Selling to Procurement: Win less than 4.2% of RFPs, or more than 50%. Your choice!

Do you recognise this situation? An invitation to respond to a Request For Proposal (RFP) lands on your desk cold – unexpectedly. You quickly scroll through it and there seems to be a very good fit between what the company is asking for and the solution, service or product you are offering. Do you submit a bid or not? How likely are you to win that RFP, given you haven’t had the opportunity to influence the requirements? That’s the question I’ll be answering in this article based on more than two decades of working in Procurement and Sales.

The average RFP win rate is 4.2%

To be brutally honest with you, the chances of winning are dismal. One figure that I’ve heard quoted is that there’s a 4.2% chance of success.

An RFP win rate that low may sound too pessimistic – particularly if you are already aware that most Procurement professionals don’t like to take more than 5-10 suppliers through an RFP process. And the reason for that is that it takes a lot of work, not only to draft the RFP and get the requirements right, but the evaluation process is also a drain on internal resources. The more suppliers, the more work, the more time spent. And if there’s something Procurement professionals don’t have enough of, then it’s time.

So, if there are 5- 10 suppliers in a normal RFP process you would have thought the average RFP win rate would be 10-20%. But that’s not the case. So, what’s going on?

Some win more than their fair share

In the real world, RFPs aren’t as fair and unbiased as they look like on paper. So, some companies win much more than their fair share of RFPs, sometimes achieving RFP win rates of more than 50%. That, of course, drives down the average RFP win rate overall. Bearing that in mind, an average RFP win rate of 4.2% sounds plausible in my opinion.

The companies that win more than their fair share are likely to have influenced the RFP requirements before the RFP was even issued. So, their fingerprints are all over the RFP document – they’ve almost drafted it in parts or in its entirety. Perhaps not literally in the sense that they haven’t actually written the document. But in some cases, they might as well have, because the specifications are a perfect match to their Unique Selling Points.

3 key factors affect your win rate

Okay, other bidders’ ability to influence the requirements pushes down the average win rate. But that’s not the only factor that can adversely affect your chances of winning.

Procurement’s motivation for issuing an RFP is another factor. They may for example want to benchmark the incumbent supplier against the market to see if they are still getting the best deal. And if they are not, they will use those other bids as a tool to negotiate a better deal with the incumbent supplier – a supplier they may be happy with overall.

In that type of scenario, the odds of winning are probably a lot lower than the average 4.2%. But that doesn’t mean the chances are zero. I’ve seen a company snatch a contract, worth tens of millions, away from an incumbent in that type of situation. They simply proved themselves by having a much more compelling proposition than the incumbent. So, the buying organisation decided to switch even though that was never their intention initially.

Of course, not all RFPs are concealed benchmarking RFPs. Some are RFPs for new solutions, services or products where the buying organisation has a very open mind with respect to supplier selection, and the requirements are written in a way that does not favour anyone in particular.

For those types of RFPs, the average RFP win rate is probably closer to the 10%-20%, depending on how many suppliers are taken through the process and whether your company is a household name the buying organisation trusts, or a newbie they’ve never heard of.

So, while your likelihood of winning an RFP where you haven’t influenced the requirements are generally very low, the actual percentage depends on a number of factors such as:

• What type of RFP you are bidding on;
• Whether you are the incumbent supplier; and
• Your general reputation and brand visibility in the marketplace

Invest 30 minutes of your time to become Procurement savvy

If winning more RFPs and dealing more effectively with Procurement is important to you, then you could really benefit from using the proven process that I share during my free 30 min. online events called, “Sell more in less time by taking control of your relationships with Procurement”. But grab your seat quickly! After 10 January 2023, the webinar will no longer be available.

Just click on the button below to register. The timer indicates when the next available session starts.