Does your firm write too many proposals? It's a common problem in our industry. Many technical professionals find it difficult to pass on virtually any opportunity where their firm is qualified to do the work, even in the face of long odds. In this economy, the temptation is even greater.
I call it the "proposal monster" because the lure of the latest RFP often wields more power in the office than the firm's strategic priorities. It diverts attention away from more important matters. It gobbles up valuable resources that could have been more productively spent on other business development activities.
Many firms spend the bulk of their business development time on writing proposals. Invariably these firms have low win rates. They would be wiser to (1) push more time upstream to the tasks of building relationships and positioning the firm in advance of the RFP and (2) invest more time on the proposals where they have a legitimate shot at winning.
So how can you tame the proposal monster? Let me illustrate my recommendations with the example of an engineering firm that largely succeeded at doing it. This 100-person firm hired me as their business development manager a few years ago on a part-time contract basis. They had struggled for some time, with little growth, poor profitability, and high business development costs (12% of net revenue) that produced mediocre results.
When I stepped into the role, they had submitted 136 competitive proposals over the previous 12 months and won 26% of them, well below the industry median of about 40%. I suggested setting a goal of cutting the number of submittals in half for the coming 12 months, while increasing their win rate to 45%. After the initial shock wore off, the management team agreed with my suggestion.
Over the following year, the firm submitted 80 proposals, short of our goal but a substantial improvement (there was one rogue office that refused to get with the program; they accounted for half of all submittals while winning only 13%!). The overall company win rate improved to 46% and sales increased by 31%. Profitability improved from -0.1% to 7.5%. Better still, the improvements continued into subsequent years.
Could your firm benefit from similar improvement? Let me recommend the following steps:
Shift the focus from chasing projects to building relationships. This is a critical first step. Most A/E firms take more of a transactional approach to business development than a relational one. Since writing a proposal is in the latter stages of the sales process, many are prone to shortcutting the preliminary relationship building in favor of seemingly starting closer to the finish line. This is particularly a problem for firms that pursue public sector work where there's little to no upfront investment required to receive an RFP.
To facilitate this shift in focus with the aforementioned firm, I started with our weekly BD conference calls. I noticed initially that the branch managers on the call spent most of their time talking about the proposals they were working on. It seemed a source of pride to report that there were multiple proposals underway in a given office. I asked that future calls include no discussion about proposals unless (1) they needed the help or advice of someone on the call or (2) they had learned the outcome of a specific proposal.
With this deliberate shift to talking more about sales than proposals, branch managers realized they needed something to talk about. I think that simply changing the content of our conversations helped encourage more sales activity. There were other steps we took to promote the shift, such as changing the metrics we tracked, but I think that redirecting our BD conversations played the biggest role.
Establish a "no know, no go" policy. If a firm decides to submit proposals only when they've been talking to the client in advance of the RFP, that one step alone will eliminate most wasted efforts and increase the win rate. I've never seen any data on this, but my estimate is that for most firms there's less than a 5% chance of winning if you submit a proposal without client contact prior to the RFP. Of course, every firm can recount an exception or two, and that's what entices many to keep trying despite the odds.
We established this policy in the example firm. Exceptions required executive approval, in this case meaning either the president or myself. As I mentioned earlier, there wasn't full compliance, but the policy made a huge difference. Besides reducing the number of long-shot submittals, it encouraged people to contact clients earlier in the process--if for no other reason, so that they wouldn't fall victim to the policy in the future.
Control behavior by limiting access to corporate BD resources. Perhaps your firm has attempted various policies like the one above, or a formal go/no go process, only to find it ignored by a significant number of key players. I don't advocate forced compliance with such policies. It's hard to tell seasoned professionals what sales opportunities they can or cannot pursue.
So what to do? Limit access to corporate marketing staff to only those proposals where the team adheres to your policies and follows the process. I mentioned the one rogue office in the example above. They didn't use any corporate support, except on rare occasion. When they did, they had to comply with what everyone else had agreed to. If someone in another office chose to pursue a proposal where they hadn't been talking to the client and didn't get approval, or where they didn't go through the established go/no go process, they did the proposal on their own. Thankfully, there were few such situations.
One of the mistakes that firms make that hampers their BD efforts is giving open access to corporate resources. Why should marketing staff be made available at the beck and call of their technical colleagues? This commonly is a disservice not only to marketing staff, but to the corporate interests. Business development costs are substantial, but opportunity costs are often even greater. Exercise restraint in how you allocate these precious resources.
Obviously this tactic is dependent on your organizational structure. If marketers report directly to technical managers who lack discipline in their proposal pursuits, you've got a problem. It might be worth tweaking the organization to gain better corporate control over marketing staff.
Give some proposals special priority. This should go without saying, but I've seen too many major proposal efforts shortchanged by poor resource allocation to avoid mentioning it. For several years, I served as the corporate proposal manager for a national firm. I worked on perhaps 10-12 proposals a year. In other words, I and the corporate resources assigned to me were only engaged on our highest priority submittals.
When your best proposals draw from the same resource pool as the ones you shouldn't even be pursuing, there's a good chance that you won't be giving your best efforts to your best opportunities. If you're not already, determine how to reserve your best assets for your really important proposals. Don't let them be overwhelmed by the proposal monster.