Capture analytics is the science of measuring how well you have performed each of the activities in your capture management process and then correlating these measurements with the outcomes of your bids.
Understanding this correlation can help you make better decisions about what deals to pursue and how likely you are to win, and they can improve the accuracy of your revenue predictions.
The foundation for capture analytics is econometrics, which uses statistical techniques to isolate the degree to which each activity in the capture process contributes to the win. It takes a lot of historical data to do this correlation well, but when done correctly, it can become a powerful predictor of win rates and new business revenue.
So how does it work and how can you use capture analytics to your advantage?
Measuring capture performance
Capture management is a process that has a defined set of activities to be performed for every capture you do. Your capture team should follow a documented, repeatable process on every capture and make fundamental measurements of how well they are performing each activity in the capture process.
Making measurements provides a quantitative basis for assessing and optimizing your capture process. With measurement, you have a basis to improve your process; without it, you are just guessing.
You already use measurements in the proposal development process. When you do color reviews, everyone understands what you mean when you say the draft management section of a proposal gets a red score. These color scores are measures of the quality of your proposal. These same color measures can be used to measure quality in the capture phase and give you a consistent framework for measuring performance across your full business acquisition life cycle.
Measuring the quality of your pursuit decisions
The pursuit decision is the first decision in the capture management process. It is the decision that is made to establish a capture team and fund the capture effort. I like to use seven factors to evaluate how well this decision is made. If a good decision is made, you’ll probably win, and if it was not so good, you’ll probably lose.
Here are the seven factors I use to assess the quality of the pursuit decision. You can modify these factors or use your own. What is important is that you establish evaluation factors and measure how well the deal lines up against them.
- Customer knowledge. Do we know the customer, their mission, issues, concerns, preferences, requirements, goals, etc. and if we don’t, is there a good chance we can discover these during the capture process?
- Right solution. Do we have the solution the customer wants to buy, or can we create that solution during the capture process?
- Customer advocacy. Does the customer know us, our management team, our past performance, our reputation for doing outstanding work, etc., and is there a sense that the customer is favorable to our performing the work?
- Competition. How much competition will we face, and do we believe we can overcome these competitors?
- Win strategy. Do we have (or can we create) an acceptable win strategy?
- Financials. What is it going to cost to take on this pursuit and proposal effort and to start up the contract? What is the expected profit if we perform the contract well? Is this a good financial decision?
- Capture/proposal resources. Do we have (or can we get) the resources to conduct an effective capture campaign and write a winning proposal?
I rate each of these evaluation factors using the same blue, green, yellow, and red color scores that we use to evaluate proposal quality.
Hopefully, you have been documenting color scores for all your pursuit decisions made during the year and now have collected enough data in your capture analytics effort to begin looking at results.
Pursuit decision factor evaluations typically start out being fairly subjective, but over time, you can define what constitutes each color rating, and the ratings will become more objective and consistent. For example, customer knowledge from face-to-face meetings generally gets a higher rating than customer knowledge gained from reading websites. If you document the basis for each assessment, you will become objective and consistent in your measurements.
Predicting wins and losses
You will find there is an amazing correlation between the color scores in your pursuit decision, capture progress, and your win/loss outcome. When your pursuit factors are scored and you have more greens and blues in these scores, the data will show that you are more likely to win. The more reds and yellows, the more likely you are to lose. And the more data you have, the more confidence you’ll have in your predictions.
The mathematics behind this is called multivariate regression analysis. If you want to do these calculations, get someone with a good statistical background to set up the equations. It is not that hard to do, and you can set it up in Excel, but the tasking is intimidating to the novice.
Making effective management decisions
With data, management can make better decisions about pursuits and can do a better job picking winners out of all those deals your business development team wants to pursue.
Capture analytics is a tool to help management make better, more consistent decisions. It is an advisory tool and does not replace management judgment. Correlation is a statistical prediction process based on historical data, and individual pursuits might not fit the historical data used to make the correlation. For example, making a decision to pursue a program with red and yellow pursuit factor scores can be a good management decision provided there is a very high payoff and low investment; however, I would caution that you don’t want this to become the norm for your company. Another example is when you have red and yellow pursuit factor scores and still pursue a deal because you expect the government use lowest price, technically acceptable (LPTA) evaluation criteria. It makes sense to use a different set of pursuit factors for LPTA procurements since the standard for technical acceptability is low.
Using capture analytics will make you a better manager and a better decision-maker and help you deliver on the revenue promises you make each year to your shareholders.
Making the pursuit decision is one of the most important capture decisions an executive can make. If you have made these decisions well over the past year, you should be enjoying a winning season and be on target to deliver the revenue your shareholders are expecting. If you made these decisions poorly, you will probably be looking for a new job as you read this article.
E-mail your comments to RLohfeld@LohfeldConsulting.com.
This article was originally published August 29, 2012 in WashingtonTechnology.com.