Winning more profitable business to sustain growth and meet investor expectations is tough. Markets are becoming more competitive as barriers to entry fall. Established companies also face competition from newly established but well financed dot.coms. The rapid spread of e-procurement puts pressure upon margins.
A shake out is underway. Major corporations are doing business with fewer suppliers. Takeovers, the centralisation of purchasing, and direct poaching to buy market share can all result in the loss of hitherto satisfied customers.
Customers have unprecedented choice in terms of when, where and from whom to purchase, and by what means. When a competitor is only a ‘click’ away, and attention spans are limited, accessibility, differentiation, clarity of presentation and rapid fulfilment are essential.
Buyers are taking advantage of their strengthened negotiating position. More business is being put out to competitive tender. As new competitors are invited to bid, the prospects of winning a particular opportunity can fall.
As expectations rise, invitations to tender are becoming more demanding. Just getting onto the invitation list can be hard. Proposals get larger and more expensive to prepare. The cost of lost bids have to be recovered out of a squeezed margin on those won.
Failure to win a major contract could mean exclusion from the next generation of technology. Companies that win too few bids are driven out of business. Enterprises, whether large or small, need to become more effective at winning business, particularly in competitive bid situations.
Yet some companies – according to a flow of reports from the Winning Business Research Programme – are much more successful than others at winning new business and repeat business from existing customers. The studies cover construction, engineering, IT and telecoms, transport and distribution and other sectors. Major professions from lawyers and accountants to engineering and management consultants are also being examined. The findings are consistent and compelling. A wide gulf exists between winners and losers.
Evidence from the ‘winning business’ series of reports suggest consistent winners and regular losers are distinct species with very different personalities. ‘Losers’ are undisciplined, unimaginative and reactive. They pursue far too many opportunities, and focus primarily upon their employers concerns and priorities.
Members of ‘loser’ bid teams respond mechanically to invitations to tender. They are pre-occupied with the practicalities of producing proposals such as obtaining cost information and CVs. They find themselves under pressure to meet submission deadlines. Yet they ignore tools that could speed up their basic activities and free up thinking time.
‘Losers’ ‘hold back’ and only commit significant effort when a prospect is ‘seriously interested’. They describe their jobs in terms of ‘submitting bids’. As winning business professionals they actually spend their days losing potential business as most proposals sent in are rejected. In companies with below average success rates bid team members are left to ‘get on with it’. Senior managers are rarely involved in individual opportunities.
‘Losers’ measure success by the number of proposals submitted. They make little effort to learn from experience or best practice. Rejection letters enable them to ‘close the file’ and move onto the next proposal. Above all, they don’t mind loosing. Failure is accepted as the norm. Phrases such as ‘you can’t win them all’ are used.
[‘Losers’ use rather than value their existing customers. They haggle over prices and margins, and discourage ‘variations’ from standard offerings that might create ‘extra work’ and cause ‘systems problems’. They avoid personal commitment to their customer’s businesses, and are reluctant to establish on line links because of worries about viruses and ‘loss of know how’.]
‘Winners’ are very different from losers. They are far more confident and proactive. They identify prospects with growth potential that would make good business partners. They take the initiative and approach those they would most like to do business with.
‘Winners’ ruthlessly prioritise available opportunities. Turning down some invitations to bid allows more effort to be devoted to those retained.. Periphonics has rapidly expanded. Managing Director, Martin Bartholomew argues that: “If it doesn’t fit bin it.” Construction company Henry Boot suffered a fall in turnover as a result of being more selective, but profitability significantly improved.
‘Winners’ want their customers and prospects to do well. They become absorbed in their problems and opportunities and focus upon their needs and priorities. They suggest, advocate and champion. In 1999 M.A.R.S won the overall BT eBusiness Innovation Award and a massive contract to supply on-line music services to the BBC. According to Marketing Director, Charlie Carrington: “I’ve stretched my customer’s imagination so far that it’ll never go back to the original shape”.
When winners do respond it is with commitment and clear objectives. They think through the outcomes and relationship they would like to achieve. They hit the ground running, and allocate sufficient resources early on to build up an unassailable lead.
Senior managers in the more successful companies participate in pitches. The visible and active support of senior management can be decisive in close contests. Redwood Publishing wrote its Managing Director into a proposal submitted to BT and won the business.
‘Winners’ try to understand how buying decisions are made. They consider the personalities involved and remain sensitive to changing buyer concerns throughout the purchasing process. They work hard to establish empathy, build trust, and match, the culture of prospects. Wang successfully demonstrated ‘cultural fit’ prior to becoming a supplier of support services to Dell.
Where possible, ‘winners’ automate the more mechanical aspects of proposal production. Eyretel sales staff use a laptop based tool for accessing presentational information, configuring and pricing solutions, and generating proposals. Time freed up is used to tailor responses, differentiate offerings and build relationships.
“With a complex product range you need to quickly communicate what you are about”, argues Don Fuller, Managing Director of sales support specialist cotoco. The cotoco team designed a CD-Rom based gallery for Jantec Printing. Virtual visitors can select animated presentations of solutions developed for blue chip clients, along with accompanying commentaries by Jantec’s customers.
According to Philip Moulds, Sales and Marketing Director of Jantec Printing, “We use the sales support CD to appraise new prospects of our forward thinking, creativity and capability as well as show a range of case studies and introduce satisfied customers.” Within 48 hours of the tool being introduced one order obtained was over ten times the size of an average contract.
[‘Winners’ care about their customers’ businesses. They look out for ways of ‘adding value’ or helping customers to solve their problems. They also lock out competitors by integrating their own systems and processes with those of their customers. ]
At the end of the day, ‘winners’ want to win. They are gutted when they lose. Win or lose, they regularly review their processes and practices, and debriefs are held to learn from both successes and failures.
The results of the Winning Business Research Programme suggest the winners could do even better. The ‘super bidders’ – the 4% who win more than three out of four of the competitive races they enter – are only very effective at less than half of the 18 critical success factors identified by the ‘Winning Major Bids’, report. Quite simply, there is enormous opportunity for most companies to significantly improve their ‘hit rate’.
The gap between ‘winners’ and ‘losers’ can be bridged. ‘Win rates’ are directly related to how many of the 18 key factors a company is good at. Similarly put more of the critical success factors identified by the ‘Developing Strategic Customers & Key Accounts’ report in place and your success at securing repeat orders is likely to increase.
So what should you do to increase your win rate? As a first step, get hold of the ‘Winning Business’ report for your industry. These spell out the relevant critical success factors. They also contain best practice case studies and commentaries by industry experts. If you are in a professional sector a related bespoke benchmarking service may also be available.
You could join the Business Development Forum, an experience sharing network for those responsible for winning business. Members meet and question leading practitioners. For example, while Marketing Director of OSI, the management support company, Harvey Parr explained how helping clients become more successful increased revenues and PBIT fourfold in as many years.
Consider how sales support tools could help put your message across. The recruitment of sales staff was constraining Eyretel’s growth. Training was also a problem in the rapidly changing telecommunications sector. A sales support tool developed by cotoco reduced the sales cycle by up to 50% and won the 1999 Award for Knowledge Management. The original investment was returned within four months by just one order.
Regularly subject your processes and practices to an independent review. Even though there is enormous potential for improvement many companies re-engineer almost every process except that for winning business.
Finally, business development teams are frequently overlooked when training budgets are allocated. The report ‘Bidding for Business, the Skills Agenda’ identifies the top twenty bidding skills and how they can be obtained. A thirty tool ‘The Contract Bid Manager’s Toolkit’ is also available. You can avoid being a ‘loser’ by consciously setting out to become a ‘winner’.
Details of ‘Winning Major Bids’, ‘Developing Strategic Customers & Key Accounts’, ‘Bidding for Business, the Skills Agenda’, ‘The Contract Bid Manager’s Toolkit’ and the ‘Winning Business’ series of reports can be obtained from Policy Publications
Prof. Colin Coulson-Thomas, Head of the Centre for Competitiveness Studies at the University of Luton, Leader of the Winning Business Research programme, Chairman of the eBusiness Innovations awards and Director of the Business Development Forum. He can be contacted at:
Prof Colin Coulson-Thomas Adaptation Ltd Mill Reach Mill Lane Water Newton Cambridgeshire PE8 6LY Tel: +44 (0)1733 361149 Fax: +44 (0)1733 361459 Email: [email protected] URL: http://www.ntwkfirm.com/colin coulson thomas/ For Books & Reports: The Interactive Business Bookshop