Improve Opportunity Qualification by Tracking These Metrics

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.

WHAT DATA SHOULD YOUR COMPANY BE TRACKING?

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.

Opportunity Cost

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

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.