HOW DO I.........

MEASURE THE PROBABILITY OF WINNING THE BUSINESS

You have submitted your proposal and have been given an opportunity to present it to three people who make up the decision making process. A week has gone by and you have not heard anything from them. You now have a one-to-one with your boss and you know the question she is going to ask you........what are the chances of us winning the business? % probability is the best way to measure it. This is not a new concept, of course, as we use this type of language instinctively. Here are some everyday examples:Q. What are the chances of it raining this afternoon? A. 50-50! Q. Do you think you will get that new job? A. I think so. I am 90% sure I will be offered the job Q. How is Aston Villa doing in the League? A. I think there is a 75% chance we will stay up Now back to the question mentioned earlier............ what are the chances of us winning the business? What we need now are some probability factors that can be reviewed, discussed and measured. Here are ten typical factors:1. NEEDS Have we accurately identified all the needs, facts and figures Have we identified their pain points? 2. MOTIVATION Does this piece of work have a high level of importance for them? Is there a compelling reason driving this along i.e. do they have to go ahead? 3. ALLIES Do we have good relationships with all of the decision makers/influencers? Is someone fighting our corner at a senior level?

4. PROCESS What exactly is the decision making process? Who talks to whom, in what order? 5. MONEY Is there a budget for this project? (If not, could they find the money?) Are we inside the budget? 6. ENEMIES Which of our competitors are we up against? What do we know about our competitors proposals and tactics? 7. HISTORY Have we got experience and expertise in this type of work? Have there been any issues between our two companies in the past? 8. SOLUTION Does our proposal accurately address the needs? Do we have relevant, compelling testimonials to support our claims? 9. PEOPLE Have we got the right people on this project? (Who else should be involved?) Is there a good cultural fit between our organisations? 10. RETURN Does our proposal contain strong ROI arguments? For every 1000 they spend with us can we prove what they will get back? There may, of course, be other probability factors that you would prefer but, for today, lets assume that you are happy with the ten factors above. What do we do now? Lets take a project with a value of 60,000. If, having referred to the ten factors, y ou come to the conclusion that there is a 80% chance of winning the business you would take 48000 (80% of 60000 i.e. the measured probability) and include it in the forecast. Big proposals with a low % probability can be dangerous. For example, if you have a 5,000,000 proposal with a 20% probability you may decide that 1,000,000 (i.e. the measured value once again) would distort the forecast. You may decide not to include pieces of work if they are less than 50% likely to come off.

The table below shows three projects in the pipeline, including the two mentioned above. You will see that after applying the ten probability factors, the 5,180,000 top-line value of the three proposals have a measured value of 120,000! Name of Prospect 1 2 3 Total Murray Industries Smith Aggregates Beta Consultants Value of Proposal 60,000 5,000,000 120,000 5,180,000 % Probability 80% 20% 60% Measured Value 48,000 Not included 72,000 120,000

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Phil Jesson
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