By Linda M. Koch, FSMPS, and Donna J. Corlew, FSMPS, CPSM
One of the most common questions in marketing discussions today is, “What is the
return on investment?” Successful marketing leaders realize a truly effective marketing effort encompasses many different types of activities:
- research and strategy development
- prospect identification and relationship building
- development of appropriate collateral materials and social media content
- responses to specific project pursuits, with compelling arguments as to why your firm is the best choice
Responding to requests for quotation accounts for a large expenditure of marketing dollars, and yet many firms don’t know the impact of those activities on their bottom line. As today’s marketing departments are tasked with doing more with less, understanding the true value of a pursuit can provide guidance about where to spend precious dollars and resources that can reap real results for your firm.
Firms have tools to capture time and expenses incurred by technical teams on billable projects. These same tools can be used to collect information on how marketing and business development professionals—as well as technical staff supporting a pursuit—spend their time.
Tracking efforts of marketing, business development, principals/management, and technical staff engaged in a pursuit provides the true picture of its cost. If your team is making the effort to convey your understanding of the client’s needs and
bringing your best ideas to the client, then it is a full-team effort to produce the proposal, deliver a presentation, and negotiate a contract. By tracking the efforts of all individuals involved, no matter their role in the pursuit process, principals gain an understanding of where costs are incurred and how resources are used. This information allows firm leaders to make informed decisions about how best to utilize finite resources to generate
the greatest impact on the firm’s bottom line.
For example, you’ve been invited to propose on a project where you know you have only a one-in-five chance of winning, And you also know this type of project yields a low profit margin. Having an historical database of pursuit costs allows you to determine whether the cost to pursue this particular project is worth the investment (and the risk). Is your time better spent on developing an existing relationship, or creating a content-rich newsletter to help gain visibility in a new target market? Measurements allow you to analyze ROI on various efforts and allocate time more effectively.
Marketing managers can use this historical database to identify trends in peak workload and adjust to keep balance and sanity among the team. If, over an extended period, your team is consistently working overtime, an examination of the firm’s go/no-go process could be in order. Documenting the number of hours spent on pursuits also could support the argument for adding resources.
Define what you are tracking
Once you’ve decided to track pursuit costs, how do you do it? Does your time get charged to a general proposal/pursuit category? Or by client? Do you drill down into effort expended on each pursuit? Do you track the time technical talent is engaged
in developing schedules, approaches, or other client-specific information that sells your team as the one that understands the client?
For a true measurement of a firm’s investment, begin tracking as early as possible in the pursuit to capture time spent on positioning efforts. Each firm has different systems and processes for tracking labor and expenses. Ideally, you should work with the accounting
team to set up standard task codes to track effort and expenses in four areas for each client you pursue:
1. Client contact and strategy/positioning (activities in advance of the Request For Proposal)
2. Proposal (once the Request For Proposal goes live)
3. Presentation (preparation and performance)
If you mirror the process used for tracking billable project time, it will help ease staff members’ angst, since they are familiar with that approach. Use these codes on timecards and expense reports, so you can develop reports to track progress against budget and watch for “creep.”
Some firms track time only after the Request For Proposal is released. Honestly, that’s not an optimal situation, but some tracking is better than none. If that’s the only tracking you can do, then do it.
Implementing a process requires support from firm leadership to encourage everyone to charge their time accordingly. Engaging the accounting team in the process also is important when successfully tracking pursuit costs.
Variables on investment
In over two decades in this industry, we have yet to see a “one-size-fits-all” proposal. So, why do we think there is a “one-size-fits-all” cost? A number of variables influence pursuit costs:
Large scope versus smaller scope
Multi-million-dollar scopes of work require a longer lead time to reach decision-makers, identify pain points, create your strategy, and develop technical approaches. Even as a sub-consultant, the effort needed to provide focused, relevant qualifications and technical insights can be staggering.
Public sector versus private sector
A public-sector pursuit often requires much more effort because of strictly-regulated procurement requirements. There are generally more steps in the process, and greater competition because of the public nature of the solicitation. It can take more effort to make a client take notice of you in a sea of 50 other submissions. Conversely, private-sector proposals are generally less complicated, and take less time to prepare (although there are always exceptions).
Potential profitability of project type
Most firms we know would rather put their efforts into pursuing projects that offer higher potential for profitability. Knowing what those project types or markets are should be a factor in your decision to pursue.
Size of firm
While small firms can compete with the mega-firms, they may not have the resources or capacity to generate the same level of effort. Teaming with another firm could bolster your efforts and also distribute the risk.
What will they do? What are they capable of? Can you compete on the same scale, or differentiate your capabilities and talent to offset any competitive edge they might have?
It’s a balancing act
Not all pursuits require the same effort. On a pursuit-by-pursuit basis, consider the level of effort required to win the job. Have frank, honest discussions with the pursuit team about when to pull out all the stops, and when to scale back. Consider your priorities
when preparing multiple submissions. Be realistic about what your team can accomplish. A thoughtful, well-crafted message can go a long way. Don’t ever fall into the “let’s-just-submit-something” trap. It will come back to haunt you in the end.
Documenting the number of hours spent on pursuits could support the argument for adding resources.
The Value of Tracking
For a true measurement of a firm’s investment, begin tracking as early as possible in the pursuit to capture time spent on positioning efforts.
Proposals as introductions
Just say no. Really.
Invest those dollars and your team’s energy in getting to know the client and their drivers in preparation for the next opportunity.
Impact on go/no-go decisions
One of the questions pursuit teams despise is, “We’ve spent XX amount of dollars on this client over the past two years on eight opportunities. Why do we think this one will be different?” It’s a valid question—are we making progress toward working with that client, or are we still just one of the pack? What other efforts, pursuits, or billable work will suffer for the time spent on this pursuit? If you’ve spent considerable time and effort pursuing a client over an extended time period with little or nothing to show for it, your leadership needs to decide if it’s worth the continued investment. Tracking pursuit costs will help them do that.
About the Authors
Linda M. Koch, FSMPS, CPSM, is director of marketing and business development for Pfluger (http://www.pflugerarchitects.com/), a regional architectural firm with a focus on education facilities in San Antonio, Austin, and Houston, TX. Linda is a past
president of SMPS Boston and Northeast Ohio. She can be reached at firstname.lastname@example.org.
Donna J. Corlew, FSMPS, CPSM, as Chief Whatever It Takes Officer for C*Connect in Nashville, TN, works with firms across the United States to facilitate market research, make connections, build chemistry, and coach sales and marketing teams. Donna served
as president of SMPS in 2007–08. She can be reached at email@example.com.
This article originally appeared in the SMPS Marketer and is reprinted with permission of SMPS.
About the Society for Marketing Professional Services
The Society for Marketing Professional Services (www.smps.org) is the only marketing association dedicated to the A/E/C industry. SMPS represents 6,000 marketing and business development professionals working in architectural, engineering, planning, interior design, construction, and specialty consulting firms located throughout the United States and Canada. SMPS and its 55+ chapters benefit from the support of 3,700 design and building firms, encompassing 80% of the Engineering News–Record Top 500 Design Firms and Top 400 Contractors.