk about best practice philosophy those who just want the facts can see the exact numbers that drive your business. These often deviate from what you might expect from industry rules of thumb. 

We’re not trying to convince you that the spreadsheet model we use for pipeline assessments will cure everything that ails you. But we do think it’s pretty cool, and the more we use it in our customer engagements, the more we learn. Here’s some of what we can share to help clarify exactly what a pipeline assessment can and can’t do:

1. Win rates. A pipeline assessment doesn’t tell you what your win rate is, unless you load it with historical data. That’s not a bad thing to do, but most companies don’t have good records of past submissions! Usually we start with an estimate and refine it with reality as we collect data moving forward. But knowing what your win rate is, while important, isn’t really the goal. It’s seeing what the relationship is between your win rate, the number of leads you need to chase, and the actual revenue you end up with. A spreadsheet model can tell you what the impact of a change in your win rate will be, but it won’t tell you what your win rate should be. But what it’s really good for is doing “what if” analysis. What if your win rate goes up (or down)? How does that impact the number of leads you need, proposals you have to submit, or your revenue? From that you can set targets for what you’d like your win rate to be.
2. Bid/No bid decisions. A pipeline spreadsheet model isn’t going to tell you what bids you should or shouldn’t pursue. It won’t even tell you what percentage you should reject. But it will clearly show if you are out of balance, and either bidding everything or dropping too many bids because you’re registering unqualified leads. We actually set targets for the number of bids we expect to drop, and measure performance against it to ensure that qualification is taking place. However, I’ve never seen a company yet that could tell me with accuracy how many bids they considered in the past but didn’t pursue at each stage. This is another example of where we start with guesses and refine them over time.
3. Benchmarks. A lot of people assume the place to start is with industry benchmarks, comparing your company to others. In service contracting this is usually a mistake. Never mind that this data is company sensitive and not available; even if it was available, it wouldn’t be applicable. No two services companies have the same combination of customers, offering, positioning, strategic goals, accounting systems, BD process, proposal process, internal resource allocation, etc. It does you no good to compare to someone else’s win rate when you don’t know if their strategic goals are, for example, to expand into new customers or maximize an existing customer relationship (ditto for markets and core capabilities), or whether they do most of their businesses through teaming or not. Differences like that do not average out. What a spreadsheet model will do is make visible your performance against the benchmarks that matter --- your own. You can separate metrics based on strategic issues like whether you are the incumbent or not. You can see when your metrics change over time, whether good or bad. You can see the impact of decisions you make. Building these metrics into your spreadsheet model will make it unique. It’s one of the reasons why every time we implement it, we heavily customize it.
4. How many people do you need? This one is fun. A pipeline assessment with the right analysis can show you a whole new numerical way to look at how much effort should go into each phase of your pursuits. But it can’t tell you things like how productive or effective your people are or what subject matters you need to cover. The big thing it can’t tell you is when RFPs will be released or how many will come out at the same time. And off-the-shelf it can’t tell you how your company accounts for people’s time or how it approaches budgeting. But it can give you a numerical baseline you probably don’t have right now. And it can show disconnects between budgets and targets. If your budget won’t support going after the number of leads you need to hit your revenue goals, you’ve got a problem that is better dealt with sooner rather than later.

It’s not the model that matters. It won’t make decisions for you, tell you what your strategies should be, or make people do the right things. But it will provide answers to key questions, if you know the right questions to ask. It will enable you to replace your assumptions with real hard data over time. It will help you set more rational targets. And it will help you make better decisions by enabling you to do “what if” analyses that will show the impact of decisions and resource allocation. But perhaps the most important thing it can do is give you a common basis to discuss opinions about decisions and resources that are probably more objective than how those conversations currently go. If it helps your company do a better job of getting right with reality, then it’s well worth the effort.