Winning new business as a government contractor is expensive, with sophisticated responses costing into seven figures. Depending on the complexity of the bid, and the number of hoops you need to jump through to complete the request for proposal (RFP), it’s a process that can take months—even years—to complete. As a leader, this is a huge commitment of resources, talent, and treasure.
What happens, when you go through all that and then fail to win the contract? It’s a waste and can be disastrous for any business that loses a few in a row. While no one should ever expect to win 100% of the bids they place, wouldn’t it be great if you could significantly increase your odds at winning the contracts you do bid on? Or, to put that another way, what if there was a way that you could determine which contracts you stood the best chance of winning ahead of time?
It turns out there is—and it doesn’t involve a Magic 8 Ball.
The most successful contractors have figured out how to use basic analytics to figure out which contracts to bid on. In fact, there are a growing number of data analytics firms that can help coach your business through a detailed questioning process to help determine those contracts that your firm stands the best chance of winning. They will even give you the percentage probability of a win, based on your answers. It can be expensive, but, as the old saying goes, it takes money to make money.
But there is also a more do-it-yourself approach you can employ that doesn’t cost much in terms of time or money, but is actually highly effective at improving the odds of winning the contracts you bid on.
What you do is form a team of senior people inside and even outside your organization who really understand the business. Then ask them to come up with a list of 7 to 10 things that must be true of a perfect customer or potential contract.
For example, your team might identify aspects such as:
- We have done similar projects in the past.
- We have excellent experience ratings for this class of work.
- We have worked for this customer before and achieved positive results.
- We have been involved in creating the RFP.
- We have an existing contract vehicle that can be used.
You could probably come up with 20 or more questions, but the challenge here is to keep it manageable with 10 or less. By creating this list, you are creating a filter that helps you identify your probability of winning that next contract with the customer. The more questions you can answer with a “Yes,” the higher the probability becomes that winning the contract becomes a slam-dunk for you.
Let’s assume you get down to 10 questions that everyone agrees on. In other words, if these things are true, we win that proposal almost every time. You then push these questions to the front of your sales process. Before you invest material resources in a bid pursuit, a certain number of the questions must be true—perhaps 8 out of 10. If less are true, with an objective analysis, you no-bid the project. Why waste time if you aren’t going to win anyway?
When you employ this kind of analytical approach, you can grab a significant advantage over your competitors who rely on the largely ineffective “quote and hope” approach. As they try to bid on everything, wasting precious resources along the way, you can save your ammo for the contracts that make the best fits for your organization.
It’s important to note that your sales team might not exactly be happy with every decision you make when you use this filter, as they’ll be inclined to also go after every new piece of business they can. But that’s OK. As the leader of your organization, you need to be the adult in the room who is willing to be rigorous in using these questions to decide whether to bid or not.
And certainly, if there is a real concern that your firm isn’t generating enough new business, you can relax the parameters of your filter—say, maybe you’re willing to bid on contracts that pass 60% of the filter instead of 80%—with the knowledge that your probability of winning the business is getting lower. But it’s also crucial to not drop too far down the spectrum. You’re always going to be better off spending time in marketing and sales finding opportunities that meet the 70-80% threshold rather than chasing down 40% potential messes and misses.
If you can maintain that kind of discipline over the long run, you’ll find that you’ll regularly double your conversion rate while also avoiding all that lost time and money chasing contracts you never had a good chance of winning in the first place.
As your Magic 8 Ball would say, if you use this process: “Outlook Good.”
Jim Schleckser is the CEO of the Inc. CEO Project. He specializes in the issues that fast-growth firms experience in their business models, talent, processes, and systems as they reach higher levels of performance. He is the author of the book, “Great CEOs Are Lazy”