Thursday, April 30, 2015

Why You Should Be Writing Fewer Proposals

The verdict is in: Writing fewer proposals typically increases both your win rate and your sales. That, at least, is the consensus of the many sales and proposal experts I "surveyed" via a Google search. That has also been my experience over the last 25 years working with a variety of engineering, environmental, and architectural firms.

But many firm principals aren't buying it. Not in practice, at least. They find it hard to "miss opportunities" by being more selective in the proposals they submit. Several have explained to me that while that maxim may work for most, it doesn't apply to their firm, office, or market sector. They fear dire consequences if they reduced the number of proposals.

Inevitably, these "volume sellers" have a low win rate. Their business development costs are often inordinately high, and their profits are usually lower. It's not uncommon for volume sellers to pursue a higher percentage of price-driven selections, which would seem to substantiate their conviction that more proposals equals more sales.

They may be right, but I doubt it. For one thing, that approach to developing new business inherently erodes the perceived value of their services. My take after watching business development trends for decades is that indiscriminate selling reinforces indiscriminate buying (e.g., selecting on the basis of low price). When you shortchange the sales process by simply responding to RFPs, you shortchange the opportunity to establish your value proposition.

Still not convinced? I offer the following additional reasons why you should be writing fewer proposals:

Proposals are costly, but the greatest cost is opportunity cost. Proposals constitute roughly half of the typical A/E firm's BD budget. But for many firms, the budget share is still higher. And as proposal costs increase, there is usually a corresponding drop in ROI (i.e., win rate). That's because the larger expenditure is rarely an investment in better proposals, but in more proposals.

It's fairly typical for volume sellers to spend about 70% of their proposal budget on writing losing proposals. But that's not the worst of it. The greater cost is that those hours could have been diverted to higher-value BD activities, such as positioning their firm for success in advance of the RFP. I remain convinced that the vast majority of awards go to the firms that invest substantially in the pre-RFP sales process. 

You need to invest more in your best proposal opportunities. What about the argument that most of the cost is borne by overhead staff who you have to pay for anyway? You still suffer opportunity costs because they could have spent more time on more promising proposal efforts (not to mention marketing, which is frequently neglected in A/E firms). Plus, if most of your proposal labor cost comes from marketing staff, I would question your commitment to producing winning proposals.

Having reviewed hundreds of proposals, I've observed that most fail in the area of technical content. Rarely do they reflect the firm's true expertise and insights. Why? Because the technical experts invested too little of their time in the proposal effort. Yes, I understand the demands on their time. Which is all the more reason why they shouldn't be wasting time on proposals that have little chance of success.

You shouldn't be using proposals to introduce (or reintroduce) your firm to the client. I advocate a "no know, no go" policy. In other words, if you weren't talking to the client before the RFP was released, you shouldn't be submitting a proposal. There are exceptions, of course, but I consider them rare. I addressed this issue in a previous post, but I'll recount two reasons that stand out: (1) if you don't know the client, you're usually going to lose to someone who does and (2) if you haven't been gathering insight into the client's issues, you're not going to be able to write a strong proposal. That means a mediocre first impression—another opportunity cost.

Bottom line, the volume strategy usually ends up diluting your value and wasting a substantial portion of your BD budget. Yes, it can be a step of faith to say no more often and trust that less is more. But you can take courage from the fact that the best firms have already taken that step.

No comments: