Where Relationships Fail Proposals

In looking at my first two articles, I wondered why so much focus on proposals. This is what I came up with:

1) Revenue begins and ends with a contract
2) Contracts are awarded based on a written proposal

Here’s a couple of things I’ve learned in 19 years selling facility service contracts:

1) Customers use decision making teams (formal or informal) to select contractors
2) Sales people may know some of a customer’s decision makers, but rarely all

Here’s what I’ve heard a gazillon times in 19 years selling contracts:

• Realtionships are everything

Which is not true. Relationships matter. But they’re not the answer to selling contract services. Here’s why:

Binders on a Table

Contractors’ proposals must sell when their salespersons aren’t in the room with decision makers. Picture a pile of competitive proposals on a table in a customer’s conference room. Which contractor is going to be selected?

Relationships don’t Guarantee Contracts

I take that back. Small contracts may be awarded on relationships alone. But medium to large contracts – no way. Customer-friends won’t jeopardize their mortgage to select their Contractor-buddies.

Relationships make Proposals Better

Pre-bid relationships provide salespersons access to customer information. The stronger the relationship, the better the intel and insight. Which should be used when developing proposals.

The Disconnect between Proposals & Relationships

However, years of wining and dining, and all that time and money go down the drain when customer insight doesn’t get into proposals.

Salespersons work to create great customer relationships. They understand customers’ business and service needs. They know what customers are trying to achieve.

However, that intel doesn’t make it into contractors’ final proposal.

Reality Check – Test it Yourself

Don’t believe me? Check any proposal. See if the following are in there. And if they are, see if they’re persuasive and compelling, or generic and boring.

• Specific problems the customer is trying to solve?
• Connection between customer’s service issues & how they impact their business?
• Description of the customer’s unique business situation & goals?
• A unique solution from the contractor, not off the shelf?
• The degree of fit between the contractor’s solution & customer’s needs?

What Are You Doing to Close the Gap Between Relationships & Proposals?

Add comment December 21st, 2006

Revenue On Track? Check Leading Indicators!

In our last post we looked at measuring proposal success. But it takes time to get on bid lists and work through the proposal process. It can take months, even years. We need earlier visibility into the sales pipeline.

So, what measurements are worth looking at?

Before getting started, let’s look at why we measure in the first place. Don’t want to end up expecting a silk purse from a sow’s ear.

Insight

Sales measurements provide visibility upstream into future revenue so we can sleep at night knowing the doors will be open next year.

Accountability

If we have employees selling, we want visibility into their efforts. We want accountability to see we’re getting value from our sales investment. This is true even if we’re the ones doing the selling.

Reality of Sales Measurements

The farther up the sales cycle a measurement is, the less reliably it’ll tell us what we want to know.

For example, the number of proposals submitted is a fairly reliable measurement of future sales. Multiply the number of proposals submitted by your historical win rate (use a conservative ratio for safety) and you can see what you’re sales will most likely be.

However, the number of meetings your salesperson had with a contact, or the number of mailings sent, doesn’t give the same level of clarity into future sales.

Why Bother?

Although we can’t bet the farm on sales measurements, they do provide visibility for improvement. They enable us to see how well we’re moving opportunities through the sales cycle.

And they identify where we should make improvements to sales and marketing activities. Think response rates from direct mail.

And they still provide accountability for sales management.

Leading Sales Indicators

Tracking everything isn’t a good idea. Pick the vital few measurements and use them to improve results. Here are a few to look at:

• Response rate to direct mail or online mailing campaigns
• Initial contacts (live phone or face2face) between your sales reps & decision makers
• Site surveys or visitations (before a bid)
• Web inquiries
• Prospects from tradeshows
• Call-in referrals
• Sales referrals from your other divisions, or your vendors & subcontractors

For any or all the above, track:

• Conversion rates from responses into proposals into signed contracts
• Quantities by source (i.e. number of educational prospects responding from web)

What leading sales indicators do you measure?

Let us know what measurements give you the confidence your revenue’s on track.

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Add comment December 18th, 2006

How Do You Measure Proposal Success?

Revenue comes from securing contracts, which makes winning bids a leading indicator of business health. That’s why we measure proposal success in the first place.

Typically proposal success is measured as new sales, revenue growth, etc. If we’re in sales management, we’ll also track closing ratio, win rate, or whatever we’re calling the percentage of wins to bids submitted.

More visibility into business health is always better than less.

So, it’s the win rate (my preferred term for closing ratio) that we want to take a closer look at.

The Number Win Rate

First, there’s the win rate based on the percentage of wins to bids submitted. It shows success based on number of bids.

This is great for bragging rights, which can help increase, or maintain funding to your sales group. Let’s face it, we get far more credibility for sales efforts when we can claim “$78 million secured @ 73% win rate” (shameless plug: this is my technical proposal writing success rate for clients).

The Dollar Win Rate

However, there’s a second win rate. This one’s based on the percentage of dollars secured compared to total dollars bid. My dollar win rate for clients is 59%, which means of all the dollars my clients bid, only 59 out of 100 were secured.

Sounds less impressive than winning 73 out of a 100 times (my number win rate), doesn’t it?

The dollar win rate only comes into play if your customers award less than the full amount bid – but this happens frequently in large bids.

How Do You Measure Proposal Success?

Are there better measurements out there? Tell me how you measure proposal success, post your comments and feedback here.

How Do You Measure Up to Your Peers?

We’re developing a contractors’ group to benchmark proposal success to peers in their same industry.

Names of peer companies and specific customers’ names are blinded. You won’t see other firms’ names and they won’t see yours. Come on, who would participate if that info was shared?

If you’d like to participate in this benchmarking project send an email to info@serviceperformance.com

2 comments December 12th, 2006