Business development vs sales: What’s the difference and which should you hire first?
What’s the difference between business development and sales? Many founders we talk to believe the terms are interchangeable—simply two different ways to describe the same function… right? Not quite. Today, we’re talking business development vs sales.
Let’s start by clearly defining both business development and sales. Then, we’ll dig deeper into the differences, how they support each other, and which function needs to be your focus based on the stage your company is at today.
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What is business development?
The definition of business development is generating qualified new leads. The purpose of business development (in the context of a sales team—NOT in terms of product validation) is to research, prospect and create a pipeline of targeted potential customers to pass off to sales for further vetting and closing.
What is sales?
The definition of sales is generating transactions. The sole focus of a mature sales team is to close deals with the qualified leads that are coming from either your business development efforts or other lead generation strategies that are designed to start conversations with the right potential customers.
So… what’s the difference between business development and sales?
Put simply, business development comes first. It’s the act of generating well-researched, qualified leads to hand off to your sales team. Business development is all about generating leads, and the job titles most often associated with business development are roles like, Business Development Rep (BDR) or Sales Development Rep (SDR).
Sales comes second, and is wholly concerned with closing a winning deal with the qualified prospects that come from your organization’s business development activities. Sales is all about transactions. Titles for sales roles vary widely, but typically form around phrases like Sales Representative, Account Manager or Account Executive.
Moreover, when you’re building a sales team from the ground up, it can be difficult to decide which role (business development vs sales) you should hire first—or to bring on more of in the early days.
The answer, as with most things in business, is… well, it depends.
Now that you’ve got a clear definition of the difference between business development and sales, start by first asking yourself which one sounds like a higher priority within your organization right now. Which role do you truly need today?
If you’ve gotten clear market validation for your solution and are consistently closing a high proportion of the prospects you speak with, but just need a higher volume of leads to continue flowing through your pipeline, then hiring a business development rep and training them on how to prospect for the right leads should be your number one priority.
If you have more qualified inbound leads than you know what to do with, but you simply don’t have enough time to follow up with every lead, schedule a meeting, do a demo and close the deal, then your focus should be on getting more sales reps on board who can help close more of your hot leads.
Sounds pretty straightforward, but the reality is that it can take a while to get to this stage.
In the earlier phases of your business (or before acquiring funding as a startup), it’s natural for founders and other members of the team to take on both business development and sales-related responsibilities while resources are constrained before sales hiring becomes a viable option.
As long as the founder-driven sales stage is working well and your revenue is growing, that’s ok for a while.
Over time though, the separation of the two roles should become more pronounced and specialized as your business begins to scale and you can afford to invest in better solving your bigger problem—generating more leads or bringing on salespeople to close more of the leads you already have.
Why you need to separate business development and sales
Let’s examine a few of the critical reasons why your business stands to benefit immensely by separating the roles of business development and sales.
Creating domain expertise in your organization
Since the advent of the world’s first automobile manufacturing lines in the early 1900’s, labor specialization has proliferated into countless other industries with massively positive effects.
Division of labor: Known as the separation of tasks within any system, the primary goal of clearly dividing tasks within your sales team, is to allow individuals to specialize within their roles.
Anyone who spends the majority of their day executing the same sets of tasks (that ladder up to a very clear goal) is likely going to build expertise much quicker than their counterparts who spend the day task-switching between multiple different roles and goals.
Separating business development and sales within your organization is no exception. When you allow members of your sales team to focus solely on either prospecting or closing, they’ll develop a level of expertise at their role that’s otherwise very difficult to achieve.
Instead of splitting their time (and mental capacity), or task-switching throughout their entire day, your business development reps are able to focus on doing everything they can to bring more qualified prospects into the company’s pipeline. Conversely, your sales reps are empowered to work on nothing but the key activities in your sales process that are proven to close more deals and generate transactions.
Creating an environment that accelerates the development of expertise is priceless in terms of organizational benefits—you’ll be able to generate more leads and close more of them.
Individual productivity gains
We touched on this briefly in the context of rapidly building expertise within your sales organization as a result of separating business development and sales, but it’s worth highlighting the productivity gains your team will experience at the individual level too.
When you have salespeople that are also doing their own prospecting (researching, qualifying, initial outreach), their calendars can quickly fill up with a myriad of different activities like conducting research, cold calling from a list of inbound leads and sending cold emails to prospects. Their calendars can quickly look like…
Known as cognitive switching, the act of consciously switching from one task to another within your day can leave you mentally exhausted. On top of that, studies have shown the quality of your work declines dramatically the more frequently you switch between tasks.
Psychologist David Meyer, PhD, director of the University of Michigan's Brain, Cognition, and Action Laboratory explains, “Although switching costs may be relatively small, sometimes just a few tenths of a second per switch, they can add up to large amounts when people switch repeatedly back and forth between tasks. Thus, multitasking may seem efficient on the surface, but may actually take more time in the end and involve more error.”
Meyer reports that even brief mental blocks created by shifting between tasks can cost as much as 40% of someone's productive time in a given day—time that you can’t afford to lose in a startup or SMB.
When you separate the responsibilities of business development and sales within your organization, you’re grouping similar activities together and making individuals responsible for a limited set of goals that are directly impacted by the activities they’re expected to do on a daily basis (having a clear connection to impact being one of the three things that make work most meaningful).
That elimination of multiple different types of goals allows members of your sales team to work on fewer tasks—thus empowering them to execute on single tasks for focused blocks of time. Which allows their calendars to look much more like…
The fewer objectives your individual contributors (both in business development and sales roles) are responsible for delivering against, the more they’ll be able to focus on excelling and being more productive on the limited tasks at hand.
Business development requires more effort than it used to
The core functions of business development haven’t changed much in recent years, but the process of prospecting and qualifying leads has become much more nuanced.
Business development roles are still charged with two main responsibilities:
- Prospecting: Identifying companies and people that may be interested in purchasing your product or service
- Qualifying: Determining if your prospect is ready, willing and able to buy
Once a lead is qualified and has a strong likelihood of converting into becoming a paying customer, they’re passed off to the sales team for closing (and if need be negotiating the terms of the contract).
This means that business development reps do not ideally have quotas. They’re responsible for bringing in enough qualified leads to generate a certain amount of revenue, but actually closing the sale and turning leads into customers is beyond their direct control.
So, what’s changed in the world of business development?
It’s become increasingly difficult to reach decision-makers and to engage them the way they want, when they want. Hell, I can’t even remember the last time I answered a call from a number I didn’t recognize—let alone respond to unsolicited sales emails.
The proliferation of conversational sales and marketing tools like Drift are proof of this dramatic shift. Your customers time is valuable, and giving them the ability to control when and how they interact with you is a serious experience upgrade, therefore your sales plan needs to grow and adapt with this shift.
Beyond just better managing the experience of your inbound leads, it also takes more time to adequately research prospects, and requires more touch points on a lead in order to capture their attention.
Business development is more about relationship-building than ever, making it a standalone full-time position on any sales team.
At the end of the day, it’s not a smart investment to have someone responsible for a new deal quota, shifting gears between prospecting, demoing and closing within their work day.
How business development and sales work together (4 common questions)
Now that we’re clear about the separation between business development vs sales, let’s talk about how the two roles should best work collaboratively together, for maximum effectiveness on your sales team.
1. When should business development pass a lead on to sales?
Your sales team has quotas they need to hit, which means they can’t waste time talking to prospects that aren’t already well-qualified. Otherwise, they'll be wasting time and energy chasing the wrong leads and diluting their close rate.
Business development reps should pass a lead on to sales as soon as they’re qualified. However, that doesn’t mean business development teams and sales teams shouldn’t have a collaborative work relationship.
WeWork VP of Business Development, Scott Pollack explains, “business development teams should be identifying, evaluating, and pursuing opportunities to create long-term value for a company. This means BD teams and sales teams should happily coexist—the sales team gets to work on closing opportunities that can drive revenue today, while the BD team focuses their attention on opportunities to open new channels and drive a flood of new leads for tomorrow.”
As Pollack suggests, it’s incredibly important that business development teams focus their time, effort and energy on building relationships only with the most qualified leads that stand a chance of becoming happy customers. Then, they’re worthy of being handed off to sales.
How do you know when a lead is fully qualified and ready to be closed? That can vary a bit based on the type of product you’re selling and the market you’re serving, but starting with choosing from these 42 B2B qualifying questions to ask your prospects won’t hurt.
In order to qualify your prospects, you’ll want to accurately gauge how well they match your ideal customer profile with key information around company size, location and industry.
Next, you want to assess their needs to make sure there’s a true use case for your product, develop an understanding of their purchasing process to make sure it’s a match with your selling process, and assess other competitive options they may be considering.
If everything checks out and the prospect still appears to be a strong potential customer, then they’re qualified—and ready to be closed by your sales team.
2. Should there be overlap between business development and sales?
In terms of day-to-day activities? No, not really.
Business development should be wholly tasked with prospecting and qualifying. Sales should be focused only on closing those qualified leads and generating transactions.
However, your business development reps and sales reps do need to be on the same page about who your ideal customers are—their characteristics, qualities and the kinds of problems your offering can best help them with.
Due to the rapidly changing environment in startups, this requires frequent cross-team collaboration.
As CreativeLive Director of Partnerships and Business Development, Kimberly Pousman explains, “there not only should be overlap between business development and sales, but there needs to be overlap, whether you personally want it or not.”
Pousman continues, “One of the keys to being great in either a business development or sales role, is asking the right questions. When you’re looking to grow and expand, you need to ask the right questions, experiment and actively source feedback from others—so if your teams are operating in a silo, they’ll miss out on valuable opportunities to learn from each other and advance your growth rate.”
Furthermore, the downstream effect is that if this alignment between business development and sales teams isn’t up to par, your sales reps are going to have a difficult time closing enough deals with the leads they’ve got, which leads to frustration and a close rate below the 20-30% industry average for SaaS.
If your sales team’s close rate is below 20%, they’re either not closing as well as they should, or your leads aren’t qualified enough.
3. What’s the difference in the day-to-day activities of business development reps and sales reps?
While the responsibilities of a business development rep can vary a bit based on the unique needs and internal demands of an organization, in general they’re responsible for two main tasks that sit at the core of this role:
- Managing inbound leads: This translates into working through an internal list, qualifying leads from various marketing campaigns and classifying the right ones as sales opportunities to be passed on to the sales team for further vetting and closing.
- Leading outbound prospecting: On the flip side, this kind of outreach involves researching and contacting potential customers that haven’t proactively expressed interest in your product through cold calls and cold emails—with the goal of qualifying sales opportunities for your sales team.
On the inbound side of things, business development reps sit metaphorically between marketing and sales, filtering marketing leads and qualifying them before assigning them to the right sales rep that can move on to close the sale.
When it comes to outbound, business development reps need to first go through your organization’s sales training process so that they have a clear picture of who your ideal customers are before they go out and begin starting conversations with prospects. Depending upon the size of your company, your business development reps may or may not start with the beginning task of researching prospects before sending an email or calling.
Ultimately though, the goal of any outbound business development work is to start a conversation and develop a relationship that can be passed on to sales for closing. Everything a business development rep does, should revolve around finding more prospects, qualifying the right ones and routing them to your sales team for closing.
Now, let’s talk about the responsibilities of sales reps.
Keeping in mind slight differences to match your unique internal needs, most sales representatives are charged with the following main responsibilities:
- Selling: Closing deals (ideally with pre-qualified leads from your business development team to save time) using solid arguments and objection management with prospective customers.
- Maintaining relationships: Although a prospect might not be a fit to purchase your product or service today, that doesn’t mean they won’t be in a completely different position 6 months or a year from now—so keeping in touch with leads to encourage future sales is a major part of a sales rep’s responsibilities.
Most sales representative roles work against a sales quota—a thoughtfully calculated monthly or quarterly minimum for the number of customers (or revenue figure) they’re responsible to close. Sales reps are often incentivized with increasing levels of bonus payouts for hitting and exceeding quota within a given period.
The intense focus on hitting specific customer or revenue benchmarks each quarter is very intentionally designed to encourage sales reps to spend all of their time only on revenue-driving activities. More meetings. More product demos. More sales calls with qualified leads. More contracts sent out for approval. More follow up emails delivered.
In a mature sales organization, that means sales reps are empowered to spend less (or zero) time researching prospects, qualifying leads, and booking meetings. Those are activities a business development rep should be helping out with.
4. How does a business development call (or email) differ from that of a sales rep?
The biggest difference between the calls and emails that business development reps send vs those of a sales rep, is that most business development activities are done toward either completely or relatively cold prospects—meaning that these prospects have likely had little to no interaction with the company before this initial contact is made.
By the time a sales rep is brought on to an account, the relationship has already been established and the lead is qualified, making the communications much more warm than those of a business development rep. The conversation with a sales rep is about how to make a mutually beneficial deal happen, rather than gauging the initial interest or need.
Bonus: The key traits you need to look for in every business development (and sales) hire
Bringing the right business development and salespeople onto your sales team is crucial in making meaningful progress toward growing your business. If your candidates don’t exhibit these key traits, our advice is to keep searching for the right people that will have a positive impact on your team.
Communication and people skills
If you hope to cultivate strong relationships with prospects and customers alike, having strong communication and people skills—like the ability to lead a friendly negotiation from start to finish so that the new customers you bring on are pleased with their decision, is crucial.
Navigating the process of converting a lead into a paying customer requires the ability to empathize; to fully understand your prospect’s situation and the use case they’ll have for your product to make sure that they’ll truly benefit from your offering.
Hunger and drive
The most successful salespeople (and business development reps) have an internal drive that pushes them forward and propels them to achieve their sales goals.
In the face of a challenge, they’re not discouraged—rather, they look forward to the opportunity to excel, surpass previous expectations and move up to the next level. They’re often incentivized by the prospect of earning more money, and respond well to financial rewards for performance improvements.
Discipline and confidence
Discipline and the confidence in your process beats motivation every single day of the week when you’ve just gotten ten rejections in a row. No matter how skilled or experience you are, in sales there will be moments of defeat that can drain your motivation levels.
The best salespeople know that sales is a numbers game, and that the only way to recover from rejection & failure is to pick up the phone (or get back into your email) and keep executing. Having the right tools and systems, like our Power Dialer will also help keep your team on track and reaching peak productivity levels each day.
They’re consultants at heart
Just because a salesperson has mastered every tactic in the book and can sell ice to an eskimo doesn’t mean they’re going to bring in customers that’ll still be happy with their purchase decision one, three, six months down the line.
When hiring a business development or sales rep, look for people that view their role as partnering with prospects to make sure there’s a mutual win-win in each potential deal—ensuring that the customer has a genuine need for the product and that they’re actually a fit for your ideal customer persona of people and companies you want to serve in the first place.
Want to take your sales game to a new level? Get free access to our ultimate sales resource library today.