Sales and Business Development Explained

By on January 5, 2012

Today I am going to attempt and put the very common question, “What is the difference between Sales and Business Development?”, to rest. There have been instances where organizations have both sales and business development as different, independent functions. On the other hand there have also been organizations which refer to their sales soldiers, as business development executives, or business development managers. This has been the basic phenomenon, which has given rise to confusion in the minds of many. We understand, the difference between the two terms/functions in this article.

What is business development?

Business development is  a function aimed at attracting new customers, or penetrating new/existing markets. The objective is achieved by means of applying various techniques which include

  • Gathering information about customers, and competitors
  • Generating leads for possible sales
  • Drafting sales policies
  • Following up on sales
  • Presentation/Pitch planning
  • Developing a marketing/sales campaign
  • Modelling strategy, and strategic analysis
  • Account planning

In short, business development is a functions which involves evaluating a business, constantly and continuously, and using tools like marketing, Management Information Systems(MIS), and customer service. Business development also aims at forging positive relationships with the prospects to ensure continuous business over a period of time.

What is the role of business development?

Business development, like sales, and like the name suggests, is a function which aims to improve, or develop sales, or business. From an organization’s perspective, business development can play either of the following two roles

  • Sales Oriented:This is a client facing approach of business development. Here business development dons the role of both head, and legs. The head doing the thinking, or strategy, while the legs do the running, or pitch, or sales effort.
  • Support Function: Business development also plays the role of a support function to sales, which in itself can be classified as an independent function. Here the focus would be on lead generation, lead nursing, relationship building, and preparing the leads for the perfect pitch, which will convert. Here it also acts as an informer to the sales team, on lead status, and acts as a guide in modifying presentation/pitch.

Why are the two functions confused for the other?

The simple answer is, because organizations do not know. Most small and medium organizations confuse business development and sales as being the same. They may assume that sales, as a function should do the strategizing, and planning. But they would be terribly wrong. Sales is a function, whose primary deliverable is to make the presentation, and ensure that the sale is closed. While business development is a more comprehensive function which does the planning and strategizing part of the business.

Functionally the difference can be understood easily from the automobile industry. Most automobile companies, have regional sales managers, and also regional business development managers. What is the difference in the role of the two managers you might ask. The difference is that regional sales managers lead sales teams to act upon leads and close sales deals. While the business development manager, has a more encompassing role. He has to study the market for potential customers, or in short look for leads (individual, and corporate), look for new dealers, new dealer/showroom locations etc. all leading to growth of business, through sale. It can be said that Business development is the super set, and sales is one part of it.

Here is a very popular scene from the movie Glengarry Glen Ross, this will explain the clear distinction between sales and business development. The scene is set in an office and it is a sales meeting. Alec Baldwin, here, is the perfect example of what business development is, should be, and has failed to be (not the swearing!). While the other characters in the scene, are an example, what sales function has been, is, and will have to be.

This question was submitted by one of our readers, Siva Karthik, who asked “Many organisations have two different departments, Sales, and Business Development. What is the difference between the both, in an organisation’s perspective?”. Good one, Siva!

P.S. If you haven’t watched the movie yet, you should! It is a Classic.

About Arvind R

Arvind believes that “Marketing is a function, inherent in every human being. A post graduate in Retail Management, he has worked with retail companies like Shoppers Stop and Spar, before venturing out on his own, and now is a successful entrepreneur running a manufacturing business. Click here to know more about him.