How do you know if your proposals are good and if you are not missing opportunities? We are talking about the win ratio of proposals, also called the conversion ratio. You calculate this like this:
win ratio = all quotations approved by customer / all quotations issued in x time
Determining a good win ratio cannot be done overnight. It depends on the sector and then also by service or product. Still, you want to know your win ratio relative to your market. A benchmark, in other words. These are the most critical parameters for your benchmark.
Number of competitors
In some markets, you have a lot of competition; in others, hardly any. The number of competitors matters. Your win ratio should be higher than the total market/number of competitors in a market with few competitors. So if you have two direct competitors, there are three of you. If you have a win ratio lower than 33%, you have work to do. Because then you immediately lose market share in absolute terms.
This component is less important if there are more than ten competitors. The customer compares only a few competitors.
Market position
How important are you as a player in your industry? Are you relatively small, or are you a market leader? If the buyers understand the market, as in Telecom, they almost always invite the first two or three in the market. As an industry leader, you often have a significant edge. This also means that you are missing opportunities if you have a lower scoring rate than 50% as an industry leader.
By contrast, 50% is hard to come by as a small party. If you score 30%, you are doing well.
Awareness of product or service
A product or service that is not yet well known to the general public sells harder. The customer does not see it as a solution to his problem or as fulfilling his desire. You have to explain more then. In many sectors, people are not nearly as progressive as they think. Cold feet are the order of the day. So if you have a product or service that is not yet at the maturity stage, your proposal scoring rate is often below 40%.
Homogeneity
You probably answer now that you are very different, and your services or products are not similar to the competitors. Step into a customer’s shoes and answer this question from their perspective. What do customers value? And how do your competitors deliver? Is it virtually the same, or are there significant differences? This so-called homogeneity is best seen from the customer’s perspective if you can easily compare your offering to the competition.
For example, a white loaf of bread is a white loaf of bread. The customer will then mainly look at objective things such as price, ease of buying the product, and the number of slices. And additionally to subjective things like taste & feeling in the store. So this is a very homogenous product.
The greater the differences, the better you can qualify whether a customer will choose you and the higher your win ratio should be.
The scope of the contract
The contract size is not about how big you think the contract is. It’s all about how great your client thinks the contract is. Is it a relatively minor purchase for him? Then he pays less attention to the purchase process. Outstanding proposals pick them right out. This is where your scoring rate should be higher than 50%.
All of these are different percentages. How do you bring this together in a benchmark so you can determine whether your bids are doing well?
Conclusion
Several things influence your win ratio. Therefore, it is essential to look at this carefully. Things to consider are the Number of competitors; Position in the market; Familiarity with the product or service; Homogeneity, and Size of the contract for the customer.
These things affect the potential win ratio. To understand your win ratio better, Stryfes recommends keeping a close eye on your own win ratio. By comparing these quarterly, you can easily see if the trend in your win ratio is improving.
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