GPI 370 – Track and analyze your current win ratio on sales quotes to win more bids. How many bids are required to get one sales order?

Every company has a different business strategy to grow sales and increase the bottom line. Retail stores happily find out which products sell quickly off the shelves and painfully when they do not. Restaurants discover and discontinue the lousy food that their patrons toss and laundromats are told their washing machine prices per load are too high when the incoming traffic slows. Other businesses are more difficult and complex. One common thing that ties them all together is that you do not want to sell to everyone because if you do, you will find out you are throwing your money away.

Suggestions for measuring your bid process:

• Officially measure your number of bids, the dollar amount of those bids, gross profit or net profit calculate on each offering, how long the process required from start to finish and most importantly, if you won. This last one is either a yes or a no. ‘Good try’ does not count.
• After an adequate period of typical activity, stratify your bids (i.e. $1 to $5,000, $5,001 to $10,000, etc.).
• Which job dollar categories did you win?
• What was the win ratio on each of the categories bid?
• If you won 100% of your bids, your prices are too low. You are throwing money away.
• If you did not win any bids, you need to work on your estimating. Ask the buyer where you came in (i.e. 2^nd of ten, 7^th of 8 bids,  last, 15^th of 25).
• Look for relationships between the win ratio you experience to the net profit estimate you bid. If you are winning all of the low margin jobs, raise your price.  You cannot afford to stay in this group forever. You are throwing money away.
• If you are not winning any of the high margin work, evaluate your bids, consider what is different between your bidding and your competitor’s, lower the next few submissions slightly (your bid dollar amounts) and do this until you begin winning. (i.e. Your net profit % was 36% and the friendly buyer told you your bid was 2^nd out of 5 bids, so lower your net profit on the next bid.) When the competition is numerous, you need to test the market to see what wins work on the street.
• If you win only small dollar jobs, analyze the competition because you may be throwing away money in an uncrowded market. When there are few players, customers are willing to pay more to get work done.
• If you win only large dollar low margin jobs, ask yourself if you are the biggest guy in the field? Question your bids and see if you are throwing away margin dollars for no reason.  Even if you are not, do you dominate this market.
• If you have multiple estimators that only bid in their stipulated areas, vary their assignments and see if the win ratios change for different kinds of jobs. Not all estimators are the same.  Some are better than others and should be used to improve the rest of the lot.  Arrange for them to do some simple but effective training.