Get Advice You Can Use (It’s Free!)

Join over a thousand wonderful professionals who get free and fresh content delivered
automatically each time we publish. Your privacy and email address are safe with us!

My 2014 Proposal Hit Rate: Good Or Bad?

Like many firms in the A/E/C industry, the firm I work at is experiencing an uptick in business. We’ve got a lot of work and we’re hiring (If you know any schedulers or claims analysts looking, please…please send me an email).

But there is one thing we’re experiencing that I never have before. For the proposals we’ve submitted in 2014, our “hit rate” is 100%. Yes, we’ve won every contract that we’ve submitted a proposal on.

But is that a good thing or a bad thing? That’s what I want to explore with you today.

The Proposal Hit Rate

Especially when I do webinars, people always try to ask me what my “proposal hit rate” is. My answer is always this:

“It doesn’t matter.”

People always email me and ask what the industry average proposal hit rate is. My answer is always:

“Even if there was such a metric, it wouldn’t be a good measuring stick for your firm.

This idea of proposal win rate as measurement of success has been drilled into our head. I just don’t buy it. In fact, I’ve gone on record saying that it’s a flawed metric. Let’s just look at four scenarios to illustrate that point.

Let’s say there is a city with two architecture firms. Firm A has a win rate of 30% and Firm B has a win rate of 70%. Who is more successful? Firm B…right?!?!

But let’s look at it in more detail.

Firm A

  • Proposals Submitted: 20
  • Proposals Won: 6
  • Proposal Hit Rate: 30%
  • Proposal Revenue Submitted on: $10M
  • Proposal Revenue Won: $7M

Firm B

  • Proposals Submitted: 20
  • Proposals Won: 14
  • Proposal Hit Rate: 70%
  • Proposal Revenue Submitted on: $10M
  • Proposal Revenue Won: $3M

Now that you see it in more detail, what firm has been more successful? Clearly, it’s Firm A…not Firm B as we originally thought.

Now, there is an obvious fix to this, right? Don’t measure by number of proposals (which, by the way, everyone does)…measure by revenue submitted on. Ok, so using that approach, let’s look at another scenario.

Firm A

  • Proposals Submitted: 20
  • Proposals Won: 6
  • Proposal Hit Rate (By % of Revenue): 70%
  • Revenue Submitted on: $10M
  • Proposal Revenue Won: $7M
  • Proposal Revenue Won Last Year: $70M

Firm B

  • Proposals Submitted: 20
  • Proposals Won: 14
  • Proposal Hit Rate (By % of Revenue): 30%
  • Revenue Submitted on: $10M
  • Proposal Revenue Won: $3M
  • Proposal Revenue Won Last Year: $2M

Now which firm’s proposal efforts are more successful this year? Well, it’s safe to say you’d rather be working for Firm B than Firm A this year…wouldn’t you? But let’s consider even more detail.

Firm A

  • Proposals Submitted: 20
  • Proposals Won: 6
  • Proposal Hit Rate (By % of Revenue): 70%
  • Revenue Submitted on: $10M
  • Proposal Revenue Won: $7M
  • Proposal Revenue Won Last Year: $70M
  • Sole Source and Add On Revenue Last Year: $2M
  • Sole Source and Add On Revenue This Year: $68M
  • Total Revenue Last Year: $72M
  • Total Revenue This Year: $75M

Firm B

  • Proposals Submitted: 20
  • Proposals Won: 14
  • Proposal Hit Rate (By % of Revenue): 30%
  • Revenue Submitted on: $10M
  • Proposal Revenue Won: $3M
  • Proposal Revenue Won Last Year: $2M
  • Sole Source and Add On Revenue Last Year: $6M
  • Sole Source and Add On Revenue This Year: $1M
  • Total Revenue Last Year: $8M
  • Total Revenue This Year: $4M

Now which firm looks more successful? Firm A, right!?!?!

Now you might say, “Well, Firm A could have won a lot more work from proposals since it won $70M last year.” But consider this. We don’t know anything about the potential proposal opportunities out there for Firm A. There may have been $80M last year and $10M this year. Plus, if they won $50M more in work, that could easily put this firm out of business.

Let’s muddy the waters even more by looking at even more data.

Firm A

  • Proposals Submitted: 20
  • Proposals Won: 6
  • Proposal Hit Rate (By % of Revenue): 70%
  • Revenue Submitted on: $10M
  • Proposal Revenue Won: $7M
  • Proposal Revenue Won Last Year: $70M
  • Sole Source and Add On Revenue Last Year: $2M
  • Sole Source and Add On Revenue This Year: $68M
  • Total Revenue Last Year: $72M
  • Total Revenue This Year: $75M
  • Proposal Costs: $1M

Firm B

  • Proposals Submitted: 20
  • Proposals Won: 14
  • Proposal Hit Rate (By % of Revenue): 30%
  • Revenue Submitted on: $10M
  • Proposal Revenue Won: $3M
  • Proposal Revenue Won Last Year: $2M
  • Sole Source and Add On Revenue Last Year: $6M
  • Sole Source and Add On Revenue This Year: $1M
  • Total Revenue Last Year: $8M
  • Total Revenue This Year: $4M
  • Proposal Costs: $60K

Now we see that Firm A spent 14.9% of the proposal revenue won on those pursuits. Let’s not consider how the firm does its accounting (that can get messy). But let’s say that, without absorbing the firm’s proposal costs, they make 12% profit on each job. If you spent 14.9% getting the job, there is no way you can make a profit. That’s a big problem that Firm A needs to consider.

While Firm B only spent 2% of those revenues on proposal costs and they won 30% more with those efforts than last year, they are still down 50% from last year. The big question there is could they/should they have proposed on more?

The point I’m trying to make is this. To simply look to a proposal win rate as a measurement of success is foolish. Yes, even some of my closest friends will be offended by that statement. But I’ve just proven it to you.

But What About A 100% Hit Rate?

As much as I’d like to pat myself on the back, simply looking at that 100% proposal hit rate doesn’t give you any way to measure the effectiveness of our overall proposal efforts.

There is no reason to believe that the quality of our proposals has drastically improved this year or that there was less competition.

As Ford Harding once said to me, “If you win every proposal, that just means one thing…you’re not proposing on enough.” That’s our likely scenario. But were there proposal opportunities that we missed? That’s certainly the question that discovering our 100% proposal hit rate created in my head.

But unfortunately, you don’t know what you don’t know.

What Are Proposal Hit Rates Good For?

I’m not saying proposal hit rates are completely devoid of merit. Yes, they can be indicators. But as a measurement of proposal success they, well, suck.

What are your thoughts on proposal hit rates? Am I talking cRaZy? Or did I hit the nail on the head? Share your opinion by posting a comment.

Growing A/E/C Firms With Doug Reed

We’re back with another Design and Construction Marketing Podcast.

This time I’m talking to Doug Reed. I first met Doug at a SMPS conference we were both speaking at. His story fascinated me and I think it will do the same for you.

Here was, by all accounts, an engineer who grew his firm dramatically during the heights of the recession. And it wasn’t the first time he’d done it.

His unique approach centered around an accounting mechanism that most of our firms use (the timesheet).

In this podcast, Doug shares his story, explains how we can implement this system at our firms, explains why Principals and accounting folks “get it,” and even provides insight into why firms fail at growing their business in tough times. 

It’s really an amazing discussion that is worth your time.

Depending on where you are reading this: you can listen to the podcast below, at this episode’s page (where you can also download the mp3), or by subscribing through iTunes.

Show Notes

Doug’s Website

Doug’s Resources

5 Ways I Use Landing Pages To Identify Potential Clients

Hoks 404 error page

Last week, I let you in on the secret weapon I’ve been using for the last year to grow my lists of potential clients. I even shared with you my personal results. If you didn’t read that and you have any responsibility for your firm’s or organization’s corporate communications or internet marketing, I urge you […]

Continue reading...

What Is LeadPages?

Leadpages example

If you’ve been following along with my little internet marketing primer for the A/E/C industry we’ve already covered: How To Set Up An Opt In On Your Firm’s Website To Convert Visitors How To Put Together A Lead Magnet and Useful Content To Send Potential Clients Now it gets really fun because I’m going to […]

Continue reading...

What Information Should You Send To Potential Clients?

10 proposal insights lead magnet

In previous posts, I covered the problem most firm websites have and how to convert potential clients who visit your website. Today, I’m going to cover how to create a lead magnet and what to send these potential clients once they’ve signed up for your list. Building Your Lead Magnet The first thing you’ll send […]

Continue reading...

Convert Your Website Visitors Into Clients With Lead Magnets

hinge marketing lead magnet

In an earlier post, I explained why your website doesn’t have a traffic problem. I told you the real problem with your website is one of conversion. In this post, I’m going to give you step-by-step directions to fix that problem. What Is Conversion? That might be a new term for you. But conversion basically […]

Continue reading...

Listen to Me Share Proposal Wisdom And Make A Fool Of Myself

I’ve been experimenting with podcasting lately. I recently appeared as a guest on two construction-related podcasts. I thought I’d share these with you because I drop some proposal wisdom and I clear up any misconception about what I do for a living (spoiler alert: I have a job just like you). Construction Industry Podcast In […]

Continue reading...

The Systems That Help Me Deal With Email Overload

inbox-overload

When you add up all the email I get in my home and work accounts, I get hundreds of emails each day. As Tim Ferris likes to say, email is everyone else’s priorities for your time. And frankly, email overload is something I struggle with. I’m sure I’m not alone. Maybe you have hundreds or […]

Continue reading...

The Present and Future of Business Development in the A/E/C Industry

I struggled with whether or not I should publish this next podcast. The audio isn’t great. But after a ton of editing and post processing, I think I’ve got it listenable. And I think the topic and conversation is important enough to post in this less than perfect state. My guest on this podcast is […]

Continue reading...

The Ultimate SF330 Guide (with Template)

sf330 section g

If you’ve ever proposed on Federal, or even state, A/E contracts…you’ve probably run into the Standard Form 330 (sf330). People often struggle with the sf330. But you don’t have to. In this post, I’m going to explain: How to fill out the SF330 How to structure your information What to add to your submission I’m […]

Continue reading...