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Managing Business Development by Creating a Pipeline

A pipeline is a way of classifying opportunities through stages until they are awarded. A pipeline answers the question, "How many opportunities do I have to pursue in order to win a certain amount of business?" Pipelines are typically defined in stages:

  • How many leads have you identified
  • How many leads are you pursuing
  • How many leads are you bidding
  • How many leads did you win

There is no set standard for how you categorize the opportunities in your pipeline, so every company does it differently. But the main idea remains the same. What matters the most is you can start to calculate your targets. Start with your win rate. Out of the bids that you submit, how many bids do you win? You can use that percentage to tell you how many bids you must submit in order to achieve the amount of new business you want.

Once you calculate how many bids you need to submit, you need to know how many leads to pursue in order to achieve that amount of bids. Not all opportunities become RFPs. Some get cancelled by the customer, others you may decide not to bid once you learn more about them. A pipeline helps you determine whether you are pursuing enough leads to end up with the amount of new business you require to sustain or grow your company.

Once you know how many leads you need to pursue, you can calculate how many leads you need to identify, in order to select that amount for pursuit. The result is a large number of opportunities that you must identify and consider in order to select some number to pursue and some smaller number to bid. Of the ones that you submit, you will only win a portion.

To create a pipeline, first categorize the leads you are tracking. Then prepare a bar graph with the total for each stage. What you should see is a large bar for identified leads, and in each stage that follows, the bar should get smaller. When you categorize your opportunities this way, it forms a pipeline that can tell you about the health of your business development efforts.

  • If you see a lot of leads at the end, but few at the beginning, then once you submit them you don't have enough leads and will be living off your backlog.
  • If you see a lot of leads at the beginning, but very few at the end, then either you just kicked off a major new business development effort or people are feeling the pressure and throwing a bunch of unqualified leads into the system to make it look like they are doing something. Or both. Your backlog may take a short term dip, but if the leads are good it should come back up when the leads become bids. If you business is in trouble, the quality of those leads is a big "if."
  • If all the bars are the same height, then either you are not being selective enough and are passing leads from stage to stage unchallenged (ultimately bidding a bunch of low-probability leads that will consume resources and lower your win rate), or you are being too selective at the front end and only tracking opportunities that you know with certainty that you are going to bid.

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By Carl Dickson,
Founder of and PropLIBRARY

PropLIBRARY is our professional tool for people who want to win RFPs like their business depends on it.

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