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KPIs Federal GovCon Business Development

The Ultimate Guide to GovCon Government Business Development Key Performance Indicators (KPIs)

The Ultimate Guide to GovCon KPIs

Set your GovCon organization up for success with these KPIs.

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“How do I know if my BD strategy is successful?”

It’s an important question to consider.

Often, contractors rely on gut instincts or the monetary success of to determine whether their business development strategy is effective.

But, unlike regular businesses, contractors in the Federal market have a more complicated BD/sales process.

Some things to keep in mind for GovCon organizations to be successful are:

  • Federal Acquisition Regulations (FAR)
  • Unique customer cultures
  • Internal political risk
  • Financial hurdles

Sometimes business development sales processes stretch across years, so it’s important for GovCon organizations to have metrics or key performance indicators (KPI) to gauge how effective their BD and sales efforts are along the way.

Having KPIs in place provides them with the analytics that they need to know whether an opportunity aligns with their industry benchmarks.

And makes sure that those organizations maximize their resources to ensure growth and success.

Having no KPIs is like driving down the road blindfolded.

It’s so important to know whether you are heading in the right direction, find the best path to avoid obstacles, and successfully reach your destination.

But remember, the “right” metrics may not be the same for every organization, so it’s important to find the right KPI for your business.

SELECTING THE RIGHT KPI'S

Many metrics can be tracked, but which KPIs are best to improve your BD process?

In Change Factory’s article, “Common mistakes with KPIs, they identified the three most common mistakes business make when selecting KPIs:

  1. Selecting KPIs that were not actually key performance indicators.
  2. Choosing too many “KPIs”.
  3. Creating KPIs that can’t be measured.

So make sure you align your metrics with the outcomes or goals you want in your BD or Capture Process.

One tip is to be selective when choosing your KPIs. Choose the best ways to measure your current progress. Then, you can reevaluate your metrics plan as your business evolves.

When selecting your metrics, it’s helpful to determine whether your KPIs are leading or lagging indicators.

Leading metrics are predictive of the future. For example, the probability of a win (Pwin) is a leading indicator of bid submissions.

Lagging metrics are often rear-facing and historical. For instance, a win percentage is a lagging indicator.

A lagging indicator only records what has already happened, while the leading indicator provides data to change your future strategy.

In this article we’ll go over some KPIs that can be used to measure your BD/sales performance, however, this is not an exhaustive metrics list but an introduction to some of the KPIs you might want to consider.

TYPES OF KPIS

Let’s imagine that your organization is already tracking revenues and profits as key performance indicators, so let’s focus on the following areas:

  • Bookings
  • Activities / Contacts
  • BD and Opportunity Pipeline 
  • Capture and Proposal

A metric for BD across an organization can be determined by The Capability Maturity Model® for Business Development (BD-CMM).

The BD-CMM codifies established industry best practices in Business Development into a framework that supports maturity growth through well-defined, proven growth paths. This metric is determined by an independent assessment, where several best practices are rated using a 1-5 scale.

BOOKING METRICS

One of the easiest BD metrics to track is bookings. Bookings are work that has been “won,” whether you have billed against it or not.

The booking is usually recorded when an organization is awarded a contract, and it’s typically broken into billings (what has been billed) and backlog (what is still to be billed).

However, in the Federal market, businesses get multiple award contracts, multi-year contracts, and task order contracts.

So BD typically focuses on “estimated bookings” (i.e., the expected value of the contract throughout their performance.)

CFOs and the financial community almost always focus on “funded bookings.” This is especially important in a publicly traded organization when bookings are most often estimated bookings.

This high-level KPI gauges BD success and measures value or actual vs. target bookings.

In the Federal market, many bookings occur near the end of the Government fiscal year (late September). So, the actual bookings have to be tracked against the forecasted bookings on a monthly or quarterly basis.

Sometimes it’s helpful to check bookings to see where corrective action might be needed. To do this, you might want to assess bookings such as:

  • Recompetes vs. new bids
  • Repeat clients vs. new clients
  • Business units, departments, or functional areas
  • Geographic locations
  • Market sectors or client types 

Knowing your current booking metrics can help you make decisions to be successful in future bookings.

ACTIVITY-BASED METRICS

Organizations often try to gauge their success by tracking activity-based metrics, like how many meetings were held or how many emails were sent.

These metrics usually try to identify how often team members are engaging in business communication activities such as:

  • Meetings
  • Phone calls
  • Emails
  • Social media activities
  • Networking event conversations

Activity tracking is used to make sure that those with BD responsibilities are being held accountable and doing the activities that, when done correctly, lead to improved win rates and revenue goals.

An example of an activity-based metric would be “arrange two meetings with new prospects per week” or “contact four former clients per month.”

It’s hard to measure the success of an activity because you only measure the number of communications and not the quality of the activity.

Oftentimes, having these metrics as KPIs often leads to resentment. Team members feel pressured to meet a set number of activities, and managers feel pressured to micro-manage ensuring those numbers are hit.

But BD professionals understand that it’s not the number of engagements but the quality of engagement that’s important.

Logging a phone call or meeting with someone on a specific date doesn’t mean that the interaction went well, that information was gathered, or that it improved the probability of a win.

However, if you want to use activity-based metrics as KPIs for your business, you’ll probably want to use Customer Relationship Management (CRM) software to provide this data. 

CRMs are a great way to gather data that can be analyzed, but one downside is that inputting the data into a CRM can take some time, which may be prioritized over meaningful interactions. 

BD AND OPPORTUNITY PIPELINE METRICS

Some of the most important business development KPIs are tied to the Opportunity Pipeline.

A pipeline lets you track your opportunities from beginning to end. The pipeline stages are usually unique depending on the organization, but in the GovCon market, many are aligned with industry best practices, like the Shipley Capture Process.

OPPORTUNITY PIPELINE SIZE

An easy metric is Opportunity Pipeline Size.

Here, most GovCon organizations look to have a pipeline that’s 5-7 times the amount of revenue needed from new business annually.

Other metrics can be used to measure the effectiveness of the entire pipeline, e.g., the total value of qualified vs. unqualified opportunities.

Others can be used to measure specific stages, e.g., Value of Opportunities by stage. Or even to identify the ratio between certain stages – e.g., Early Engagement vs. Win Ratio.

AVERAGE SIZE OF OPPORTUNITY IDENTIFIED

The Average Size of Opportunity Identified helps you understand the pipeline make-up and the number of opportunities that are needed to achieve the desired goals.

An example would be measuring the difference between large deals or task orders and the level of effort required from BD, capture, and proposals to win.

The pipeline timeline would also be a factor – task orders may result in bookings relatively quickly, while a Cat 1 acquisition may take many years.

PIPELINE VELOCITY

Pipeline Velocity is a KPI used by mature BD organizations to measure the speed that opportunities pass through the pipeline.

So it’s a measure of successfully moving opportunities from identification to fully qualified to solutioning, proposal writing, and finally to award.

The time that opportunities through the pipeline vary. Some task order contract awards can take a few weeks, yet others may take a few months…or even years.

VALUE OF OPPORTUNITIES BY STAGE

It’s important to track efficiency throughout the process.

You can expect some opportunities to be disqualified as you move through the process.

Some will be disqualified because the requirement was canceled, others will be disqualified because you didn’t have great customer communications throughout the process, and some because you can’t find the right partners.

Over time you should know the rate for opportunities moving through your pipeline. Remember, the better client screenings you do early on, the less time you’ll waste on poorly qualified leads.

QUALIFIED VS. UNQUALIFIED PIPELINE

This takes us to the next metric, which is the qualified vs. unqualified pipeline.

Most organizations have their definitions for what qualified means.

Still, in most cases, it’s an opportunity where the customer has a funded need, and somebody from your organization has engaged with them to figure out if they’re qualified to be a future client.

This qualified vs. unqualified metric is often used at a stage level.

For example, in the early stages, you would expect the ratio of unqualified to qualified to be high. Later on in the process, you might expect zero unqualified opportunities.

NEW VS. RECOMPETE OPPORTUNITIES

This is a growth strategy for Govcon organization is expanding into new agencies and adjacent markets.

The Value of New vs. Recompete Opportunities must reflect this focus. This is where you compare new opportunity value vs. recompete opportunity value.

The value can be potential revenue, strategic positioning of the company, future growth opportunities, and other forward-looking metrics.

The following pipeline metrics should also be considered:

  • Value of opportunities added over some time
  • Active opportunities by stage, priority, lead, customer, etc.
  • Opportunity pass/fail rate for by stage gate/review
  • Bid rate by the customer, type of opportunity, and pursuit size

CUSTOMER INTIMACY (CUSTOMER RELATIONSHIPS)

This metric evaluates the quality of your customer relationships. It’s a competitive advantage to have high customer intimacy. Better customer intimacy builds trust and can give you repeat business.

To assess customer intimacy, create a scale and give a score for each level. This could range from 0 – never met the person to 5 – trusted advisor.

Once you create this scale, give each customer a score based on the scale.

Next, group individual customers and develop averages for customer organizations. This trend will show your BD Teams or individuals’ where they can improve their customer intimacy for better customer relationships.

It’s been proven that organizations with lots of high-quality relationships have easier access to customers and can gain intelligence pre-RFP that their competitors might never get.

If you’d like to improve your customer relationships, try The Hi-Q Success Path. This method transforms professionals like you so that you can improve your Sales and Leadership performance and the way you engage with your customers.

QUANTITY AND QUALITY OF CUSTOMER INTELLIGENCE

This is a subjective metric, but often organizations will assess the level of customer intelligence during their post-award debriefs and lessons-learned sessions.

Effective business development (BD) personnel are accountable for developing relationships, gathering customer information, and shaping the customer’s thinking.

Strong relationships can result in higher-quality intelligence. So, while there isn’t an absolute metric for this, Your BD Team needs to gather and validate the highest quality intelligence they can.

RETURN ON BD INVESTMENT

This is calculated as the value of new bookings/ revenue generated from BD investment divided by the dollars invested in BD efforts to win the business.

RETENTION RATE OF BD PERSONNEL

This non-financial metric measures the percent of current BD personnel retained annually. This calculation usually excludes personnel removed or reassigned for non-performance or legal reasons.


👋 Read the second half of this guide:

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OUR GOVCON GUIDE COVERS:

  • Selecting the Right KPIs
  • Booking Metrics
  • Activity-Based Metrics
  • BD & Opportunity Pipeline Metrics
  • Capture & Proposal Metrics
  • Most Important GovCon Metric

    BD & OPPORTUNITY PIPELINE METRICS

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