“Business development” is a broad topic that has not one but at least a hundred different definitions. For some, it’s marketing, or at least a kinda-sorta marketing. For others, it’s a fancy name for sales or client onboarding.
No matter where you stand on defining business development, in the end, it boils down to whatever your business is doing to create growth. And business 101 tells us there are only three ways to do that:
- Increase the number of clients.
- Increase the value of a client.
- Increase the frequency of purchase.
How your professional service organisation decides to accomplish one or more of these growth opportunities defines its business development strategy.
This guide aims to help people new to the idea of business development understand why it’s critical for any organisation to set business development goals and devise a business development strategy. We’ll describe how such a plan can propel your firm or practice to new levels of growth and profitability.
By its conclusion, you’ll have a comprehensive understanding of what business development is. We hope it will energise and drive your own business development strategy, helping your professional service organisation grow better and boost revenue.
Let’s dive in.
What’s the Difference Between Business Development and Sales?
Many people conflate business development and sales, and the reason is simple. Bizdev success requires sales. Your sales team will play a vital role in securing the transactions that will feed your growth goals.
Confusing sales success for business development success is the same as confusing a healthy heart for a healthy body. A healthy body requires a healthy heart, but a healthy heart does not necessarily imply a healthy body.
In business development sales are crucial. You can’t:
- Get more clients without sales
- Increase the average transaction value without sales
- Increase purchasing frequency among your clients without sales.
But you don’t want a salesperson out there burning all of their time to create these opportunities, you want them spending their time doing what they do best, closing buyers who are ready. In this way, business development is all about creating opportunities for your sales person to close.
Business development directs you to:
- Establish and maintain relationships with prospects
- Learn about buyer’s personas, needs, and habits
- Increase brand awareness inbound leads
- Find new opportunities to promote growth
So, you can see business development is closely tied to sales. But to develop a robust business development strategy, it’s important to understand what makes them different. To keep it brief, sales is about selling your service or product and converting leads to customers. Business development is distinct from the sales process in that it seeks out and establishes new strategies and tactics for your business to grow.
Common Terms in Business Development Goals
Let’s return to our three growth objectives opportunities:
- Increasing number of clients. Also referred to as customer acquisition and sales velocity, this tactic is about your ability to acquire new clients and the speed at which you can do it.
- Increasing the value of a customer. This refers to both customer lifetime value and average transaction size.
- Increasing the frequency of purchase. This is simply the number of times a client pays for your services in a given time period.
What are sales velocity, customer lifetime value, average transaction size, and purchase frequency, and how do they fit in with your business development goals?
Though it’s not a frequently covered topic, sales velocity plays a huge role in your business’s ability to thrive and grow. This critical sales metric calculates how quickly sales prospects are moved through your pipeline. The faster deals are closed, the less time it’s taking to bring in revenue. It’s a simple yet powerful way to gauge sales health and determine how much value new customers provide over a given period.
Common tactics for boosting sales velocity include:
- Increasing the number of sales opportunities
- Driving up the average deal size
- Optimising personal win rates
- Shortening the sales cycle timeline
Customer Lifetime Value
Wouldn’t it be helpful to know what future value your marketing initiatives will generate? Customer lifetime value is a metric that lets you do just that. Tracking buyer journeys, improving content, and providing stellar customer experiences are all essential marketing tactics. But if you want to ensure long-term success, measuring customer lifetime value can help by identifying which clients are bringing in the most revenue so you can tailor your marketing to them.
It’s estimated 80% of future revenue growth will come from just 20% of your existing customers. That doesn’t mean you shouldn’t pursue new customers, but it does mean you should focus more effort on retaining these clients. Because as everyone knows, holding on to happy clients is much more cost-effective than acquiring new ones.
Average Transaction Size
It doesn’t matter if you’re selling widgets or accounting services, focusing on average transaction value is vital to increasing sales and profits. Many professional service organisation owners feel frustrated when business growth stalls. You can improve growth initiation results by reviewing how effective your revenue streams are and which business factors are affecting your profits.
To determine average transaction size, divide the total of all sales transactions over a given time (preferably a year) by the number of transactions in the same period. For instance, if your company had $250,000 in sales and 3,000 transactions during the previous 12 months, your average transaction value is roughly $83. Your questions now become, what can I do to increase this number? What if I did this or that? Common tactics for increasing average transaction size include:
- Bundling services
- Strategic sales approaches, such as “save 10% when you spend $500”
- Upselling and cross-selling
Finally, not charging enough in the first place is one of the most common reasons SMBs don’t see appreciable growth year to year. If this is true for your business, it’s important to remember you’re not in business to match your competitors’ prices. You exist to give your customers services they can’t get elsewhere and make a profit doing it.
Purchase frequency is the number of times a client pays for one or more of your services in a given time period. To increase purchasing frequency, you need to encourage people to use and pay for your services more often. For an accounting firm, that might mean encouraging your once-a-year tax filing clients to also invest in financial planning services. Law firms can increase cross-selling efforts or sell existing clients more of the same service. For instance, if you currently provide tax advice to a client who’s expanding their business, you can recommend other legal services they might now need. It’s all about giving clients a reason to come back and do business with you.
The Business Development Goal Setting Process
Setting goals for business development is much more involved than simply picking a revenue growth goal and working towards it. Part of this process is acknowledging the role of business development in creating new growth opportunities. This process of inventing new business channels, means we need two sets of goals.
Growth objectives (client growth, client value, purchase frequency) are benchmarks for high level goals, whereas your progress goals are more ground level, both should be done as part of a business development goal setting process.
Growth Goals/High-Level Goals
While it’s easy to pick a number, to select goals that your leadership and teams can rally behind requires a time investment to understand your current landscape. So we begin at:
Step 1. Determine where you are
- What are you currently doing to grow your business?
- How do you measure the results?
- How effective are your efforts?
Step 2. Chart a new course
Next, use your understanding of your current efforts to create a series of growth goals that aligns with one or more of those 3 objectives. Try to find goals that eclipse your previous successful performances, without seeming impossible. Involve your front line team, and listen carefully to their feedback before finalizing your decisions. Once you have your goals, select metrics to measure your progress, and deadlines for evaluating your results.
You now have a series of achievable growth goals. Next we need to create progress goals and connect them to our customers.
Pro Tip: If your organization uses revenue goals as their highest overarching goal, then you can develop growth objective goals by breaking down your current revenue by source (number of new customers, average revenue per new client, and average revenue of existing clients) with this information you can ensure that your growth goals align with your revenue goals.
Step 1. Determine how you got here
Evaluate HOW your clients buy your services and compare that to HOW other people buy services like yours. Look for channels you may be missing or underutilizing in your current efforts.
Step 2. Plan your progress
Develop strategies for how you plan to accomplish your growth objective goals.
Strategies should include WHAT (activities) you plan to do in order to achieve those goals.
They should also include HOW (Tactics) you will approach those activities to ensure/enhance their effectiveness.
Step 3: Create your milestones
Create a series of strategic goals for each of your activities including metrics to measure your progress and deadlines. Also create goals for tactics that are not 100% predictable (this can include things like situational tactics and A/B testing.
The Client as Quality Assurance
Now that you have both high-level and ground-level goals to chart your path to growth, there is one important consideration that ensures you have done your work effectively. The client.
Simply put, the client is where the rubber meets the road. Their reception of your ideas and efforts is your compass to ensure you stay pointed towards your growth goals. Compare your strategy to your buyer’s journey and look for areas where you may not be meeting an important need. How will you gain their awareness? How will you nurture them when they are considering their options? Etc.
And once you have clients, invest the time to ask them about their buying process, what needs are greatest, and how they feel about their decision after the first 6months/year. Look for opportunities and warnings to tell you if your internal systems are enhancing or restricting your growth efforts. It will also ensure you have accurate information to base future goal settings decisions on.
Business Development Goal Formulas and Examples
If setting these types of goals is unfamiliar to you, you can use the formulas below to capture the important components. Once done, you can rewrite them to reflect your own style and culture before sharing them with your team.
Organizational Growth Goals
We Will ________________________(Acquire, Increase, Enhance, Grow etc) our _____________________ (Growth Objective) From _____________ (Current Level of Success) to _____________________ (Goal Success Threshold) by _______________________ (Deadline)
Rewrite to suit your writing style, but preserve the elements.
In order to achieve (Organizational Growth Goal) We will _____________________(Activity), __________(frequency) in order to _________________ (Add to pipeline, schedule meetings, desired activity outcome) by ______________ (deadline) We will be ______________(Applying Tactics) to improve outcomes. ____________________________________ explain how your tactic affects the success of your strategic goal.
Organizational Growth Goal Examples:
- We will increase our average transaction size by 20% from $17,454 by the end of 2022.
- We will acquire 20 new clients this year to achieve a portfolio of 40 active clients by 2022.
Note how high-level growth goals are broader? This makes it easier to attach multiple progress goals to them, which by their nature are more detailed.
Progress Growth Goal Examples:
- To achieve a 50% annual increase in new clients, we will attend or host at least 3 networking events every month for the next year, in order to increase awareness and add qualified leads to our pipeline. We will be investing in networking automation technology to enhance followup efforts to capture extra leads and keep account reps focused on increasing prospect interactions.
If you’ve invested in one or more business development activities but still aren’t seeing the growth you want, it’s time to reconsider your strategy in meeting your growth goals. Digital tactics are one way, though there are industries and businesses that take non-digital approaches to growth all the time.
Some grow their client base and profits exclusively through mergers and acquisitions, not marketing or networking. Others might try throwback methods like door-to-door sales. Anything that results in boosting growth is a legit strategy, which is why it’s so important to think beyond your organisation’s traditional practices. Some of today’s most overlooked business development strategies and tactics include:
- Understanding the competitive landscape so you can differentiate your brand.
- Choosing the right KPIs so you know when your business development efforts are successful.
- Developing long-term client relationships.
- Soliciting and implementing client feedback to shape your business development strategy.
- Keeping your website and content fresh and relevant so it’s easy for potential clients to get in touch with you.
Your business development strategy acts as a road map that guides your professional service organisation on closing more deals, measuring success, and accelerating growth. It includes everything from setting SMART goals to identifying target clients and choosing your outreach strategy.
Frequently Asked Questions About Business Development
What are the 3 main purposes of a business plan?
The three primary purposes of a business plan are to create an effective strategy for growth, identify new business opportunities, and develop a plan to position your brand as a leading authority.
What should a business development plan include?
Successful business development plans include a situation analysis, a SWOT (strengths, weaknesses, opportunities, and threats) analysis, and clearly outlined objectives, goals, strategies, and tactics. It guides all members of the organisation and includes business development activities like increasing revenues and profitability through strategic partnerships and business decisions.
Which growth strategy is the toughest?
Market penetration is considered the most challenging growth strategy. Whether it’s developing a strategy to enter into new markets or using it as a metric to measure the share your services can capture, market penetration tactics must be aligned with favourable market conditions. A successful market penetration campaign can lead to greater brand awareness, create client referrals, and discourage competition.
What’s the best marketing strategy?
The “best” marketing strategy is the one that helps your professional service organisation achieve growth either by increasing your number of clients, increasing the value of an existing client, and or increasing the frequency of purchase. It focuses on what we at Dash refer to as “The 3Bs” of buyer, brand, and build. It can include tactics like specialization and niche targeting, positioning your firm as an industry expert, useful and relevant content, a lead-generating website, search engine optimization or SEO, speaking engagements, networking, social media campaigns.