- 1.Are Win Rates a Valuable Measure of Success?
- 2.Are Win Rates Valuable? (Part 2): Making Win Rate Metrics Work for You
Win rates can be based on a number of different variables and are often calculated in self-serving ways.
Win rates are an established best practice to measure business success. The escalating grade inflation of win rates, however (in many cases exceeding 90 percent), casts significant doubt on their usefulness as a meaningful measure. How valuable is this measure of success and how do we bring the skyrocketing win rates back down to earth?
When someone wants to get an idea of how their business, division, proposal center, employee, or consultant is doing, they usually ask the simple question: “What’s your win rate?” The answer is often made up, fudged, or otherwise artificially inflated to impress the audience with our “winning” ways.
How are win rates calculated?
Win rates are typically expressed as a percentage and are calculated in one of two ways:
- Number of wins: This method compares the number of proposal “wins” to the number of total proposals. For example, if a contractor submitted 10 proposals and won 3 proposals—Win rate = 30% (3 wins/10 proposals x 100 percent)
- Amount of win revenue: This method compares the amount of proposal revenue “won” to the total amount of proposal revenue bid. For example, if a contractor submitted proposals valued at $1,000,000 and won $300,000 of new business—Win rate = 30% ($300,000 won/$1,000,000 bid x 100 percent)
What’s a good win rate?
The answer to this question largely depends on the context of the question and who you ask. Win rates can be based on a number of different variables and are often calculated in self-serving ways to suit specific objectives. For this reason, “good” win rates can vary significantly.
Most companies don’t publish win rates for public consumption but generally achieve win rates between 10 and 75 percent with an industry average of 33 percent. Consulting companies are notorious for publishing high win rates as a potential discriminator. Most published win rates for these value-added service companies are between 60 and 95 percent.
Two of the largest and most recognized consulting companies in the proposal industry have win rates of 82 percent and 85 percent respectively. A large Washington, D.C., company touts an ironically well-positioned win rate of 83 percent, while a small firm in the area boasts an unbelievable 94 percent win rate. High-level research reveals that at least one of these companies hasn’t updated their published win rate for at least six years!
“Not everything that can be counted counts and not everything that counts can be counted.”–Albert Einstein
The problem with win rates
Win rates used for marketing, sales, or other external publicity are rarely audited and virtually impossible to verify. Human nature suggests that these win rates are largely inflated or at least “gamed” to put the best possible spin on the numbers. Consider what one local win rate authority and colleague had to say about win rates:
“Firms boasting a high win rate have long ago given up on trying to compute anything, and instead are just pulling a number out of the air. These companies have no fear that anyone would ever ask them to substantiate the number. If they did, the company would conveniently say they can’t disclose their clients. It is just a game of liar’s poker. The lesson learned here is as a consumer, if you are naive enough to believe a high win rate, then you deserve to be conned —and you will.”
Here’s an extreme example of how the win rate game might be played.
Con-Sulting Company. A large consulting company is hired to provide capture and proposal management services for a well-known Fortune 500 firm. During a 12-month period Con-Sulting supports 10 proposals for this firm. Two of these proposals result in new business wins.
The 20 percent win rate (2 wins/10 proposals x 100%) drags down Con-Sulting Company’s overall win rate of 85 percent calculated across their other customers. So, Con-Sulting decides to not count the eight losses, and instead, calculates a 100 percent win rate (2 wins/2 proposals x 100%) using the following justification:
- Did not participate in pre-RFP capture activities (2 bids)
- Won the RFI down-select, but lost the subsequent RFP bid (1 bid)
- Recommended “no-bid” was rejected (3 bids)
- Was not involved in orals preparation and coaching after down-select (1 bid)
- Recommended price-to-win analysis was not conducted (1 bid)
If you’re not convinced that win rate calculations are suspect when used for marketing or other external purposes, think about this. Most proposal experts agree that approximately 80 percent of awards are made to the lowest price bidder. If Con-Sulting Company does not provide strategic pricing services for the bids they support, their “win rate” only really applies to the 20 percent of the bids that were awarded independent of price.
How can I make win rates work for me?
Despite the apparent challenges and diminishing value of win rates as a marketing metric, a strong case can be made for using win rates for other purposes. The next article in this series discusses how to bring skyrocketing win rates back down to earth to provide a valuable measuring stick for growth, accountability, and business success.