As a proposal consultant, I am asked this question frequently. Unfortunately, I always have to answer the same way, “there is no such thing as an average proposal win rate.” Here’s why.
Calculating an average from two data points only works if you’re comparing apples to apples. If you calculate the average cruise speed of a Boeing 747 and a Cessna 152 trainer, what have you learned?
The same applies to calculating proposal win rates. If Company A only bids on opportunities they know they’re going to win, for example, their win rate is going to climb toward 100%. If Company B bids on everything that comes in the door, in contrast, their win rate is going to plummet into the single digits. If you calculate an average win rate between these two companies, you get about 50%. But what does this tell us? The result is a meaningless number that has no value to any seller looking for a standard against which they can evaluate their performance.
Despite this, I understand why sellers ask about average win rates; they’re trying to gauge their performance. They’re looking for some external standard against which they can evaluate how well they’re doing.
So even though it’s not possible to calculate an average win rate, here are some guidelines that might offer insight into how well—or not well—you are doing.
Incumbent opportunities have higher win rates
There’s an old sales axiom: “It’s a lot easier to keep an existing customer than it is to find a new one.” Most people in business appreciate the wisdom in this statement, and it’s reflected in win rates.
Companies that respond to an RFP where they are the incumbent vendor will generally enjoy a much higher win rate than if they’re a competitor trying to win a contract away from an incumbent. In my experience responding to non-federal RFPs, incumbent win rates vary between 60% and 90%.
- If you do a great job taking care of your clients, your win rate will be on the higher end.
- If the service you sell is so integrated into the buyer’s operations that it would be difficult to replace with the same service from another vendor, your win rate will be on the higher end.
Again, there are so many factors involved in calculating win rates that it’s impossible to provide a win rate number that is universally applicable. But this discussion and these factors should provide a frame of reference.
New business opportunities have lower win rates
For the same reason you have a higher win rate when you’re the incumbent, your competitors do to. If you are the competitor, therefore, if you are trying to unseat an incumbent vendor, your win rates are going to be much lower.
In my experience responding to non-federal RFPs, new business development win rates generally range from the single digits up to 15%. It can climb as high as 20% or 30% if you’re really good, but the truth is many sellers do not have win rates this high unless they have both a robust pre-RFP sales effort and they’re careful about which RFPs they pursue.
I have one client, for example, that consistently has a new business development win rate over 40%. They do so well because they have a sophisticated sales team that is proactive instead of reactive. They don’t say, “how are we going to win this RFP that just came in the door.” Instead, they say, “we want to win this contract when it is rebid in three years, and here’s how we’re going to do it.”
Do you bid on every RFP you receive?
When responding to RFPs, one of the best ways to increase your win rate is to avoid the RFPs you have no realistic chance of winning. If you respond to every RFP you receive, your win rate is going to be low. Single digits low. Not only that, this ‘bid on everything’ approach wastes a lot of good resources that could be invested in other, winnable opportunities.
This is one of the biggest stumbling blocks for many sellers. They mistakenly believe that every RFP represents a winnable opportunity. They take the short-sighted attitude that “you can’t win if you don’t bid.” Not every RFP is winnable, and even if you do bid, you’re probably not going to win. You’re just burning up good resources.
If you are careful and discerning about which RFPs you choose to pursue, your proposal win rate will go up, both because you aren’t bidding on the stuff you can’t win, and because you’ll have more resources available to invest in the opportunities that are winnable.
Does your sales team “make the sale” before the RFP comes out?
This is the single biggest determinant of proposal win rates. Whether we’re talking about new business opportunities or opportunities where you are the incumbent, if your salespeople are going out and selling before the RFP is issued—in the two-three years before the RFP is issued—your win rate goes up dramatically. If your salespeople take a reactive approach, however, and wait for an RFP to fall in their laps, your win rates fall.
The bottom line is this: relationships matter. Build good relationships between your subject matter experts and the buyer’s department heads before the RFP comes out, and you will win more. If you don’t build good, strong relationships before the RFP comes out, then they don’t know who you are and whether they can trust you, and you don’t know enough about their real needs to write a customer-focused proposal that is targeted to their real needs. Then your win rates go down.
Want to win more RFPs?
If you want to win more RFPs, don’t try to compare yourself to some external, subjective standard, it doesn’t work. Instead, look internally to see if you’re doing the things you should be—things like not bidding on everything that comes in the door, things like building relationships with buyers before the RFP comes out.
Do these things and your win rates will improve.
Other related articles...
If you enjoyed this article, you may also appreciate reading, Calculating Proposal Win Rates.
David Seibert is a professional salesperson, proposal trainer, author, writer, and business development consultant. He is the founder and president of The Seibert Group, a proposal consulting and training organization serving businesses that sell to other businesses, schools, and to state and local governments. You can contact him at David.Seibert@ProposalBestPractices.com.