Business development is vague. It is a marketing concept. It is a sales concept. It is used interchangeably with many other concepts in marketing, sales, and it’s used generally in business.
What it is not is easy to define. But, we will try to do that here. We will try to discuss business development and its various aspects. That way, you better understand how it might apply to your business.
What is Business Development?
Business development is about generating value for the business. The value is generated from three key areas. These areas include our customers, building relationships through things like partnerships, and developing markets.
An apt definition is:
When thinking and discussing business development, it is important to remember that it’s not exclusively sales. Nor is it exclusively marketing. It is somewhere in between but leans more towards the marketing function.
The Function of Business Development
As a function, business development would officially be classified as marketing. But, it also contains elements of sales. So, it makes sense that it sits somewhere in between these two functions.
Although this is the case, it deserves its own function. Particularly a function that is separate from sales. Seeing as business development has a wide range of focus areas.
It focuses on relationships, which take long sales cycles to deliver profitability. It is strategic in developing markets, which can tend to fall in the area of marketing. And, it works with customers to create more valuable relationships.
Thus, the ultimate function is to drive value through the three key areas from our definition above.
Building Relationships
The building relationships component of business development is an important factor that helps differentiate itself from sales. Relationships are long-term value generating partnerships.
These types of relationships can be seen in the form of partnerships with channel distributors in a given market. They can be referral partners, where both parties send customers to each other. Or, the relationships can be as simple as joint promotional efforts.
Whatever the case, the partnership is long-term and the value generated can scale.
Developing Markets
Market development can be seen as a business development function. It crosses into the domain when relationships, partners, and long-term value generating projects become involved.
To adequately use a market to generate business, and to grow a market, long-term relationships are necessary. Looking at this particular area is about segmenting markets, then using tactics to build the market.
Markets are a key area of focus.
Working with Customers
Existing customers are a great opportunity to build business. Working with existing customers to increase business can be a sales, marketing, and business development strategy.
When it comes to business development, working with customers is looking at long-term projects that generate business. This can be helping a customer grow their business. Then, they use more of your product, which increases your business. It can also be working with a customer to turn them into an influencer. This helps generate awareness about their process with your product.
This is just a small sample of the way’s customers contribute to a business development strategy.
Sales vs. Business Development
Business development gets mistakenly interchanged with sales. Both in terminology and in concept. If it is so easily mistaken, what is the difference?
To understand the difference, we need to understand that sales, in a basic concept, is about directly closing a deal with prospects and customers.
Where business development is about working on longer term business generating projects. These can also be considered deals.
The major difference between the two is the scale of the deals and the prospect of recurring business. In a word, it’s a more scalable concept than sales on its own. Which can be seen in the three areas of focus.
Which is why, as a function, it shares marketing and sales functions.
Business development is an important area of business. Though, it is important to understand its function, how it differs from sales and marketing, and how we can effectively use it to grow our business.