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Difference Between Business Development and Sales

sales

Although, it is a common misconception that sales and business development (BD) are one and the same thing, but it is not true, nor can they be used interchangeably. Sales is the main process to generate revenue by selling a product. In order to gain a competitive edge in the market, sales operations have to be continuously scaled and optimized by a business. This means recruiting more sales personnel and channel partners, and then proposing a solid compensation plan with realistic objectives to boost the sales. On the other hand, business development focuses on identifying the match between a product and a market segment with potential customers. The main purpose of business development is not to generate revenue. Instead, it is about building the right product-market fit.

Bryan Gonzalez, a sales development analyst at TOPO (research and advisory firm), said that there are two reasons why the entire sales process now includes business development process as well in addition to sales, i.e., a rising difficulty to reach buyers and advantages of specialization. To better understand the difference between the two, it is important to know what it actually is.

Sales

Sales are about making revenue by selling the product in the selected market segment to attain market leadership. The primary objective of sales is to seal a deal. Once a qualified lead is received by a business development representative (BDR), the sales team is responsible for taking the deal to the finish line.

Business Development

Business development and product management work side by side to build a competitive position in the market. Business development does not mean closing as many sales as possible in a small period of time; it is about building as many relationships as possible as the business progresses, which opens the gates of opportunities for the sales personnel to close their deals.

Differences

Scalability

The role of sales is to sell a product directly to the end consumer, whereas, when it comes to business development, its role is to sell the product through a partner in a scalable way. It means business development, itself, isn’t responsible for making the final sale. Scalability is a key factor here, as it allows businesses to utilize their sales staff or small groups created by partners to access the audience.

Size

Sales has more to do with the identification of capacity. This is the reason why there is more sales staff in a company and it tends to grow rapidly with time. But business development teams are relatively smaller and prefer to maintain a small size by making their way through existing partners. The creativity of business development lies in recognizing partners that fit the description while identifying a course of action to offer value to the end customer of a partner.

Focus Vs. Execution of Plan

The function of business development is to identify how much a business will expand and where that expansion will come from, and then interpreting the approach through which it can be achieved. Sales develop a relationship with end-users in order to link them to a final product or service. In other words, BD is about devising, focusing and measuring the plan, whereas, sales is about its execution.

Expansion Vs. Distribution of Products and Services

BD managers look for ways to grow the business in order to increase the revenue, and so they make strategies to expand the current market and find a new one. Sales managers, on the other hand, look after the distribution of product and services in the market and designate territories to sales representatives to achieve the pre-defined goals.

Pricing and Inventory Management

The prices of goods and services are critically observed by a business development manager. He also negotiates with manufacturers and distributors to set the right price, for example, if the demand for a particular product declines in the market, he might try to arrange a lower price in order to boost the demand and ultimately improve the overall revenue stream. So, business development is responsible for setting a price of product and services. Sales managers also deal with manufacturers and distributors, but the purpose of their interaction is to ensure that enough stock is available to maintain a reasonable inventory level. They use statistical information to identify the inventory requirements of a business and to measure the preferences of their customers.

Steering The Market Trends

Business development is about agility. It is one of the most important traits of a business development manager, because the market trends keep changing from time to time, and there are multiple factors that trigger such variations. Therefore, they have to make timely decisions and adjust the company’s products, services, and pricing accordingly as soon as they notice currency fluctuation and variation in consumers’ demand or trends. On the contrary, consumer trends are regularly observed by the sales manager to determine the ways of how performance can be improved. For instance, sales representatives may be directed by their manager to promote such goods and services that are similar to those sold by their competitors for profit.

Gathering Information Vs. Sealing the Deal

Business development is responsible for collecting as much information as possible about market leads, key problems, and a need to have a solution. The initial planning and working should be based on gathering this data to come up with a solid strategy. The sales staff picks up where the BD staff left off, as they strive to seal a deal. Their responsibilities are to show how the value proposition fits their business plan, compare their own product with their competitors’ product, provide a breakdown of a price, define the terms of the contract, set up a product trial, and devise an implementation plan.

Ability to Capture a Bigger Picture

The effectiveness of a business development manager is partially based on his ability to see a bigger picture beyond his own responsibilities and keeping his focus to achieve the targets defined by a business. For example, it usually includes working side by side with managers from different departments in a company to assist them in the preparation of presentations and management of contract negotiations.

The success of sales is based on their ability to be able to oversee a number of product outlets in different territories. This is where sales managers have to change their tactics according to the demand of that region in order to improve their revenues and boost profits.

Although, business development can be seen as a jack of all trades, but it should be noted that they cannot replace sales. In fact, a business would probably fail in the absence of a focused sales staff. Individuals working in sales department possess different traits than those working in the business development department, for example, they can understand the marketing techniques better than BD managers. If the purpose of BDR is to bring the key elements of business together, it is sales representatives who materialize the targets defined by BDR.

They are social engineering processes that are based heavily on understanding and impacting a human behavior that cannot be controlled by any business. This is why it is important to define, test, formalize, optimize, and scale the processes of sales and business development so as to gain market leadership.


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