Here’s why every B2B organisation should give equal attention to developing its pre-bid engine – the processes, people and technology .
A while ago HBR wrote an interesting paper titled – “To improve sales, pay more attention to pre-sales”. As not much management work has focussed on the pre-sales topic, it got us thinking what are the key actions B2B organisations can take which can impact their pre-bid capabilities (processes, people, technology) and thus help improve their odds of winning.
First let’s look at some of the relevant finding from the HBR paper. They refer an IT services company which was ailing in its pre-sales efforts:
1. 40% of opportunities had not been assigned a pre-sales bid manager five days after receiving an RFP.
2. As many as 5% of bids were simply dropped due to insufficient presales resources.
3. In addition, the sales reps spent 22% of their time on proposal development—more than double the industry standard.
4. The company’s technical presales experts were not assigned to the highest- opportunity bids.
5. There were frequent disruptions to their (presales’) assignments.
Obviously, these operational issues were impacting their win rates and sales performance. After recognizing and analysing, they bought in the following changes:
• The company developed a staffing approach that gave an at-a-glance picture of the availability and skillsets of presales staff a quarter out
• It redesigned and simplified its bid review and approval process
• Instituted a mechanism that allowed key account managers to provide suggestions and recommendations to the presales team immediately following a bid submission
As a result, of this new approach the company staff 15% more deals with presales resources and anticipate 30% more “must win” deals (for the same number of total presales resources). Sales reps’ time on proposal development was cut in half. If you already haven’t, it’s time to think more deeply about your presales – people, processes, and technology.
What else can an organisation do to improve its winnability?
Determine an optimal sales : pre-sales ratio. This is especially crucial in large value, complex solution sales. Depending on industry and territory this could be 1 : 3-5. An organisation we know used to follow what they called a TRIAD model – sales + technical pre-sales + industry consulting. Every account was jointly owned by the three, not just sales. Industry consulting group consisted of experts who had walked-the-talk in those very specific industries and knew first-hand about the challenges the business leaders in those organizations faced .. and how those could be addressed. Given that their solutions were industry aligned, this approach had a profound impact on the quality of the pre-sales engagement.
Providing additional ammunition to the sales organization rarely hurts. No wonder that the HBR article found that souping up the pre-sales engine can yield:
• 5-point improvement in conversion rates
• 6–13% improvement in revenue
• 10–20% improvement in the speed of moving prospects through the sales process
Pre-sales is a key component of any bid process and best practice suggests organizations will do well by investing more time and resources in improving their pre-sales capabilities. Whether it’s a pre-bid meeting or the solution creation, involvement of pre-sales is crucial Another report, this one by McKinsey, says - Effective presales activities—the steps that lead to qualifying, bidding on, winning, and renewing a deal—can help B2B companies achieve consistent win rates of 40 to 50% percent in new business and 80 to 90% in renewals.
Now, anything that is likely to give 6-13% improvement in revenue and 40-50% win rates in new business, should get the CXOs attention.
Comments and observations welcome at firstname.lastname@example.org.