RFP Response Trends and Benchmarks

We can’t emphasize enough the amount of effort and potential costs associated with developing an effective proposal. You must give careful consideration in making your decision to go for it. Loopio (n.d.) conducted a 2020 study of RFP responders to evaluate response trends and benchmarks from over 650 people across North America that were either directly involved in the RFP response process or managed an RFP response team. The study participant industries included software (22%); technology (hardware, telecom, and IT) (20%); financial, legal, and media services (20%); manufacturing and retail (15%); other (12%); and public sector (education, health care, government, and nonprofit (11%). The following summarizes key insights from the report 2021 RFP Response Trends & Benchmarks by Loopio (n.d.).

RFP Response Trends and Benchmarks

• Organizations responded to 150 RFPs in 2020 on average, with 18% of those surveyed responding to 101-250 RFPS, 9% responding to 251-500 RFPs, and 8% responding to over 500 RFPs in 2020. Small and midsize companies (1-500 employees) responded to significantly fewer RFPS than enterprise companies (5001+ employees).
   
• 40% of respondents indicated that they responded to more RFPs in 2020 compared to 2019, with 81% indicating that the reason for more responses was due to an increase in the number of RFPs that were received, and 39% indicating that they received more RFPs because they proactively pursued more bids.
   
• 21% of respondents indicated that they responded to fewer RFPs in 2020 compared to 2019, with 68% citing the reason for the drop in response rate was because they received less RFPs in 2020 (keep in mind that 2020 was impacted by COVID). Another 23% indicated that they were more selective about responding to RFPs, 19% indicated that the drop was due to less resources to respond, 11% indicated the drop-in response rate was due to a change in business strategy, and 10% indicated that their win rates were not high enough to justify doing more.
   
• Organizations responded to 65% of the RFPs that they received on average, with 22% responding to 76-90% of RFPs received, 15% responded to 91-99% of RFPs received, and 11% indicated that they responded to 100% of RFPs received.
   
• 72% of respondents use a go/no-go process to assess if they are likely to win an RFP prior to starting a proposal.
   
• On average the organizations surveyed win 47% of the RFPs that they bid on; 29% of respondents won between 50-79% of their bids and 13% won 80% or more; whereas 32% only won between 20-39% and 16% of respondents won only 19% or fewer bids.
   
• Those that had higher response rates also tended to have higher win rates.
   
• 75% of the top performing teams with response rates greater than 50% used a go/no-go process to decide if they should respond to an RFP. This could be an indication that those that are not using a go/no-go process may be winning fewer bids because they are wasting their time responding to RFPs that they are unlikely to win.
   

Common Reasons for Losing a Bid

The following indicates the percentage of respondents that selected each of the common reasons for losing a bid, interestingly, the reasons for losing a bid were often impacted by company size, role of respondent, and employee level of respondent, with larger companies more likely to cite price as the top reason; proposal managers and writers more likely to cite price and losing to competitors as the top reason; and executives and leaders were more likely to cite proposal quality and customization level, bad fit customers, or missed deadlines as the top reasons for losing bids:

• Price of our solution (56%);
• Lost to competitor (50%);
• Favored incumbent from the start (36%);
• Product doesn't meet customer needs (32%);
• The bid was blind (27%);
• We never found out why (12%);
• Proposal quality wasn't strong (8%);
• We missed the deadline (5%);
• Other (3%).

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RFP Response Team, Contributors, and Effort

The following includes key statistics related to RFP ownership and characteristics of the RFP response team:

Hours Spent

• On average respondents spent 23 hours developing a single RFP response with over 50% of respondents spending 5-20 hours on each RFP response, 32% spending 21-50 hours on each RFP response; and 9% spending 51-70 hours writing each RFP response;
• Large companies spent 27 hours on average compared to 19 hours in small and midsize companies; and the software industry spent significantly more hours than other industries at 27 hours per RFP response; respondents with the highest win rates spent 2 hours more on each RFP;
• 55% of respondents took between, 5 and 48 hours from start to finish on the turnaround time for an RFP response, 21% had an average response writing time of 6-10 days; 15% had an 11-20 day response time; 4% at 21-30 days; 2% at 31-60 days; and 2% greater than 61 days;

Team Members

37% of respondents indicated that the owner of the RFP response process was a dedicated RFP manager/writer or team; 18% indicated that the owner was both the proposal and sales team; 16% indicated sales representatives; and 14% indicated solutions engineers/consultants;

Team Size

• The average RFP response team size was 7, with 20% having 1-2 team members, 20% with 3-7 team members, 36% with 8+ team members, and 11% that did not have a dedicated RFP response team;
• A total of 9 people is involved in the creation of every RFP response on average, with 28% of companies involving less than 5 people and 33% of companies involving more than 10 people on each RFP;
• Respondents with larger teams and more contributors were more likely to have higher win rates which could be due to greater insights from across an organization or shared workload that provides opportunities for better quality proposals;

Use of Response Software

• Teams that use RFP response software have 2 more contributors on average, which could either be due to the software making it easier to involve more contributors or because larger teams are more likely to adopt software;
• 69% of respondents use RFP Response software and the technology industries were more likely to use it than other industries;
• The following indicates the percentage of respondents that selected each benefit for using RFP Response software:
  • content storage improved (65%);
  • time saving (63%);
  • automation of manual tasks (53%);
  • better quality proposals (45%);
  • completing more RFP responses (42%);
  • improved collaboration between teams (40%);
  • meeting more deadlines (36%);
  • enabled more team members to contribute (30%);
  • faster sales cycle (21%);
  • better win rates and/or increased revenue growth (16%).

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