3 Things You Need To Do Right Now To Improve Your Recompete Win Rate
Start Improving Recompete Win Rates Today
In 2015, the win rate for U.S. government contractor incumbents on single-award recompetes worth $100 million or more with two or more bidders was 30% (Bloomberg). Industry research estimates that it costs 4 to 10 times more to acquire a new customer than to retain an existing one. Simply put, keeping your customers is the first step in cost-effectively growing your business or market share...And most government contractors are giving it away.
“The customer relationship is the #1 factor in predicting recompete success”
i3 Design and Consulting has ten years worth of quantitative data that tells us one simple fact...the relationship between the contractor and the customer is the #1 factor in predicting recompete success. Almost all companies view price as the key element in determining their recompete success, but ten years of data just do not support this notion. Price is important, but only in the context of being in competitive range. If you are in this range, it's the relationship with the customer that is the most important factor.
But what about Low Price Technically Acceptable contracting trends? Good question. Consider the following scenario...You were working on an existing contract with a customer for the past three years, and the contract is coming up for recompete. Over the past six months, the customer has been giving you hints that your current best value contract is going to move to LPTA because of 'someone in acquisition'? Was your response to drop your price so low that you had to cut salaries and key staff to keep it? Was it to walk away, 'knowing' that you could not present a low enough price to win the recompete. Did you price it like you always have, pull your key staff to other contracts, and let the on-site staff change to a new company when you lost? Or did you ask yourself the fundamental question...Maybe it's not about price at all. Maybe the customer is using LPTA to get rid of us because they are unhappy with our performance and their personal relationship with us?
Ten years of data clearly show that if a customer has a robust and positive relationship with their contractor, they will almost always find ways to continue doing business with them. And conversely, if the relationship is weak, they will find effective mechanisms to change that contractor.
With that in mind, here are three things that you can start doing today to dramatically improve your recompete win rates:
- Establish a Customer Satisfaction and Loyalty Baseline.
- Objectively Evaluate the Relationship Between the PM and the Customer
- Instantiate a Life-Cycle Approach to Winning Recompetes
Establishing a Customer Satisfaction and Loyalty Baseline
Establishing a complete picture of contract/project performance is critical to the situational awareness necessary to consistently win recompetes. All companies know the financial picture associated with their contracts. Most understand their performance against contract requirements. However, few pull these items together with customer satisfaction and loyalty data to create a complete picture of the contractor/customer relationship. Often, financial performance and even technical performance masks how the customer views their contractor. It is not unusual to see contracts that are meeting all their Service Level Agreements, but the customer is unhappy with areas of performance that are not being contractually measured. If you are not asking your customer about issues beyond mere contractual performance and finance, you are flying blind and leaving your recompete chances to mainly luck. Today, establish a formal customer satisfaction and loyalty program in your company and value the data the same as you would your financial information. They are intimately linked.
Objectively Evaluate the Relationship Between the PM and the Customer
“When the customer relationship sours between the PM and the customer it takes 12-18 months to recover confidence with the customer.”
When is the last time a project manager said the following in a project management review, "The performance on my contract is horrible and my relationship with the customer is even worse." Never, right? Project managers are human and they are not going to paint a negative picture of their contract. Some may be fearful for their job, others may genuinely believe things are turning around, and some just have no idea on the current state of their relationship with the customer. Understanding the state of the relationship between your customer and the Project Manager is critical for two reasons: 1) the project manager is the primary touchpoint for the customer relationship and has the largest influence on that relationship, and 2) our data shows that when the customer relationship sours between the PM and the customer it takes 12-18 months to recover confidence with the customer. The question all companies should be asking themselves is, "How much of my work portfolio is going to recompete in the next 12 to 18 months and do I really understand my risk to losing it?"
Instantiate a Life-Cycle Approach to Winning Recompetes
Business Development can lose a recompete, but they generally are not responsible for winning it. The reason is that most companies ignore a recompete until it shows up on the business development radar about 12-18 months before the next procurement is expected. If you have a performance or a customer relationship problem on that contract/program, you are likely too late to positively affect a change on your chances of winning that work. Of course, it's possible and there are exceptional success turnaround stories in the myth and lore of every large company, however, if this is going to be your approach you will not be able to consistently achieve positive results. Every maxim of project management says that the customer relationship is built from day one. That's true, but what does that actually mean? What is expected of your project managers on day one, at the start of the year 2, or year 3? You must have an organization approach with consistent key milestones, activities, and management oversight throughout the contract focused on winning the recompete. You must be matching up your business development life-cycle (Shipley or others) to your operational life cycle.
Winning work is always tricky business, and there are a million things that need to go right for it to happen. However, winning recompetes is something that the contractor can and should have a much greater influence over. That influence is created by performing on your contracts and developing the human relationship with the customer (and the contracts shop). If your customer is not bending over backward to get you back for a second round, it's likely because they either do not want you back or at best they are ambivalent about it.
The i3 Design and Consulting Approach
i3 Design and Consulting LLC uses a data analytics-based approach that dramatically improves recompete win rate success. Built on ten years of data, the i3 solution enables an accurate analysis of re-compete risk and a proven approach that has driven dramatically improved recompete win rate success for our customers. Our approach has helped federal contractor customers improve from re-compete win rates of 36% to a sustained win rate of over 90% in less than two years.
Using our data analytics approach we accurately establish a recompete risk baselines at key milestones through the existing contract lifecycle. Using this baseline, we drive the needed activities on the existing work to drastically improve win rates at proposal time. Our approach includes a common organizational strategy for the company that can be institutionalized across the business portfolio and customized solutions for key re-compete pursuits.
For more information, visit us at i3designandconsulting.com or book an appointment online to chat with us.