Be Careful About Win Rates!

Proposal win rates often are used to measure business success.  After all, there is a big difference between winning 30 percent and 60 percent of your bids.  However, win rates are slippery numbers, and they may cloud rather than clarify your business efforts.

Chris Simmons, the founder and president of Rainmakerz, points out that win rates are often “made up, fudged, or otherwise artificially inflated.”  There are two basic ways of calculating a true win rate.

First, you could simply compare the number of proposals that become contracts to the number of total proposals.  For example, if a company submitted 10 proposals and won four contracts, the win rate would be 40 percent.

Another method is to compare the amount of total proposal revenue won through successful bids to the total amount of proposal revenue bid.  For example, if a company or consultant submitted 20 proposals with budgets of $20 million dollars and won $5 million dollars in new contracts, the win rate would be 25 percent.  In this calculation, the number of bids is unimportant.  What counts is the ratio of revenue bid to revenue obtained.

These two kinds of calculations seem very straightforward, but many companies and consultants have problems with their win rates.  The most prominent ones are:

  • Win rates for marketing and sales purposes are rarely audited and impossible to verify.  As a result, they sometimes are inflated to make everyone look good.
  • When companies and consultants are asked about verifying win rates, they often reply that they cannot disclose their bids or clients.  This makes high win rates suspect.
  • Consultants often do not have a choice about what proposals to develop.  Sometimes they are asked to develop proposals that have little likelihood of winning, which will lower their win rates.

In actuality, most companies have win rates of around 33 percent.  Having a win rate of 50 percent or higher is unusual and impressive.

Because of the inherent difficulty of calculating win rates, they should be treated with great skepticism, especially if they are high.  It is not uncommon for consultants, for example, to advertise win rates of 80 percent.

I think that the best kind of win rate is the one that calculates the total amount of revenue gained through proposal bids.  From my perspective, it does not really matter how many proposals you submit but how much new revenue you gain for your company or organization.

Albert Einstein once said that “Not everything that can be counted counts, and not everything that counts can be counted.”  Keep this in mind when calculating win rates, and focus on the only number that ultimately counts – $$$$.

3 Comments

  1. Wayne Kurtz
    August 3, 2012

    A very useful blog post. One thing you didn’t mention but I’m sure is of interest to you is the cost/benefit ration of bids. I have been involved in several high dollar value bids which were very expensive to produce. A win rate based on margin is interesting. Also including the other end of the pipeline is also interesting. What is the performance when delivering on a winning bid is calculated in.

    Reply
  2. MOHAN
    August 10, 2012

    Hello Jayme,
    There is one more angle to this measurement. One should also measure the efforts spent in winning the proposal. So if the cost of making one proposal is X for a doller amount Y it will be good to track the % cost per proposal win.

    Reply
  3. Mike
    April 11, 2013

    Jayme –

    In my experience, there’s Win Rate, and then there’s Win ROI. Both are indicative of the level of success and both are routinely fudged.

    What solves this challenge (at least from a corporate perspective) is a unified Bid Process Management Tool that tracks and reports on BD activities, pipeline, B&P expenditures, wins, losses – providing transparent visibility into the whole Business Acquisition process.

    Such a tool can manage, track, and report on the Business Acquisition process from Opportunity Identification, Pursuit, Capture, Proposal and ultimately to Win/Loss. A tool that provides input to and receives input from the major stakeholder groups like BD, BD Management, Corporate Management, Contracts, Pricing, HR.

    – Mike

    Reply

Leave a Reply