Business Development vs. Sales: The Basics

So why is it so confusing?

Well, for one, the titles are often used interchangeably in organizations. Sales reps often refer to themselves as business development reps to avoid the negative connotations associated with salespeople. And “business development” is commonly used to describe everything from product development and marketing to sales functions.

Both business development and sales help grow your business. But while both activities have the same end goal to generate revenue, they do so in different ways.

For me, BD is anything that you’re doing with partners to grow the business — it could be sales-related, marketing-related, or product-related and it can apply to both new and existing markets.

Some companies’ business development efforts may concentrate on activities that expand their reach to a new audience, while others may focus on getting more ammo for existing markets to unlock customers they weren’t able to reach before. While the end result of business development is sales, a BD team can actually go about this in many different ways.

Sales, on the other hand, is a bit of a different story. You sell a specific product or service, with a clear value and price to an identifiable customer. It’s a tactical process that can’t happen until you identify the customer — sales teams usually generate revenue once they have the documented product and market fit to support the customer.

Business development lays the groundwork to identify a match between products, solutions, and a particular market segment. They don’t sell directly to customers — otherwise, they’d compete with the sales team. Instead, they work through partnerships to identify new customer segments and markets.

Business development explores, defines, and drives new revenue streams for their company. If they see an opportunity to expand their SUV line with hybrid features, they might develop a partnership and lay the groundwork to bring the new hybrid features and products to market. Or, they might look at creating joint marketing campaigns and aligning with other players.

Another difference is who the two teams work with. Sales teams work primarily with Marketing and Product (and the customer) to sell a product or service. Business development teams work closely with teams across — and beyond — the company to ensure their products and services are a good fit for both existing and new markets.

Another common area of confusion between sales and business development are sales development roles.

Sales development reps research, prospect and qualify leads and pass them off to the sales team.

Sales is a nuanced, detailed process — sales development formalizes the process of how sales reps persuade customers to purchase their products and services. They continuously review, evaluate, and improve methods for contacting prospective clients and customers to make sure it’s effective and cost-efficient.

Sales development roles evolved for two reasons:

1. It’s increasingly difficult to reach buyers. Today, you need to spend more resources and time, creating a longer sales cycle.
2. Specialization is more effective — the more background research and touches, the more likely you’ll connect and make the sale. Rather than have top sales closers waste their time researching companies and hunting for leads, sales development reps prospect and qualify leads for them.

Sales and business development roles are convoluted in today’s organizational structure; it can be hard to identify who is responsible for what.

But the distinction is critical. The two feed off each other. Without a business development plan, you risk unfocused market penetration and fluctuating sales cycles, which in turn affects your revenue forecasts and makes it difficult for sales teams to achieve their objectives.

Business development establishes the parameters for sales teams. They open up new channels and markets for sales reps to sell products and services in — and even establish the repeatable strategies and processes to succeed in those markets.

Without distinguishing between business development and sales activities, growth and revenue become a little black box of secrets that’s impossible to scale and grow — they require distinct, separate mindsets and metrics.

Not every organization needs to hire a full-time business development team right away. It depends on your goals and the type of product or services you offer.

For high-growth and startup organizations, it’s more a question of when, rather than if. In the beginning, business development is typically handled internally by the CEO and executive staff until you have the revenue to hire full-time employees dedicated to business development.

The question of when you should invest in business development resources also depends on your products and services.

For example, say you’re a website startup that wants to monetize your site through ad space, sponsorships, and content partnerships. Depending on the type of organizations you want to attract, you’ll need to hit traffic and audience benchmarks to invest in business development resources.

The line between sales and business development is often blurred if you’re a consulting or services company.

Product is scalable. The features, benefits, and pricing are clearly defined. Both sales and business development teams have clear parameters to work in — anyone with funds who’s interested can purchase a product or software.

On the other hand, if you offer highly specific, technical services, it becomes a little more complicated to differentiate between sales and business development—and to decide where and how to invest your resources.

Service businesses are harder to expand and scale. They’re very particular about the type of work they want. Many consulting companies have specific revenue benchmarks, industries, or sectors they work in exclusively. It can be a challenge to scale out detailed processes into different markets.

To accomplish this, you need more than just sales support. You need business development managers capable of selling your services, especially if you have detailed, consultative services that require a deep level of knowledge. If you’re unsure or don’t have the funds to hire an experienced full-time manager, try hiring a consultant or freelance business development manager to start.

Though they’re different, sales and business development teams aren’t entirely separate entities. They work adjacently with each other and are both instrumental to the company’s success and revenue.

When you’re looking into business development, there are several questions you need to consider:

• How much new business do you need? How much can you handle?

Before investing in business development resources, you need to know how much new business you want to generate and how much you can handle. For example, expanding into burgeoning new markets could be damaging to your company if you don’t have the sales resources to handle it.

On the other hand, you might also want to use BD to grow your reach and help you scale within an existing market. This takes pressure off of your sales team to do all the work. (True collaboration!)

Yet another example is finding partners who can help source business that your sales team would otherwise have to go fight for on their own. Essentially, these types of partnerships help your sellers bat above their weight — I’d classify this partnership activity as part of BD as well.

To have a better idea of when is the right time, determine the amount of business you need to achieve your revenue projections, then break it down further — calculate the number of prospects in your pipeline and sales activities needed to drive that amount of revenue.

If the numbers fall short of your revenue projections, it could be a sign you’re ready to invest in business development and strategically expand into other markets.

• What type of biz dev candidate do you need?

Next, determine the caliber of talent and experience you need to achieve your goals. If you have a straightforward, transactional sales process and are looking to grow your business development function slowly, a college graduate or young professional with a few years of experience could be good enough.

But if you sell high-value, B2B services that require a more consultative approach, you’ll need mid to senior-level experienced business development managers who can understand your product and have the experience to explore and launch it in new markets effectively through different partnerships.

For example, here at Copper, our BD efforts sometimes involve working with a partner to unlock a new integration (e.g. what we launched most recently with Quickbooks and Zendesk) that provides value to both brands’ customers and prospects.

If you’re unsure of what you need, go back and look at your revenue projections. The Small Business Association recommends that organizations that make less than five million a year and have net profits in the 10 to 12 percent range spend seven to eight percent of their gross revenue on marketing and business development activities.

Depending on your budget and goals, you can hire business development in-house or hire freelance or consulting support instead until you’re ready to hire a full-time team.

• What will your organizational structure look like?

Despite their seemingly interchangeable titles, business development doesn’t work directly with customers; they typically work on developing new partnerships with other organizations to expand your reach.

As a result, they need to be defined separately from the sales team in your organization. Here’s a sample organization chart:

First, this chart clearly defines sales and business development as separate entities. It establishes their roles and targets, ensuring they work together and aren’t in competition with each other.

Second, it shows the opportunity for a partnership between sales and business development working in parallel. After all, you can’t execute a business development plan successfully without sales support to close the leads.

Business development and sales complement each other — together, they lead revenue strategy, sales, and execution in organizations.

From getting the word out and leveraging a partner’s prospect base, to finding a way to market more effectively, to unlocking new use cases, to becoming stronger in the markets you already play in… the possibilities are literally endless.

Ultimately though, business development and sales are going to look a little different in every organization. If you can understand the distinction and separate mindsets of business development and sales teams, it’ll make it easier to collaborate and maximize the strengths of each.

Want more sales resources? Check out our blog.