While often thought of as similar company segments, the business development vs. sales consideration is much larger and more complicated than it first appears. Here is what you should know about how these areas resemble and differ from each other.
What Is Sales?
Sales is the department that focuses on closing deals with customers. While the specific details vary by company, a sales development representative may visit leads, demonstrate products, answer questions, handle objections, or even draft contracts with potential clients.
Sales, by nature, has a near-future focus. Anything about finding customers is usually the job of someone else, so they do not worry about future advertising plans. Instead, they adapt to the needs of the moment and focus on maximizing profit for the company.
Most sales departments focus on the current quarter and, occasionally, up to one quarter ahead if the company has something especially big planned.
Some companies look at things through the framework of a three-step journey for buyers. There is the awareness state where buyers learn of problems, the consideration stage when they’re evaluating ways to resolve the problem, and the decision stage where they’re picking the solution.
Sales departments focus almost entirely on this decision stage, intending to sell their product as the answer to a problem. More rarely, sales departments may notice lost sales and provide feedback on product improvements that would help make sales easier.
In the end, this department comes down entirely to closing the deal and earning money for the company. Most other matters are ultimately secondary to a sales department, and that’s appropriate.
Sales can and should focus on closing deals. It takes work to give great presentations and personalize contacts with customers to maximize the chances of closing a deal. Unfortunately, most businesses focus on this to the point of neglecting business development, and that’s where the problems start coming in.
What Is Business Development?
Business development is the part of a company that focuses on identifying and attracting new business. Many people think of this as the early stage in lead development, where people quantify potential leads and decide whether to pass them on to sales.
That’s part of business development, but it is not the entire role. A good business development department also considers the strategies and tools a company needs for improving future sales. If the company is not growing more leads, it is probably in trouble.
Now, this is not universally true. Some companies have a small number of high-value contracts and do not need to grow a customer base constantly. That might not even be possible for products or services that have fixed demand.
In most cases, though, business development needs to consider what, where, and how to sell products in the future, as well as who to sell them to. That includes essential roles like providing input on when to hire new personnel, get new manufacturing plants, or otherwise modify the company’s development plans.
To go with our example from above, business development focuses on customer awareness and consideration. This can include things like convincing people there is a problem when they didn’t realize it existed. Most businesses want to solve any problem that’s hurting their bottom line, so informing them of those problems is an effective business development strategy.
What About Marketing?
Going by the description above, business development can sound a lot like marketing. However, if you analyze them closely, these departments have fundamentally different roles.
Business development focuses mainly on things like strategic partnerships and business relationships, particularly when those will help the company grow and reach more people. Marketing focuses more on direct-to-consumer strategies.
To give an example, business development might decide that Company A is a good fit for growth because it attracts a potentially valuable audience. Once that’s been identified, they may negotiate with Company A for advertising opportunities. After that, they can hand things off to Marketing, who will create advertisements and manage things going forward.
Why Are These Separate Functions?
At this point, many business owners want to know why this is split at all. There are advantages to having all development and outreach centered in one department. However, there are two main reasons that the roles are split: specialization and the challenge of reaching new customers.
Put simply, reaching new audiences is hard. Whether it is negotiating for sales in new retail stores or analyzing market trends to figure out new audiences, many parts of business development take weeks or even months of full-time work to complete. That’s not even counting the effort for finding and qualifying leads.
Business development is hard enough that it usually requires people who can focus entirely on this job without the pressure of having to meet other quotas or metrics. This is especially important because business development fails quite regularly.
That’s one thing most professionals do not want to admit, but it is true. However, if you look at it another way, failures in business development are often the best result you could hope to expect.
I’ll explain this now. Any lead that doesn’t get passed to sales is technically a failure because someone in your office spent time on it. However, rejecting leads before they go to sales usually means you spent a minimal amount of time to determine if they were a good client or not. You cannot find good leads without having a way to locate and reject bad leads.
Business development can also fail for other reasons. Emerging technologies, real estate prices, and even federal legislation can throw an unexpected wrench into development plans. Employees in business development should strive to succeed, but they should also feel that it is okay to fail sometimes as long as their overall results are good.
The other challenge is the focus on specialization. Most employees cannot be excellent salespeople while also studying and focusing on business development activities. The roles are complementary but distinct enough that anyone who tries to focus on both will not excel in either.
If you can hire separate people for these roles, it is usually better to. Small companies may combine these tasks, but the sooner you split them off, the better.
As you saw in the section above, there are many differences between sales and business development. However, there are more differences we have not even touched on yet. Here are some of the most significant considerations.
Companies often overlook this in the business development vs. sales debate. Ultimately, sales departments do not care about cost savings except to the extent they can save money on their work.
Business development departments, in contrast, may look across the entire company to find areas for cost savings. This is particularly useful when they need more funding for developing revenue but cannot get it from other sources fast enough.
This goes deeper than just trying to save money, though. Business development departments often focus on strategic partnerships, which include figuring out which jobs they can outsource to other companies and which can remain in-house.
With the growth of the service economy, and especially the tertiary sector of functions like financial services, there are more opportunities for outsourcing than ever before. Similarly, there are many ways to achieve previously impossible cost savings. Business development departments can help find those.
Sales departments mostly use existing technology to perform their work. If it is not helpful for closing a deal, it is not worth considering. Sales departments may occasionally provide feedback on what they’d like to use, but they rarely go out to look for technology.
On the other hand, business development departments will actively research new and emerging technologies to see if they’re a good fit for the company. That can include things like examining other companies, testing technologies, or speaking with people who are already using them.
Most companies want to minimize the amount of technology they introduce because every bit of added complexity makes things more difficult. Accordingly, business development needs to judge not just the value of the technology itself, but the ease of including it in their company. Sometimes, the challenges of technology can stop its use even if the tech itself is good.
Similarly, business development departments may look at how their company’s technology and products could meet the needs of potential clients. This often involves close discussion with the marketing, sales, and R&D departments to figure out what’s worth focusing on.
Negotiations And Networking
Many business initiatives require so-called soft skills, such as networking, lobbying, or negotiating. These can be spread across regulators, governmental authorities, partners, vendors, agencies, and anyone else involved with making or selling a product or service.
All of this ultimately falls under the purview of business development. A business development office should know when and where these types of skills are needed. It should also make sure the company has people with those skills available.
This is not the same thing as project management, which we will discuss in more detail below.
Product management focuses specifically on meeting regulatory and market requirements in each area a company is selling a product. Some things are legal in one region but restricted in another, so entering a new market could require customizing products or creating entirely new ones.
Business development departments often help consider these types of details, usually well ahead of releasing products. This is especially true if a company wants to launch a product worldwide on the same date rather than introducing it to new markets later.
Sales departments usually have short-term projects with simple, clearly defined goals. These suit their near-term objectives, which are often the only goals they have as a department.
Business development departments focus on broader project management, including things like where to get products. This often involves extensive research into the cost and time for different opportunities. Business development departments often give the final approval for a project or at least a recommendation on it.
Once that’s done, the actual project is handed down to the appropriate team, and from there it moves through the rest of the company.
The role of vendors is slowly changing as new products, technologies, and services become available. However, business development departments often help manage vendors while also determining when and where vendors will be most helpful.
For example, some products may need dedicated couriers for regular deliveries or specialized customer support services. There is no end to the possibilities here, and it only gets more complex as a company grows.
At times, a business development team may also decide that it is a good time to stop using a vendor and do things internally. For example, Amazon used to ship things through regular mail but eventually switched to an internal shipping service so they could control more of the process.
This often wraps into cost savings. Generally, if something is cheaper to outsource, business development teams will advise that. If it is more affordable to do it internally, or there are other benefits to doing that, they’ll provide advice in that direction.
Business Development vs. Sales: Final Opinion
Sales is fundamentally a short-term department. The focus is always on improving revenue and making the most of qualified leads. Sales departments may work closely with marketing groups to plan initiatives and make sure people are ready for them, but they do not look any further ahead than needed.
Business development is fundamentally long-term. This department focuses on finding and making the most of opportunities for developing the company, including all of the many forms this takes.
However, despite everything, business development teams rarely have the final say on most decisions. Instead, approval usually needs to come from an executive or someone in another department based on the advice that the business development team offers.
This may be the hardest part of business development. While they can research and recommend anything they want, they also need to accept and work around any decisions they disagree with.
Sales departments, in contrast, usually have broad reign to do as they wish within the limits of their budget. In that sense, the sales department has much more freedom than business development teams do.