Business Development Vs Sales Why Clarity Matters

10th July 2020Business Development

business-development-vs-sales-understanding-difference

Business development vs sales is a hot topic right now as the world sinks into recession.  

How you generate revenue is vital.

Are you in business development or are you in sales?

Chances are that however you answer this, someone is going to tell you that you’re wrong!

Or even that the question doesn’t matter because business development and sales are actually one and the same thing.

Let’s start by being absolutely clear that business development and sales are in fact different but equally valuable activities regardless of the size, sector and maturity of your company.

Without business development you won’t grow. Without sales you won’t survive.

What is sales?

Businessdictionary.com defines sales as:

“The activity or business of selling products or services. An alternative term for sales revenue or sales volume”

Sales is therefore essentially a transactional activity. It’s based on finding potential buyers for the products and services that your business already provides and selling these to them on mutually beneficial terms.

Sales can be a one-off transaction or a series of repeat sales. The sales cycle – i.e. period of time between identifying a prospective customer and closing the deal – can also be short or long.

You know that you are in sales when you:

  • Have a target related to the number of products you have to sell. Or a budget for the revenue that you have to achieve in a given time period
  • Work to a defined process for managing sales cycles for your products and goods. Typically this will include “forecasting”, “prospecting”, “quotes/offers” and “closing/conversion”
  • Follow pre-defined strategies to maximise your units sold or revenue generated according to business needs. These may include volume discounts, introductory or end of line offers, and bundling
  • Enjoy ongoing marketing support to raise awareness of your products and services, generate leads to connect you with prospective buyers and provide collateral to help you pitch and win orders

What is business development?

In my in-depth article on what business development is and isn’t I define business development as:

“The process of identifying and implementing long-term growth opportunities within and between business organisations”

What drives business development is therefore the search for entirely new ways of creating value.

Indeed, the creation of this value may involve products and services which your company may not yet offer and for which it needs to partner with third parties.

As a result, business development is necessarily a longer-term activity than sales. And, unlike sales, it does not generally have nailed-down revenue targets or tightly defined processes or methods. At least not at the initiation stage.

This is because business development is focussed on future value. Moreover, the path to unlocking this value is often not fully clear at the launch of a new business venture.

You know you are in business development when you:

  • Work with other companies to jointly develop products and services or to integrate, co-brand or otherwise build synergistic partnerships where common customers are shared and added value is generated
  • Operate inside your company as a kind of intrapreneur. You break down traditional silos, bring together functions and individuals that don’t normally collaborate to drive innovation that results in the next generation of products and services
  • Research new markets, scout new technology and make new business connections outside of your company’s core business area
  • Have a timeline for your activities and expected results which extends beyond your firm’s quarterly or yearly business plan

The difference between business development and sales

Ultimately both sales and business development lead to revenue growth. However, how they achieve this and the lead time to impact the top line are entirely different.

Sales is essentially a short-term activity. It’s about maximising the opportunity to generate revenue from your company’s current products and services, using your existing resources and deploying market-proven strategies. The aim is to close deals.

By contrast, business development is a longer-term activity. It involves generating sustainable and profitable growth from new products and services, leveraging external partnerships and technologies and venturing into emerging markets capable of fuelling new demand. The aim is to open new opportunities.

So, the difference between business development and sales is very clear. Yet they are often confused.

How can this be?

Why business development vs sales is still confused

There are 3 legitimate reasons for the continuing confusion between business development and sales.

1. There is a clear overlap between business development and sales

While business development is longer-term and often broader in scope than sales ultimately it does lead to revenue generation.

Business developers tasked with the creation of new revenue streams from novel activities often stay with projects from ideation, through inception, piloting and launch. Only handing over to the established sales team when “new” becomes “business as usual”.

The demarcation line between business development and sales therefore becomes blurred.

2. The same person does business development and sales

Although sales and business development are different activities and often require different skillsets, many organisations are too small to have separate teams.

So, it’s not uncommon for the same person to be responsible for both activities. This is particularly the case where the business development projects themselves are specialised. Or, where sales becomes the natural extension of the technology used and the relationships built.

3. Business development and sales are intrinsically linked

Early stage start-ups often have prototypes or not-yet completely developed offerings which they still need to sell in sufficient volume to generate enough revenue to finance the next stage development.

In a very real sense, here sales and business development are intrinsically linked. Sell what you have now so that you can invest later in adding more valuable product features or addressing an adjacent market with an evolved service offering.

Sales has been rebranded as business development

There is of course a 4th reason why business development and sales are often confused. And I’m afraid it’s a deliberate strategy pursued by companies of all shapes and sizes right around the globe.

The sad fact is that they’ve purposely rebranded sales as business development. Even though the two activities are not the same. And despite the fact that they are equally valuable.

Why have they done this? It’s hard to know for sure. However, a number of factors are probably at play.

Firstly, the proliferation of titles generally. Secondly, the somewhat tarnished image of sales and thirdly, the belief that certain aspects of pre-sales such as lead generation and prospect qualification are actually business development activities.

This desire to rebrand sales is perhaps understandable. After all, we’ve all had a negative experience of being sold to when all we wanted to do was to make our own buying decision.

Naturally, this outdated image of the pushy salesperson does not fit with the way that companies and the salespeople they employ see their role today.

This is especially the case in professional services and technology where the rebranding of sales to business development is most prevalent.

However, the fundamental purpose of sales has not changed. Changing your job title from “Sales Manager” to “Business Development Manager” does not transform your role from selling what your company can deliver today to figuring out what and to whom your company should be selling tomorrow.

Summary

In this short article, I hope that I’ve cleared up some of the confusion over business development vs sales.

But why does it matter?

It matters because business development and sales are closely linked but obviously not the same.

If you run a company that needs to sell more of your existing products and services to grow, and yet set out to recruit business developers, you may be extremely disappointed.

After all, business development is about finding new opportunities with new products or through building strategic partnerships and alliances to extend reach. The main aim is to build new business in the future not to maximise sales in the here and now at existing or prospective customers.

Salespeople on the other hand are out in the marketplace right now interacting with potential buyers, helping them to understand how your products and services will solve their pain points or fulfill their wants and needs better than your competition. They will get you the revenue you need today.

Conversely, if you are looking for longer term growth from as yet untapped sources that won’t generate immediate revenue you may discover that your existing sales teams can’t or won’t identify or unlock these new opportunities. You will therefore definitely need business developers for this activity.

So, being clear on the difference between sales vs business development really does matter.

Thank you for your reading this article on business development

If you need support with your business development or sales from an external consultant, please don’t hesitate to Contact Chris Dunn Consulting