Business development is often considered to be synonymous with sales. While increasing sales does form a core part of the role, the aim of a business developer is to develop the business. This involves looking for new customers, new markets, strategic partnerships, and new offerings. But there are so many opportunities, it can be difficult to know where to start focussing your efforts.
Finding the Gold
A model that can be used to frame your initial thinking is the Ansoff Matrix (Ansoff 2015). This allows you to plot your products and service lines on the matrix below, using two axes: Existing and New.
The Ansoff Matrix presented in the figure below, allows you to determine your broad strategy and gives a good indication of where to start focussing your efforts. A good rule is to begin where there is the lowest risk and extend the risk profile as you firm up your revenue foundation. The matrix can also be used to help identify the low-hanging fruit, immediate action, to focus on, when starting your business development role, and those actions to consider once a feedback loop with the market and customer base has been established. This allows the business developer to adjust the company offering built on market and customer feedback.
Based on the matrix above, business development effort should be prioritised in the following order:
- Market Penetration (lowest risk)
Provide existing products to the existing customer base. These customers already know your company and use your services. Continue expanding your existing offering amongst those who understand and appreciate it.
- Market Development
Provide existing products to new markets. This takes your knowledge from the existing customers and products and applies it to new customers and markets. For example, a transport engineering team may be able to push their services into the mining industry.
- Product Development
Develop new products for existing customers. Using your relationships with existing customers, and the knowledge of their needs, can enable the development of new products and services that may solve additional problems for them. A good example of this is outdoor brand Patagonia, offering their customers tough-wearing climbing clothes in addition to their quality climbing hardware (Chouinard 2006).
- Diversification (highest risk)
Create new products for new customers. Using the knowledge and experience of developing new products for existing customers can give insight into applying it to new customers. This should only be considered once a robust feedback loop within the market has been in place for some time, to enable diversification decisions to be based on real market data.
The Ansoff matrix highlights a key lesson for any budding business developer: start mining the gold you already have.
I heard this fantastic analogy whilst listening to an interview where Tiffani Bova, a senior executive with Salesforce, was a guest speaker on a Business Made Simple Podcast, and it really struck a chord with me. During the days of the gold rush when a prospector got lucky and struck gold, he wouldn’t just get up and walk to the next mountain. He would start mining the vein that he had already uncovered. The same is true for business development. Start with your vein of gold, your existing customers and work out from there. They already know, and like, your service, your team, and your offering—they keep coming back. There is a level of goodwill here that makes it easier to target this group first. This goodwill can also help you gain references and referrals, and circulate success stories, which, in turn, can help open doors to your new customers.
Expanding the Mine
The second half of the matrix, which is centred on product development and diversification, can only be explored once an adaptive feedback loop has been established between the market, the customer base, the business developer and their company. Only then is enough information being absorbed to make new product development a successful undertaking.
When you do get to the product development and diversification phases, Collins and Hanson (2011) provide some excellent advice in their book, Great by Choice. They suggest that you don’t go all in with a new or diversified product, but instead conduct small trials with products, which have controlled costs. Repeating these small trials will allow you to learn which products are worth the effort. Do not bet the whole company on a new diversified product offering.
If you see a gap in the market for a new offering use this advice and consider how you can conduct a small, relatively risk-free, trial of your idea. Present this to the leadership for approval. This has a much higher chance of being accepted. If it works, the new offering can be grown from there. If it fails, document what has been learned and move on.
Call to Action
Think about how you prioritise your business development pursuit. Are you making the most of the Gold that you already have? Do you have any existing customers who might be interested in other services your company provide? If so go talk to them!
Using the Ansoff Matrix along with the Sales Ecosystem can also help you find some BD Gold. Check out my previous post a the link to learn more.
As always I’m interested in your thoughts. Let me know what you think in the comments below.