Institutional money managers, commercial banks, ETF providers and asset management firms are always on the lookout for the best opportunities they can get. via RFPs. Sometimes, companies also receive RFPs directly, instead of via a public notification. This happens when the firm has a good market reputation, and the issuer wants them to contest for the respective tender/work. A company will win bids only when they reply to RFPs with their solution and pricing. At times, companies must track their RFP success rate to know how well they perform. Read on to learn about the key metrics used to measure the RFP success rate.
What is the significance of RFP success rate?
For drafting RFPs and submitting them timely, companies devote employees and utilise other in-house resources. When funds are utilised for any business activity, they should be used judiciously. The same goes for RFP processes conducted by in-house employees. Even if a company has hired a third party for RFP support, it needs to measure the success rate. RFPs can help win big contracts, which means more work for a company. Organisations that win more RFPs boost their revenue and reputation. By measuring the RFP success rate, firms know about their business stability and market reputation. Let us now understand some metrics that are used to measure the RFP success rate for a company.
- RFP volume
Knowing the RFP volume is essential for a company. They must know how many RFPs they receive monthly, quarterly and yearly. If the company does not receive enough RFPs at frequent intervals, it has a low reach. Consider RFP volume as a category that contains several sub-metrics. These include the following.
- ‘RFP received’ is a metric that tells the number of RFPs received by the company in a given time.
- ‘RFP submitted’ is another metric that describes the number of RFPs responded to by the company.
- RFP participation rate is a percent value that tells what percentage of RFPs a company responds to. It can be calculated by dividing the RFP received by RFP submitted and multiplying the result by 100.
- RFP win percentage
To find the RFP revenue, tracking the RFP win percentage is essential. Companies with a high RFP win percentage should be proud of their sales team. Divide the number of RFPs won by the number of RFPs submitted over a period. Then, multiply the obtained result by 100 to know the RFP win percentage. Ideally, the RFP win percentage for a company should be over 47%.
- Shortlist rate
The shortlist rate is also a percent value that tells how powerful the responses are. The buyer shortlists several RFPs to move to the next step. It then selects the winner from the shortlisted RFPs. Even if the RFP has been shortlisted, it is a positive sign for the company. Divide the shortlisted RFPs with submitted RFPs over a period. Multiply the result by 100 to obtain the shortlist rate for the RFPs. Some people also measure the advancement rate to know the effectiveness of their RFP process. The advancement rate denotes what percentage of RFPs were forwarded to the next level by buyers.
- Total RFP revenue
It is a simple yet powerful RFP metric that helps assess the company’s performance. In the CRM, locate all deals won by submitting an RFP response. Add the money involved in each RFP deal down to a single penny. Repeat the same process for different time cycles. If the revenue is growing after each cycle, the company is on the right path.
- Turnaround time
Drafting an RFP response is not a simple process. Different teams within a company work on the same response. Once all team members have submitted their responses, a final draft is prepared. The senior professionals in the company might spend some time editing the final draft. After so many processes, an RFP response is generated. The total time spent from accepting an RFP to submitting the final response is known as the turnaround time. If a company has around ten people working on an RFP, the average turnaround time should ideally be less than 48 hours. To reduce the pressure from in-house employees, a company can look for external RFP support services. Track your RFP performance with powerful metrics to improve results!
