Sales and business development. Just two different ways to refer to the same activity -- getting your company’s product into customers' hands. Right?
Actually, sales and business development should not be considered the same job at all.Instead, think of the two roles as complementary halves of a whole.
It’s true that both positions exist to help grow your business, but they achieve this end in different ways. Read on to understand the division between sales and business development, and learn what parts of the sales process each team owns.
The Difference Between Sales and Business Development
1) The definition of business development
First things first. There are two types of activity commonly referred to as “business development,” but they bear little resemblance to each other in both job function and importance within an organization.
What is business development?
In the traditional sense, business development refers to activities designed to expand your organization's reach into a new market -- for example, forming partnerships with other businesses to sell Company X’s product to Company Y’s customers.
The type of business development we’re talking about here, however -- also known as sales development -- is a specialized sales role.
What does an SDR do?
Business or sales development reps (BDRs or SDRs, respectively) are tasked with researching, prospecting, and qualifying leads before passing them off to the sales team to further develop and close.
This means that SDRs do not carry quotas -- although they are responsible for bringing in enough qualified leads that generate a certain amount of business, they are not directly responsible for closing deals.
2) What is sales?
Sales is all about closing. After receiving a qualified lead from an SDR, sales reps take the deals across the finish line. Sales reps might perform some additional qualification in certain circumstances, but their primary objective is to close deals. Sales reps are also responsible for demonstrating the product, handling prospect objections, and drafting contracts.
3) Why divide prospecting from closing?
According to Bryan Gonzalez, a sales development analyst at research and advisory group TOPO, there are two primary reasons why the sales process has been split into sales development and sales -- the increased difficulty of reaching buyers and the benefits of specialization.
Reaching a buyer “now requires a larger effort by smarter people,” Gonzalez said. “More research and more touches on a lead are required to connect, and it’s not as valuable to have someone with a quota on their head doing that.”
So taking a cue from Henry Ford, companies have split the sales cycle into specialized areas of responsibility to maximize efficiency and output.
Closing is no easy feat, and it doesn’t make sense to have your top sales reps spend time researching companies and hunting for leads if they’re best at selling. In the same vein, prospecting and qualifying is neither a fast nor simple process. Separating prospecting from selling allows each team to focus all their energy on one task, instead of dividing their time between two different and time-consuming objectives.
Another advantage of splitting the two roles is the ability to mold reps from an early stage in their careers and cut down on hiring costs, says HubSpot's global director of business development Justin Hiatt.
"A sales development team takes some of the prospecting and qualifying burden off your quota-carrying reps’ shoulders," Hiatt writes. "But its grander purpose is to become a training ground for your sales organization. It’s a place for your SDRs to prove they can become quota-carrying reps and should feed new reps into your organization every year. "
4) Are there any overlaps in the sales development rep (SDR)/sales rep role?
Yes and no. SDR and sales rep positions don’t have too much crossover when it comes to day-to-day activities, unless your reps are also responsible for some of their own prospecting. However, the teams should be hyper-aligned. Both SDRs and sales reps must understand your organization’s ideal buyer persona and be able to spot good fit opportunities.
5) When should an SDR pass a lead to sales?
The point at which an SDR passes a lead to a salesperson will vary from company to company. It rests on how your sales team defines what makes a lead “sales qualified.”
There are several different frameworks for sales qualification: BANT (Budget, Authority, Need, Timeline), ANUM (Authority, Need, Urgency, Money), and GPCT, to name a few.
But no matter what framework you use to qualify leads, SDRs should become adept at uncovering the following:
- Whether they're talking to a decision maker. If the contact is a low-level employee with no purchasing power, it’s imperative to figure that out sooner rather than later.
- Whether the company could use your product. If your product or service solves a problem that doesn’t exist in your lead’s industry, it’s not a good idea to pass that lead along to a sales rep.
- Whether the lead’s problems can be solved by your product. Every company has different needs. Digging a little deeper to find out exactly where a lead needs help is critical to determining whether or not your product can solve the problem.
Many organizations have their SDRs go a step further than this basic qualification to get a better sense of whether a lead is ready to buy. They require SDRs to look for two additional pieces of information:
- Whether the lead needs a solution in the near future. It’s possible that at the time your SDRs first make contact with a lead, their problems aren’t serious enough to warrant a purchase. This doesn’t mean the lead is dead, but passing it along too soon is a waste of sales reps' time.
- What kind of budget the lead is working with. This isn’t the time to get into specific pricing breakdowns or negotiations, but it’s important to know if your product is priced in the same ballpark as what a lead can afford.
Throughout the qualification process, SDRs should spend the majority of their time asking questions and listening to the prospect. However, it’s also important that they educate leads about what solutions your company offers and start demonstrating their value so any potential misalignment is rooted out early.
6) How should a sales development call differ from a sales call?
As outlined above, an SDR’s responsibility is to find out as much as possible about a lead’s company, pain points, and need for a solution. Early conversations should revolve around gathering this information.
A sales conversation should pick up where the SDR left off, with the endgame of getting a deal signed. Sales calls can cover a wide range of things -- here are just a few examples:
- Demonstrating how your value proposition applies to your prospect’s business pain
- Comparing your product to your competitors'
- Setting up a trial of your product, if applicable
- Product demonstrations
- Price breakdowns
- Implementation plans
- Contract terms
The degree of separation between business development and sales will vary from organization to organization. Especially in smaller companies, sales reps might be responsible for both prospecting and closing, and that’s okay. But as you grow, separating and clearly defining the roles of the two teams will allow each to focus on what they do best, and help your business reach new heights.