There is no silver bullet when it comes to winning tenders. My life would be far easier if there was (at least, if I could keep the secret to myself). Companies that use consultants like myself might think we’re the silver bullet. But no bid writer would profess to that ability. All we do is use the experience gained through hundreds of wins and losses to help our clients gain an edge. Like most things worth doing in life, the route to success in tenders is hard work and failure.
There is one practical tip that I guarantee will increase any company’s win rate if used correctly. That tip is (and you’re going to hate this)…
I agree with you: what a cop out! But it’s true. There are all sorts of reasons why a company might have a low win rate (by the way, average win rates overall hover around 20-30%). They might be new to tendering, their writers might be inexperienced, or their prices might be too high. More than anything else though, the cause is usually going for too many tenders.
It’s easy to see why companies do this. When a tender lands on an eager salesperson’s desk, all they see is the contract value. The bid team might point out some reason’s not to bid: “We don’t have enough good references,” “Our local presence is weak,” “It would use up all our capacity.” In response, the directors say the four most dangerous words in bid writing:
“Let’s take a punt.”
I’ve worked with companies like this, and their win rates are always sub-optimal. Sure, there are times when “taking a punt” is the right thing to do (to test the waters of tendering, to gain exposure with the potential client, or for an opportunity that’s too good to miss). Most of the time though, the bid team’s time would be better spent elsewhere. Scott Keyser nicely sums up why overbidding is a mistake in his book Winner Takes All. He identifies nine risks companies are exposed to when they bid for everything:
- You waste limited resources, including the good will of your bid team
- You miss easier, more winnable opportunities
- Opportunity cost
- Your business development team becomes a proposal factory
- Like your team, your proposals become tired
- You miss warning signs in the client’s behaviour
- You become a serial “failer” of bids
- Your tendering return on investment goes south
- You get nasty surprises
All things you want to avoid!
So how do you choose which opportunities are worth bidding for, and which are worth avoiding? You use a rigorous bid/no bid decision making process. This involves collecting data, talking to your team, and coming to a conclusion that is based on information, not emotion (read: greed). There are four “abilities” that companies should look at when doing a bid/no bid decision, summarised by Keyser:
- Winnability: the most important criterion. Do you have the track record, team, relationship with the client, and edge on the competition to have a realistic shot at winning the tender? If not, no bid.
- Desirability: how much you want the contract. Does it fit into your wider business plan, or is it a deviation motivated by wishful thinking? If the latter, no bid.
- Deliverability: your capacity to meet the requirements of the contract. Are you in a position to deliver the contract now, or would you have to take on 50% more staff just to have capacity? If it will stretch you too far, no bid.
- Profitability: finally, we come to the money. There are times when it’s worth bidding even if you won’t make much of a profit, for example to gain a prestigious client. For the most part though, you need to look at whether you can offer a highly competitive price and still make a profit that, don’t forget, covers the cost of the bid. If not, no bid.
I think the Pareto Principle is particularly apt when it comes to bid writing. 80% of your proposals deliver 20% of your profit; chaff. 20% of your proposals deliver 80% of the profit; wheat. Separate the wheat from the chaff, make life easier for your bid team, and your bid win rate will boom.