Expert insights for sales, operations, capture, proposal, and marketing pros.
Expert insights for sales, operations, capture, proposal, and marketing pros.
An average proposal requires 23 hours of labor across seven or more team members, according to a new report by Loopio. While revenue from proposals is an essential component of many businesses, pursuing poorly qualified proposal opportunities wastes time and money and builds frustration among employees. For this reason, 62% of executives believe RFPs distract from higher-value tasks. Yet, despite this consensus, too many companies still pursue poorly qualified opportunities. According to the same report, 36% of proposals are lost because a competitor shaped the opportunity.
Bid and proposal managers know this feeling all too well: pursuing a flawed opportunity because of the long-shot possibility of revenue. Unfortunately, once the solicitation is lost, proposal managers and executives are likely to differ in their perceptions about why. While proposal managers are more likely to believe they lost because a competitor shaped the opportunity, executives are more likely to think it was because of a weak proposal. This disconnect foments tension. Proposal teams are frustrated with sales for pushing a go decision on a bad opportunity. Executives and SMEs are frustrated with the proposal team for failing to capture attractive opportunities.
It doesn’t have to be this way. A data-backed approach to opportunity qualification can help your team make more informed go/no-go decisions, more efficiently provision company resources, and build a healthier company culture. Below, we discuss the key metrics your company should be tracking and how to use these metrics as the foundation for a data-backed proposal qualification strategy.
Companies frequently report tracking the following metrics: new and total revenue, opportunities won, proposals submitted, customers retained, production speed, and satisfaction. Each of these metrics is important in its own right, but none help improve the qualification process. Below, we list additional metrics that will help your company make more informed pursuit decisions and operate more efficiently:
Opportunity Fit Score
Quantifying opportunity fit is one of the most challenging tasks facing any proposal team, but the dividends from doing it well can be substantial. The best proposal teams can evaluate potential opportunities using several factors to assign a score that correlates with an expected win percentage.
Expected Win %
By tracking opportunity fit, teams can gather data to validate their qualification process. How often are teams winning opportunities with a high fit, medium fit, low fit? Tracking this data helps refine the fit criteria. But more importantly, this data point creates a powerful starting point for pursuit-decision conversations.
Every proposal carries an opportunity cost. To make intelligent decisions about which opportunities to pursue, teams must not only track the time spent on proposals but convert this into a dollar amount that demonstrates the cost of labor on any given proposal. This metric generates more visibility across the organization into the true cost of preparing a proposal.
Profitability metrics measure potential revenue and compare it against both the cost of the proposal and the cost of services that would be provided if the proposal was won. Advanced versions of this metric might also apply expected win percentages to create an expected value of pursuing a given opportunity. These metrics help decision-makers consider multiple aspects of the company’s health: cost of proposal capture, cost of providing services, and the potential revenue gain from winning.
Money Saved by No-Go Decisions
Finally, it’s essential for bid and proposal teams to demonstrate how strong qualification processes can help the company become more efficient. Every no-bid decision for a bad-fit proposal helps free up time across the company: SMEs can continue producing toward company goals, and proposal teams can focus their energy on the highest-value opportunities. This metric demonstrates the positive impact of a strong qualification process.
DATA AS A BASIS FOR CONVERSATION
Of course, the metrics listed above won’t help companies make better decisions on their own. Data is most powerful when used to bolster decision-making and help communicate company priorities. The above metrics are powerful because they help improve communication between teams and build a common language for decision-making.
For bid and proposal professionals, qualification metrics help contextualize no-go decisions and soften potential conflict. By calculating an opportunity fit score, a likely win percentage, the cost of proposal preparation, and the expected profitability of the proposal, proposal teams can walk sales professionals and executives through exactly why a decision was reached and how it will help the company’s overall health. As qualification improves, proposal teams should expect to see their win percentage improve.
For decision-makers, qualification metrics help improve visibility and add additional context. With an opportunity fit score and the expected costs of a proposal, decisions can be expedited and made with improved confidence. When a decision is reached, decision-makers can better communicate their decisions to their team by incorporating key data points.
For executives, qualification metrics help ensure that proposals are apportioned the proper amount of company time and resources. When the metrics demonstrate that the company is pursuing too few opportunities, it might be time to invest in more proposal resources. When the metrics indicate too many opportunities are being pursued, it might be time to revisit and refine the decision process.
Pursuit decisions impact every aspect of a company. When a go decision is reached, contributors from across the company mobilize to produce a successful bid package. Without precise qualification metrics, companies will pursue too many poor-fit opportunities, wasting time and money and diverting resources from more impactful initiatives. But with proper metrics and robust conversations around them, companies can more accurately qualify opportunities and optimize operations.
More precise qualification will improve every aspect of a company’s health, from allowing proposal teams to focus their energy on the most winnable opportunities to encouraging sales professionals to keep their pipelines and forecasts honest to enabling executives to make better decisions and more efficiently allocate resources. Consider implementing the qualification metrics detailed above to improve your processes and streamline your company’s operations.
Download Proposals 101: How to Start (and Win) Proposals from the Ground Up to Learn More
For companies in complex industries, responding to an RFP is an essential tools to capture revenue and promote growth. But they are also costly and time-consuming.
Many companies either avoid proposals altogether, losing out on valuable revenue, or respond to far too many proposals without the proper processes in place to be successful, sapping energy and company resources.
It doesn’t have to be this way.
This eBook is a high-level overview of how to find, qualify, and respond to RFPs, RFIs, and RFQs. Intended for companies launching a proposal response function or seeking to understand why they aren’t winning more competitive solicitations, this eBook covers everything you need to know to establish a successful proposal function and win government contracts.
Download Proposals 101: How to Start (and Win) with Proposals from the Ground Up to learn the following: