I was recently asked to help a company evaluate its business development performance. They had collected data regarding dozens of proposals submitted.
Some of the details really don’t matter since the lessons learned are broadly applicable. But for those who are curious, the company happens to provide health care staffing, and the type of proposals happen to be task orders in response to a Federal Government Indefinite Delivery/Indefinite Quantity (ID/IQ) contract. On its bids, there are usually about a dozen companies competing for each award. Unlike other kinds of ID/IQs, this one normally receives many bids for each opportunity. All of the contracts they had were expiring and being recompeted.
For each proposal they had submitted, they knew who won and at what price. They had accumulated this data over some time in a spreadsheet. They knew which task orders they were the incumbent on and historically what share of business they had won. This number had started to slip, and that was what was driving their concern.
They had been looking at their win rate and comparing it to what percent they should expect if the amount of awards were won evenly by each of the competitors. They looked primarily at their win rate as a percentage of dollars, since the average value was pretty consistent.
I generally advise people to look at two win rates, one based on the percentage of dollars and the other based on the number of bids. This is important if the opportunities include a few very large bids and many tiny ones. A single win or loss of a large value bid can change the win rate based on dollars dramatically, while not overly impacting the win rate based on the number of bids.
I recommended that they calculate their win rate separately for when there was an incumbent contractor, when there wasn’t, and when they weren't sure. On this type of bid, the incumbent has a major advantage since they already have the staff, know exactly what they pay them, and don’t need to do any recruiting or guess-timating. You would expect their win rate to be lower when there is an incumbent. The question was what is their win rate when they were not the incumbent and is it rising or falling?
I also recommended that for the opportunities they lost, they track the difference in award value from what they had proposed. This would tell them whether they are losing because their prices are too high. It is also entirely possible, for this type of bid, that they are losing because their prices are too low.
Next, I made a series of recommended calculations based on each competitor and on each labor category or type of position proposed.
For each competitor I recommended they calculate:
- Their win rate in order to find out who is winning and who is not, remembering to calculate the win rate both by dollar and by the number of bids.
- What is the average difference in price between their own bid and the competitors' bids? This would tell them who prices high and who prices low. It will be interesting to see how this correlates with their win rates. This can be very useful when bidding against them.
For each labor category or type of position proposed I recommended they calculate:
- What is their own win rate? This way, they could see if some labor categories are more competitive than others.
- What is the win rate for each competitor by labor category? This would tell them if any of their competitors are stronger in some areas than in other areas. This is also useful information to have when bidding against them.
- What is the average difference in price between their bid and their competitors’ bids? This should correlate with which labor categories are the most profitable.
In the past, they mainly looked at whether they were getting their “fair share” of the business. But the data they already had could be used for so much more. Like making sure they get more than their “fair share” of the business.
Most people don’t realize that there is no single way to calculate a win rate. Each way you calculate shows something different, and potentially hides other things. But with just a little data and careful analytical assessment, you can discover things about your business development performance that can really show you what you are doing right and wrong, which will ultimately give you a competitive advantage.