The Difference Between Business Development and Sales
Many information technology companies fail to distinguish between business development and sales. So what is the difference and why does it matter?
The short version
Business development is the process of finding the match between a product (or solution) and a segment in the market.
Sales is the process of systematically generating revenue with the product (solution) in the chosen market segment in the race for market leadership.
Business development will work very closely with product management on the competitive positioning and the feature set as well as with marketing for developing the most productive definition of the value proposition, the identification of the most effective communication channels and the most cost/effective lead generation process. This match-making process is based on continuous and close interaction with potential customers. The objective is not revenue generation, but finding the right product-market fit.
When we move into a new market (which may also be a new geographic market) where the environment is different from where we are already operating, then we need to go through the business development process first before we employ sales resources.
Sales is the tactical process of revenue generation when we have proven and documented product/market fit and defined the most effective way to support our customers’ buying journey. To achieve market leadership we will have to continuously scale and optimize our sales operation, which means hiring more and more salespeople (or recruiting more and more channel partners). We can define compensation plans with realistic objectives and quotas and we can benchmark salespeople against each other, optimizing the sales process.
When we confuse the two situations
Failing to distinguish between the two situations and the corresponding roles of the people we hire will result in unfocused market penetration, unpredictable sales cycles, unpredictable revenue forecasts, fluctuating revenue and processes that are impossible to repeat, optimize and scale. In such situations, revenue generation becomes a “black box” where some salespeople are successful and some are not, but we have a hard time putting our finger on what makes the difference.
Social engineering processes
Business development, marketing and sales are business processes just like R&D, G&A, manufacturing and logistics. I call them social engineering processes since they depend heavily on understanding and influencing the behaviour of human beings outside our direct control. Unless we define these processes, describe them, test them, formalize them, optimize them and scale them, then achieving market leadership will be by accident only. And I am afraid that achieving market leadership by accident is becoming less and less likely in the information technology industry.