I found myself thinking about this question while working on a project that involved researching senior leadership in large companies. I had trouble answering the question, because I’ve always thought of Business Development as essentially the same function as Sales. Several of my friends who recently graduated from college have job titles like “Business Development Representative”, and yet their activities are identical to that of a Salesperson. What I have seen firsthand in my experience with over fifty projects is quite different.
As discussed in my last post, companies should consider basing their business development on
“finding customers who have a need for a product or services at a price they can afford that is available in their market”.To illustrate my point, let’s use some real-life examples.
A digital communications company has identified targets for their business development in the United States. They developed a tool that makes websites more visually accessible to people with disabilities, including Parkinson’s, dyslexia, and partial blindness. With a good understanding of their market at home, they asked us to conduct a search for the best match for their product in the U.S. We found that the Americans with Disabilities Act (“ADA”), which requires businesses to accommodate people with disabilities, made our job easier because we could reach out to organizations with a strong interest in complying with ADA. After a round of few phone calls, more potential customers than we could think of, thanks to ADA, showed interest with a need for the company’s product.
Another company, in the transportation sector, gave us a detailed profile to identify potential partners for them in the U.S. and other countries. Their objective was very clear: to identify partners who could use their design specifications to locally produce and sell electric buses in the market. Thanks to a detailed profile and information package, we have been able to quickly identify three potential partners (customers) from three different countries outside of the U.S and engage in active discussions. Working with a such well-prepared client makes our job of finding potential customers much easier.
In contrast, a manufacturer of orthopedic slippers established a warehouse in the suburbs of Chicago and hire a full-time employee to make “cold calls” to pharmacies and shoe stores to generate business. Without any prior business development analysis, the company purchased a list of U.S. pharmacies to call, starting in August 2016. Since that time, the company’s operations are running with no sales yet. Furthermore, we noticed that the slippers’ packaging and labeling might be suited to the European market but not really adapted to the U.S. consumers.
The company’s market approach in the U.S. is based on a prior experience in Lithuania. The CEO was told that pharmacies in Lithuania did not sell orthopedic slippers. After three years of cold calls, Lithuania is now one of the company’s biggest markets. Lithuania has approximately 1,400 pharmacies in the country (European Healthcare Distribution Association) while the United States has around 67,000 (SK&A). By neglecting to conduct a minimum of market analysis, the Company assumed that the same need that existed in Europe would exist in the U.S. – and that the same business development strategy would bring sales. This approach may prove to be very expensive and risky for the business.
Read part 2 here! I explore how trade shows, conferences, and a clear understanding of the market fit into a company’s business development strategy!