How to Create a Business Development Strategy- Guide for Executives
An organization's ability to grow and provide value to customers, as well as partners is often contingent on business development.
A business development strategy can cover a wide variety of sub-plans, including relationship building, brand awareness campaigns, and market expansion. However, this broadness in scope is also the reason why business development can mean different things to different organizations.
What is Business Development?
A common misconception about business development is that it is just another term for sales and marketing. However, these are only two components of its many aspects.
At its simplest, business development refers to the creation of strategies, processes, and activities that contribute to a company's long-term growth. Unlike salespeople and marketers who typically work with customers directly to close deals, business developers usually look at the bigger picture. Their job is to think of strategies to generate new business and promote long-term growth.
In many companies, business development teams perform three fundamental functions.
- Attracting Prospects - Business development professionals explore different ways of attracting potential buyers, creating new partnerships with clients and suppliers, and tapping referral sources.
- Building Engagement - Business development teams also nurture relationships with new prospects to bring them closer to becoming new customers and clients. They also strengthen existing relationships to generate repeat customers.
- Identifying Business Opportunities - Identifying and leveraging new opportunities can be a lucrative growth strategy. By analyzing trends, demographics, and customer data, managers can find ways to expand into unexplored markets with new products and services.
Essential Elements of a Business Development Strategy
A business development strategy provides the necessary guidance for companies to generate new business and achieve their growth goals effectively. Like most other types of business plans, business development strategies generally contain a list of objectives, methods, timelines, and expected outcomes of individual growth tactics.
While there is no one-size-fits-all approach to creating a business development plan, most strategies are created using these seven steps.
1. Identify Clear and Attainable Goals
Clear and realistic objectives are the foundation of any business development strategy. At this stage, the company's development goals don't have to be hyper-specific as this comes later in the process. The idea is to come up with at least three to five desirable outcomes that will determine whether the year has been a success.
The key is to aim for realistic business development goals that everyone can rally behind. Most small businesses will naturally gravitate towards revenue benchmarks, such as reaching the $1 million-revenue mark within the next 12 months.
However, there are other high-level goals worth pursuing, such as improving customer retention (it is five times more expensive to acquire new customers than it is to keep existing ones), introducing new products and services, or expanding operations into new locations.
2. Narrow the Strategy's Focus
Concentrating on defined market segments and buyer personas can increase the business development strategy's likelihood of achieving its desired outcomes. This is especially important for small businesses, which tend to have limited resources. Consider the following scenario.
- An insurance provider wants to reach out to an underinsured market segment - millennials.
- The company's business development team decides to produce highly targeted content that addresses the needs and pain points of this segment.
- The action plan is to create a series of infographics explaining the benefits of the company's insurance products, which include car insurance, mobile device insurance, and travel insurance.
By taking this approach, managers can help create tailored marketing messages that resonate with millennials and increase their trust in the company.
Businesses can also take a similar approach to product development. Through extensive market research and detailed customer personas, the research and development team can conceptualize new products and services for new markets.
3. Choose Marketing and Sales Channels
The next step involves choosing the marketing and sales channels to acquire leads for each market segment. Below are some examples of typical channels.
- Outbound Marketing Channels - Leads generated by outbound prospecting. This refers to direct marketing methods that interrupt prospects where they are, such as email marketing and advertising.
- Inbound Marketing Channels - Leads generated by attracting prospects using premium content and offers.
- Paid Search and Display Advertising - Leads from paid search ads on search engines like Google and banner ads on display networks like Google Display Network.
- Paid Social Media Advertising - Leads generated by paid ads on social media platforms like Facebook, LinkedIn, and Twitter among others.
- Referral Networks - Leads provided by the company's satisfied customers.
- Offline and Online Networking - Leads from offline networking efforts such as trade shows, conferences, and other events, as well as online platforms like LinkedIn Groups.
- Channel Partners - Leads from channel partners such as resellers, suppliers, distributors, and original equipment manufacturers (OEMs).
- Upsells - Opportunities to sell additional or more expensive products and services to customers.
- Cross-Sells - Opportunities to sell complementary products and services to customers.
At this point, it is a good idea to break down the business development strategy's high-level revenue goals into smaller objectives, first by the organization's target markets and then its marketing and sales channels.
4. Identify KPIs and Metrics
A business development strategy would be limited if it did not provide a way for managers to track the performance of their efforts. This is where metrics key performance indicators (KPIs) come in - providing a means for quantifying the success of the company's development efforts. On a more granular level, metrics also help managers determine which tactics are producing results and which ones need revising.
In any case, businesses should focus on measuring relevant, actionable metrics. Many managers make the mistake of getting caught up with vanity metrics - these are numbers and stats that only look good on paper. Examples of such metrics may include website visits, views, likes, follower counts, and open rates.
While not entirely meaningless, vanity metrics are not linked directly to high-level revenue goals.
In contrast, actionable metrics, such as conversions, average order value, and cart abandonment rates, are tied to sales and help managers make strategic decisions to grow the business.
5. Define the Sales Funnel
The key to creating scalable pipelines for lead generation is to implement tactics that consistently align with each step of the organization's sales funnel. For every marketing and sales channel, the business development team must define the milestones for opportunities to enter the closed-won stage.
These milestones can then be entered into the company's customer relationship management system so members of the sales team know what actions to take to nurture leads into becoming customers.
6. Identify the Resources Needed to Execute the Strategy
After identifying the goals and tactics to generate business growth, the next step is to determine the necessary resources such as people, technology, and budget to execute the business development strategy.
People - Managers will have to decide whether to execute the business development plan with an in-house team or by hiring an agency or consultant. Most small businesses don't have the technical expertise to develop and execute a business development strategy so it may make sense to look for outside help.
Technology - Managers also need to audit their existing marketing and sales technology stack to ensure they can support lead generation. Below are some examples of technologies that marketing and sales teams typically depend on.
- CRM platforms
- Inbound marketing software
- Marketing automation software
- Lead generation software
- Google Analytics and other analytics platforms
- Graphic design and video editing software
- Video conference software
- Inventory forecasting software
7. Distribute the Business Development Strategy
Finally, managers can share the business development plan with key stakeholders. Business growth is a company-wide effort so make sure everyone in the organization understands its goals and vision. Everyone, from sales and marketing teams to service staff, should be on the same page to maximize the plan's effectiveness.
Examples of Business Development Strategies
Many businesses pursue similar development strategies with minor differences based on their circumstances. Here are a few examples of common approaches to business development.
- Advertising and Sponsorships
- Outbound Strategies
- Content Marketing
- Blended Strategies
Business development can be a massive undertaking for the average small business. By following these steps, companies can create and execute a documented business development strategy with as few issues as possible.