Not Everything That Can Be Counted Really Counts: Measuring Success One Metric at a Time Question that Makes Sales and Wins Proposals

By Kristin Dufrene, APF.APMP – Vice President, CACI and Ali Paskun, AF. APMP – Director, CSC

Everyone is familiar with the terms “win rate” (based on proposals submitted) or “capture rate” (based on revenue bid), but it can be difficult to quantify these numbers as they relate to proposal processes and proposal professionals. Win and capture rates are indicators of an organization’s bidding success, but can’t be attributed to any one area of the overall process. What metrics can be applied directly to capture and proposal teams and capture and proposal managers to gauge the quality of the product and the effectiveness of the processes? How can these metrics then be used as a baseline to develop key performance indicators for proposal staff members?

Metrics Overview

Many companies measure proposal win rates, while others measure their capture rates. Win rates measure the successful number of proposals no matter the size against all submitted, and capture rates measure the dollars bid against dollars won. Looking at the following win rates; which of the three options is the best?

Of course 95 percent looks great for Option B, but looking at the number they submitted, did they bid enough? Sure, good business development strategies say “bid less, win more,” but are they really stretching themselves to capacity? They may be working in a narrowly defined market niche and don’t venture out of their comfort zone. If the company opens up its bid criteria slightly and takes on more bidding risk, it can greatly increase its revenue. Let’s look at the difference between pure win rate and capture rates. Now what do we learn? Are these three options putting their resources on the right deals? Options A and C are winning more often than not, but they are winning lower dollar value contracts. Option B is winning the higher value deals and their win rate and capture rate are almost even. Would it surprise you to know that these metrics are all captured by the same company? What kind of conclusions can we make?

As a rule, you can look at win rates to gauge the overall effectiveness of your business acquisition process. If your win rate is at the bottom of the scale, it is time to redefine your capture and proposal processes. If your win rates are too high, your company is probably bidding too conservatively.

Larger companies with mature processes and well-trained capture and proposal managers consistently deliver results in the 50 to 75 percent range. Manage to these processes, and train your staff in the roles they have to perform. Every company with good processes and a supportive infrastructure should deliver win rates above 25 percent.

By breaking out the types of win rates separately, you may find that your recompete win rate is high, but you haven’t selected new business wisely (like in the previous example). If you are bidding both Small Business Set Aside (SBSA) and full and open (F&O) opportunities, consider capturing metrics separately. You might be surprised to find that while you do well on small business competitions, your win rate on full-and-open procurements is below par. You need to revisit your people, processes, and infrastructure to bid full-and-open competitions effectively.

What does a capture rate tell us? That depends on how you are allocating value to the opportunities. Are you setting arbitrary values to ID/IQs, or are you basing it only on firm awards? By using capture rates, you can see the real ROI of your business development organization and processes. Often companies that do well bidding smaller procurements, do not do as well when the proposals/efforts become more complex, or go above a certain dollar threshold. For example, in an LPTA environment, a capture rate might be more telling than a win rate.

Capture Team and Proposal Management Metrics

Overall win and capture rates can assess a company’s bid qualification decisions, overall business development process, and general success, but it doesn’t measure capture team or proposal center effectiveness. A team measurement system should assess both outcomes and processes. Outcomes are the end result of team performance (e.g., bid evaluation results), and processes are the specific behaviors and performance strategies that explain how or why a particular outcome occurs.

Capture teams are brought together for a common goal (winning the opportunity) and are usually measured solely on if they win.  While this is a valid assessment, “a blind squirrel finds a nut every now and then,” meaning that ineffective capture teams have won deals and highly effective capture teams have lost. Capture processes need to be measured on effectiveness and efficiency. To be effective, the capture team needs to examine the following questions:

• How useful was the material gathered through the Capture Management process?
• Did we have the right team?
• What worked well in the Capture Management process?
• What did not go well or could be improved in the Capture Management process?
• What were the lessons learned?
• Did the capture team work within budget and deliver on schedule?

Proposal management includes developing and implementing proposal strategies, discriminators, and themes. Regarding proposal management, chances are a company doesn’t win a deal solely on what the proposal says—it’s how well it articulates the capture strategy. Proposal management outcomes include wins/losses, highly evaluated technical proposals, low number of clarifications or evaluation notices (ENs), and no deficiency notices (DNs). A better metric for proposal management is how well it correlated against the evaluation criteria. You could even keep track of ENs and DNs. For most companies, proposal management is a service organization, so internal customer satisfaction is another measure of process success.

Individual Metrics

Similar metrics can be used to measure individual proposal staff performance: number of bids managed, number of bids won, or number of bids lost. It is easy to apply the team metrics to the individuals on the team. For instance, tracking a capture team’s win rate could be as effective as tracking a capture manager’s win rate. But it doesn’t tell the entire story.  Which metrics provide a better assessment of an individual team member’s performance?

The plan should be to set base performance parameters for a year or quarter and measure performance at team and individual levels. Each team member needs to have clear understanding of target performance parameters and how it will affect team performance/his own appraisal ratings. Both these metrics can be tracked using single simple report (basic xls spreadsheet) and it is the manager’s duty to upgrade these parameters every year or quarter for continuous improvement. Broader individual metrics include:

• Type of Bids – helps to separate a team member’s contribution to critical deals
• Unique Contribution to Team – creating reusable artifacts, overseeing some critical team activities/initiative, etc.
• Proposal Feedback Rating – after proposal submission, the end user of support services should provide feedback through a survey or interview.

It is possible to be even more specific in what is measured to gauge individual performance. Think of the role of each team member and how he/she is expected to contribute. Then evaluate which tasks can be quantified, and therefore measured. Remember that in some cases you need to be in an appropriate position of authority to collect, analyze, and use a metric. For example, if you have no control over the editing staff and you aren’t in their management chain, tracking metrics on such data as # of pages edited per day or number of hours spent on the task is difficult. Be thorough in your analysis; there may be an underlying reason for the result. For example:

• Business Developer – # of opportunities that evolve into proposal submissions
• Capture Manager – # of times budget is overspent/underspent
• Proposal Manager – # of version control issues
• Writer – # of missed deadlines when submitting work.

Turning Metrics Into Key Performance Indicators (KPIs)

Using metrics tracked as a basis for performance goals increases the employee’s commitment and job satisfaction. You can easily migrate these individual metrics to KPIs by implementing the following three-step process:

1. Set specific goals
2. Think performance-based contracting
3. Take experience level into consideration.

Let’s examine each of the steps in detail.

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1. Set specific goals:

It doesn’t help the employee achieve success if performance goals are too general and not specific. Generic goals are difficult for management to track and employees to meet. For example, which of these goals would you rather be assigned?

a. Provide proposal management support.
b. Provide proposal management support to new business and recompete efforts within the IT Division. Manage the overall process and maximize team performance within appropriate boundaries to meet/or exceed proposal objectives by assisting Division proposal teams and enhancing proposals.

The first goal is too broad, while the second goal indentified more specifics, such as the types of bids (new business and recompetes). Professional development goals such as training, identifying and learning new skills, mentoring a junior staff member, or being involved in professional organizations like the Association of Proposal Management Professionals (APMP) should also be included.

2. Think performance-based contracting:

When a contractor is supporting a performance-based proposal, it’s necessary to include specific metrics that allow the Government to track and assess how well the contractor is performing on the program. Using the five qualifiers below, the same performance-based approach can be applied to develop metrics for KPIs:

1. Performance Goal = the objective to be accomplished
2. Performance Measurement = quantifies the objective
3. Due Date = when will the objective be accomplished
4. Needs Assessment = defines any dependencies to be considered
5. Feedback = interim status checks.

Using the specific goal provided earlier, let’s see how it can be expanded by applying performance-based principles:

Performance Goal: Provide proposal management support to new business and recompete efforts within the IT Division. Manage the overall process and maximize team performance within appropriate boundaries to meet/or exceed proposal objectives by assisting Division proposal teams and enhancing proposals.

Performance Measurement: Ability to support organizations within the IT Division, understand RFP and RFI requirements, and manage proposal efforts within deadlines and schedule. Ability to plan and manage a schedule; commitment to on-time performance; managing internal and external resources; coordinating inputs, reviews, and strategy implementation; and problem identification and resolution.

Due Date: Ongoing; overall performance on each assigned proposal evaluated during lessons learned survey after proposal submission

Needs Assessment: Clear direction and support from IT Division leadership, adequate time to prepare for and complete assignments, computer resources, access to personnel resources within the Division, training or mentoring as necessary, and full participation in planning and review meetings for proposals and other products.

Feedback: Regularly scheduled opportunities for feedback from IT Division leadership are required to ensure the employee is working to achieve assignments and accessing all relevant company resources. Assess areas for performance improvement at pre-determined times to identify and implement training/mentoring opportunities as necessary.

Be flexible and willing to revise performance goals. There may be instances where a performance goal needs to be re-evaluated due to changing corporate strategy and priorities, customer acquisition schedules, or employee career decisions. For example, budget issues may cause a company to reassess the number of bid opportunities to pursue during the year or an employee may choose to pursue a different career path within the company.

3. Take experience level into consideration:

Set goals that are realistic based on the employee’s experience level and time with the company. For example, a junior-level employee would need KPIs geared toward learning the basics, while a senior-level employee would prefer KPIs that broaden his/her horizons. A new employee, regardless of experience level, will need some time to learn company-specific processes, resources, roles, and responsibilities.

Summary

It is possible and not difficult to implement, track, and analyze quantifiable metrics to determine the performance level of proposal processes or staff. Be as specific as possible when developing the metrics to be tracked.  Identifying the exact outcome you want to achieve, such as tracking win rate or capture rate, is an important first step. Evaluate all available data points to account for any underlying causes that may impact the performance measured.