No – you lost!
A team with whom I was working recently shared their win rate statistics with me. Out came a complex spreadsheet, with a summary that ran something like the following:
Open deals: 30%
Won: 30%
Lost: 20%
Result unknown: 20%
As a result, they explained, their win rate was 60% (in other words, the number of deals won, as a proportion of the number of deals won or lost).
I asked them to explain the difference between ‘open deals’ and ‘no result’. “Ah,” they said, “that’s easy. When we submit a proposal, we forecast when we think the customer will make their decision. Obviously, that can take some time, so we can’t include those ‘open’ deals in the win rate calculation.”
So far, so good. But what of the ‘no results’? Well, they explained, those were the deals that were no longer ‘open’, given the time that had elapsed, but where the company had never heard back from the customer as to the result of the bid.
“In other words, you didn’t actually win a piece of business?” I asked.
They – reluctantly – agreed, knowing where my logic would take me. For their win rate – apparently showing that they captured more deals than they lost – was, to my mind, somewhat misleading. For me, it hugely over-inflated the true picture, in which they were actually winning more like 43% (30 / (30 + 20 + 20). If they hadn’t heard back from the customer after a significant period of time, excluding the deal from the total felt like false optimism.
“Ah,” they commented, “but our boss wouldn’t be happy telling people that.” That’s OK, then…
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In our line of business, nearly 1/4 of all RFP sales processes in which we bid end up coming to a halt without any winner being declared. Because of the long sales cycle, customer-side issues such as change in their executive leadership or loss of funding often derail the best laid purchase plans. In such instances, we do separate these from wins/losses.
Hi Mikey.
I’ve seen that as well in some industries and I agree – if the client closes or stops the opportunity [for whatever reason, and did you check it was a real one at qualification ;) ] then it really should not be counted as a loss, but it should be tracked (it cost you to bid).
All the best for 2011.
Graham
And getting through the PQQ and RFI don’t count as wins either…but do as losses.