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The point of this sort of metric is pretty obvious. It's like glancing at the baseball standings—the team with the highest winning percentage is on top. For most sales executives, increasing the win ratio may be exactly the kind of success they want to see. It's simple and straightforward.
2002: 500 proposals submitted, 200 deals won = 40 percent win ratio
2003: 400 proposals submitted, 185 deals won = 46.25 percent win ratio
The interesting thing about these numbers is that even though fewer deals were won, the win ratio was higher. This could stem from putting in place a better bid/no bid analysis process, or from fewer opportunities in your industry due to economic conditions. But it could also mean the sales team was not doing as good a job of uncovering opportunities, even though you managed to win more of the deals they did find. You can see why measuring win ratio alone may not be adequate. But it is a starting point. And it's one measure that's obviously relevant.
To address some of the inaccuracies inherent in measuring nothing but win ratios, you might consider tracking how you are doing compared to the total number of opportunities that were available for you to compete on. If you are working in a focused market, such as local government, where all opportunities require an RFP as part of the formal procurement process, you may know exactly how many deals were on the table. For example, suppose the numbers look like this:
2002: 750 RFPs released, 200 deals won = 27 percent hit ratio
2003: 600 RFPs released, 185 deals won = 31 percent hit ratio
Again, although there were 20 percent fewer opportunities available to bid on, the number of total deals you won declined only 7.5 percent. Your "hit ratio'' went up.
A useful measurement is to segment your success by markets, particularly if you're trying to grow your business in a specific area. Suppose you have traditionally been a government supplier, but your firm has decided that it must expand into the commercial market. Tracking revenue by market will show whether or not you're making progress toward that goal, as these number indicate:
2002: | 85 percent revenue won in government contracts 15 percent revenue won in commercial |
2003: | 78 percent revenue won in government contracts 22 percent revenue won in commercial |
If you are winning a lot of deals, but those deals are all the small ones, and you're not winning any of the large opportunities, you may have a high win ratio and yet unexpectedly low revenues. By tracking the total value of all the contracts for which you compete and comparing that to the total amount you win, you can track your capture rate, like this:
2002: | won $4 million revenue/$24 million potential revenue = 17 percent capture rate |
2003: | won $3.8 million revenue/$21 million potential revenue = 19 percent capture rate |
On a year over year basis, your revenues went down, but you captured a larger share of what was available, which means you actually did a better job in a declining market.
Finally, a measure of business performance that is relevant to a dedicated proposal operation is how much it costs to run that operation compared to how much the proposal team has helped win. A well-managed proposal operation should learn to operate more efficiently and effectively over time. If this measurement is trending in the right direction, the ratio between the cost of running the proposal operation and the revenue won from proposals produced by that operation will grow larger:
2002: | Proposal Center budget = $850,000 Revenue won = $38 million Ratio of revenue to cost = 44.7:1 |
2003: | Proposal Center budget = $850,000 Revenue won = $64 million Ratio of revenue to cost = 75.3:1 |
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