Having a Business Development Strategy is vital for all businesses. Fifty percent of companies fail in five years or less. One in three companies continues to operate after ten years. These statistics come from the Small Business Administration. The most common reason is that they run out of cash to keep the businesses going. One key reason for this type of business failure is that many lack customers because they have not attracted them or given them a reason to return. Hence, they run out of cash because they have limited revenue. A poor business development plan or lousy execution of it is usually a key contributor.

The frequent assumption is that with a great idea or fantastic product, customers will demand it, and sales will grow. The theory that great products lead directly to strong sales is not accurate. Even with non-strategic investment in marketing, this approach usually does not have a good outcome.

Macro and Micro Strategy

Having a business development strategy is critical, whether it is part of the business plan or separate. Each area or department within a small to medium-sized business must have a specified strategy, plan, or set of goals. There is both a macro and micro component to the strategy. What we do in each area must align with the overall strategy to be successful.

This strategy, plan, or set of goals will determine how they (departments and individuals) will contribute to the company’s overall strategy and complement the plans of other departments instead of competing, which frequently happens. When there is competition and unaligned goals, it often creates only the illusion of success. Individuals usually take actions that are not in the best long-term interest of the organization to benefit department metrics.

What is Business Development:

Business Development intends to create long term value. Some examples of this are:

• Improved image of the organization 
• Growing market share and customer loyalty 
• Improving the quality of life for customers or clients 
• Offering a unique value proposition

All for-profit and non-profit (NGO) organizations are started to provide some value to one or many groups. We must not lose sight of that as they continue to operate. With a good plan, it should be easy to answer the question of why the business exists. The strategy should provide long term value to:

• Customers 
• Employees 
• Community 
• Investors 
• Owners and other Stakeholders

Business Development Strategy vs. Sales Plan

Business development is the overall strategy that drives sales, marketing, customer support, and other functions. In other words, this is the high-level activity where we think about all the building blocks (sales, marketing, customer service, accounting, etc…) and how we will use them to build a business that meets or exceeds its objectives in creating value. This is a long-term activity that will adapt over time but also helps to drive consistent behavior for long term growth.

The sales plan is part of the business plan that focuses solely on how the organization will gain new business and customers. It is both strategic and tactical and is intended to be a tool that assists your organization with execution. It is a way to define the goals of the sales organization:

• Company Analysis
  • Goals
  • Culture
  • SWAT Analysis
• Customer Analysis / Market Segmentation
  • Profile including size & share
  • Needs & Wants
  • Use case
  • Support expectation
  • Incremental sales potential
  • Price & Value sensitives
• Competitor Analysis
  • Competitive Intelligence
  • SWAT Analysis
• Business Climate / Environment
  • Economic status of markets and geography
  • Technology
  • Social & cultural
• Collaboration / Partnerships
  • Business partners, distributors , suppliers
  • Cross promotion
• Sales targets
  • Net sales
  • Margin
  • Profit targets
• Products
  • Benefits & Resource allocation (ROI)
  • Market share
  • Targets Markets
  • Pricing Strategy
• Sales Representatives
  • Training requirements
  • Products assigned / coverage
  • Key activates required
• Promotion strategy
  • Advertising methods
  • Public relations
• Budgets & other resources in support

The intent of the list above is to guide you on elements that should be considered for a sales plan. As each business is different, this list should be tailored to your situation to have the most impact.

Sometimes, sales plans rely on historical performance, then make some assumptions that extra efforts by salespeople, adding headcount, and running a promotion or changes in the market will yield better results.This type of planning rarely produces consistent, reliable results and can lead to failure. Without an excellent Business Development Strategy, three issues are likely:

1. Limited sales prospects 
2. Few prospects convert to customers
3. Customers buy from competitors

Marketing Funnel (New Thinking)

Frequently, one of the items discussed that is fundamentally part of Business Development Strategy is the Marketing Funnel. The Marketing Funnel is usually described as having three segments:

1. Attract prospects (attract potential buyers, referrals, and influencers)
2. Build engagement (educate, build trust, build brand equity)
3. Conversion (% of prospects that become clients/customers)

It is our opinion that there is a fourth segment that is not typically identified. This segment is the lifeblood of a successful business, and it is Retention (Customer Retention).

Customer Retention is Profitable

The cost of sales to these customers is much lower, and nurturing these customers leads to long term success. To learn more about the benefits of customer retention, please read some of our other articles. As the group of retained customers grows, they will continue to purchase. The marketing and other costs associated with those sales will be lower than a new prospect that has moved through the funnel.

Summary:

Why strategy matters

There are many ways to develop a Business Development Strategy and implement it. The critical question is: Does your business have a specific strategy based on both your physical and virtual presence that attracts prospects, prepares them to be a customer, converts them to customers then focuses on their retention?  

Involve everyone

Having a specific plan that identifies how each person or group in your organization will work together to attract prospects, build engagement, facilitate their initial purchases (Conversion) then retain them for the long term is critical for business success (Retention).  This is the intent of a Business Development Strategy.

Within this series is another article with tips related to Business Development Strategy.

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