Are Win Rates a Valuable Measure of Success?
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
How are win rates calculated?
Win rates are typically expressed as a percentage and are calculated in one of two ways:
What’s a good win rate?
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!
The problem with win rates
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:
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?
Chris Simmons is the founder and principal member of Rainmakerz consulting—a business development solutions company specializing in all aspects of proposal development. He is also the Vice President of the local APMP chapter in the greater Washington, DC area.
Still confused or looking for more detailed suggestions? Take time now to send feedback, comments, or questions about this or other challenging proposal issues to Chris at firstname.lastname@example.org or 202-255-2355. Visit www.rainmakerz.biz.
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