Increasingly firms are using their bid:win ratio to gauge return on investment, that is to maximise the value of their bid:win ratio.
Business development in a B2B enterprise, including professional services, is much more costly than a business to consumer enterprise because the investment is mainly in ‘push’-related activities that involve expensive human resources.
Increasingly firms are using their bid:win ratio to gauge return on investment by measuring both the number and value of wins as a proportion of bids made. This is useful, especially if tracked over time and if reasons are sought from the prospective client in both winning and losing situations.
Benchmarking your firm against close competitors on your prospecting, pitching and winning pitch ratio is an important step towards understanding how best to focus your firm’s valuable business development resources.
Prospecting is defined as the extent to which firms make proactive efforts to win business, e.g. calling on clients, submitting unsolicited proposals.
Pitching is defined as the extent to which firms pitch for a specific engagement, e.g. submitting a tender, responding to a RFP.
Winning is defined as being appointed after a competitive pitch.
If your winning pitch ratio is materially lower than the competitors' and your prospecting and/or pitching activities are the same as or materially above the competitors, you are less effective in converting business development effort into sales. The converse is also true.
What makes a winning pitch?
Our beatonbenchmarks research asks respondents a number of qualitative questions, one of which is What makes a winning pitch? Across all professions the top five reasons clients choose the winning pitch are:
Relationships – there is a strong relationship with the people involved;
Expertise – the firm has expertise in the area of service;
Knowledge – the firm has specific knowledge of the industry in which the client operates;
Experience – the firm has an experienced team with a track record in the work required; and
Price – competitive pricing but not necessarily the lowest price.
How many times has your firm pitched for work when you are not able to tick each of the boxes?
Economics of the bid:win strike rate
Experience shows pursuit of a large pitch can cost between $100,000 and $1m in opportunity cost of time involved and disbursements, depending the industry and type of work involved. Winning only one in three bids triples the cost of acquisition of a large engagement. And this doesn’t count the morale costs of losing.
The merits of maximising your bid:win strike rate are clear and the value of this research unarguable.
For more insights on related topics
+ How industry strategies drive profitable growth
+ The three things that create value for clients
+ Here’s how to help your clients cross-buy
+ Why Consideration matters
This post was written by David Goener, a beaton partner based in Brisbane. You can connect with David on LinkedIn or follow him on Twitter at @dpgoener.