The greatest myth about business development vs sales [By Chong Yan]

Oftentimes, when people ask me what you do for living, I answer, “I am doing Business Development.”

The typical responses I will receive once I answer are, “Ah, you are doing sales!”, and “You mean like…sales?”. Even after I decided to write this article, I still have friends and colleagues asking me “Really? What is the difference?”

It is a common misconception that Business Development (BD) and Sales are interchangeable terms in the B2B sector. This is not entirely wrong, because in some organisations, both the BD and Sales functions lie within the same person or division – the same person will be acting like a BD executive and at the same time, a Sales representative for the organisation. The fact is, in terms of functionality, BD is a high level, strategic function, whereas Sales is a tactical and operational function. Both of them create different values for the organisation, playing different but complementary roles and responsibilities in the sales cycle.

The roles and responsibilities of BD and Sales in a typical B2B sales process are as follows:

B2B-sales-process

  1. Identify target market

In most companies, this step is not included in the sales process because the target market(s) has been decided by the Top Management team. However, the reason we include this as a part of the sales process is due to this step being one of the most important responsibilities of a BD function.

BD needs to collect market intelligence on the target segments and markets to determine which market and segment will be the most profitable for the company to penetrate into.

Other than identifying target market, BD also needs to be involved in product development, as BD will better understand the market sentiments as compared to other divisions in the company.

 

  1. Prospecting & 3. Initial Contact

Both BD and Sales are required to do prospecting as well as initiating contact with their target audiences, but the purpose and nature of discussion will be very different.

BD focuses on establishing strategic partnerships with other businesses that will complement the company’s existing offerings. For example, an HR system provider’s BD would look for HR consultants to form an alliance so that they could offer a one-stop solution for their clients.

Sales focuses on targeting the end users of the offerings. In the HR software provider’s case, the Sales team would speak to companies who might require an HR software.

 

  1. Pitch & 5. Close the sale

When it comes to pitching stage, BD needs to convince the business partner to establish an exclusive partnership between the two companies and discuss about the method of collaboration. Continuing with our example, it could be a simple collaboration in which the HR consultant would refer the HR system provider to their clients. Alternatively, both companies could come together to develop a solution for their clients, which would entail both consultancy and implementation.

On the other hand, Sales will need to persuade the end users to engage them, and often times they will need to negotiate on the pricing and some of the terms and conditions of the project. It is a pretty straight forward process for Sales at this stage, because all they have to do is follow the sales Standard Operating Procedure (SOP).

 

  1. Relationship management

BD and Sales also have different objectives when it comes to relationship management:

BD is there to make sure that the strategic alliance is unbreakable, and to continue discussing different collaborations that can indirectly contribute to the company’s Profit & Loss, including organising outreach activities together, co-publish thought leadership articles, etc.

Sales is there to maintain the relationship with the clients, to ensure recurring business and referrals.

 

In summary, if there is only one thing you take away from this article, refer to this graph:

BD-vs-Sales-structure

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