Understanding what matters about proposal costs
The first thing to understand is the economics of proposals. Usually, a small increase in win rate generates so much additional revenue that it is smarter to focus on proposal ROI than it is on proposal cost. Do the math. An increase from a 20% win rate to a 30% win rate returns (on average) 50% more revenue. For each single percentage increase in win rate that’s 5% more revenue. It’s worth investing in improving your win rate, and it can be foolish to cut proposal costs if it means lowering your win rate.
But revenue is not everything. If your margins are extremely low, and especially if your average bid value is also low, it’s possible that investing to achieve a high win rate can turn profit negative. High revenue with negative margins is not a good thing. If you have low margins, you may need to focus on volume instead of win rate. High-volume low-margin proposals are run completely differently from proposals that are individually optimized to win.
The biggest cost for doing a proposal is the effort it takes
The best way to lower proposal costs in a high-volume low-margin environment is to eliminate effort. And most effort on a proposal is spent thinking and talking about it. Relatively little effort is spent writing. Recycling proposal text without cutting all the chit chat doesn’t really save much effort. But the chit chat is how people normally think things through. The problem is that when they do this by talking about it, they usually talk in circles. If you want to lower the effort required to produce a proposal you need to accelerate how quickly people think through what should go into the proposal.
Instead of recycling proposal text, the best way to do this is to ask leading questions about the things writers should consider. Your goal is to get them to consider everything quickly. This is much faster than writing and rewriting until you either stumble across what you want to say (rarely) or run out of time (usually).
You can also save significant effort by eliminating ineffective proposal reviews. These are last minute subjective opinion fests that produce changes that should have been suggested at the beginning. Ineffective proposal reviews or proposals that fail their reviews can increase the cost of the proposal by 50% or more. The solution: Get the proposal right on the first draft.
Getting the proposal right on the first draft
Getting the proposal right on the first draft means getting the proposal right before you start writing. This in turn means knowing what to write about and knowing that it fulfills your quality criteria. And this means having quality criteria for your proposal. It also means getting all of the proposal stakeholders on board. If the organization is serious about reducing proposal efforts and doing business in a low-margin field, then getting everyone on board about this should be a strategic priority.
Having explicit quality criteria for your proposals is a game changer. It enables writers to know what they need to do to get the proposal right on the first draft. It provides a rallying point around which stakeholders can agree about what standards the proposal should meet, before it is even written.
And the best part is that for low-margin proposals, quality criteria can be (mostly) standardized and turned into checklists. Instead of focusing on recycling text, focus on creating a goal-driven checklist validated proposal process that gets it right on the first draft.
When it makes sense to reuse proposal text
You should only reuse proposal text when you don’t know any better. This is not a flippant statement. If you don’t have the information you need to tailor your boilerplate, you might as well recycle the text. If you don’t know the customer or your competitors, and you don’t have any insight into what it will take to win the opportunity, you have two choices: not bid or bid based on assumptions. If your boilerplate reflects your strategic positioning for your company and your offering, then you might as well use that if you don’t have insight into the best positioning for this bid.
If you are doing low-margin bids, the odds are high that you lack insight because your budget for relationship marketing is probably insufficient. If you are bidding in volume then your proposals are essentially brochures. Instead of building them from the ground up around what it will take to win a given bid, they are built around what it will take to win bids like this one to customers like this one.
The amount of high-volume low-margin bids you win will be based on the percentage of time your assessment of bids like this one and customers like this one is better than someone else’s assessment. If they have the insight you lack, you will be bidding at a disadvantage. If you are recycling your proposal text because you don’t know any better, you will be bidding at a disadvantage. But if all of your competitors face the same high-volume low-margin issues that you do, it becomes a game of percentages where if your assessments are a little better you will do a little better.
Putting it all together and turning it into a high-volume low-margin bid machine
Instead of templates, start by writing recipe scripts that help people think faster. Your scripts should guide proposal writers to quickly figure out:
- Which circumstances apply
- What strategies they should consider in those circumstances
- What topics they should address in those circumstances
- What quality criteria they should fulfill so they will know when they’ve achieved what they should
For circumstances where you don’t have any customer, opportunity, or competitive insight, you can create boilerplate that addresses:
- The parts of the proposal that do not need to change
- Your standard win strategies and positioning language
Your goal should not be to have a proposal pre-written or to start from recycled proposal text. Your goal is to accelerate how quickly people can agree on what the proposal should be so you can get it right on the very first draft. Any fragments that you can recycle are just a bonus and only come after you’ve determined what is applicable to your circumstances and what your quality criteria are.
You know things are working well when you really do get it right on the first draft and stop making last minute changes. For low-margin bids, this tells you that:
- You're not working inefficiently or putting more effort into your bids than necessary
- You are ready for high-volume bidding because proposal effort is now a finite, scalable quantity
But your actual success will be determined by the assumptions you are making about your customers, opportunities, and the competitive environment.
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Carl is the Founder and President of CapturePlanning.com and PropLIBRARY.
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.
Carl can be reached at firstname.lastname@example.org
To find out more about him, you can also connect with Carl on LinkedIn.
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