Having worked for a technology start-up and in the Big 4 accounting firms, building a growth engine and scaling a business organically is not easy. Sales and business development (BD) can be key players for growth, not just a supporting function. Nothing new there.
Many people believe the terms are interchangeable—simply two different ways to describe the same function… right? Not quite.
For any B2B start-up or professional services firm, the similarities on scaling the right commercial function are very similar.
There’s a million different ways to slice this topic up, so I’ve created a version that I think really works in professional services. Here’s my top observations on what the options are and how to go about it:
Observation 1: the difference between BD and sales – what are you ready for?
If I’ve learnt anything, it’s understand what you need and hire for the long term, and with a strategic mindset. The commercial model that will deliver the most growth and/ or biggest efficiencies should be highlighted and built.
Commercially focused roles in professional services have developed into both externally and internally facing, all with different features and benefits for careful consideration.
Externally facing
BD – often called ‘consultative sales’:
Forbes describes a “pure” Biz Dev job as – identifying and strategically assessing an opportunity to create long-term value and then executing on a path to pursue that value.
Longer term to develop and certainly the most strategic. Often the most successful when off market opportunities are created from scratch with the client, unearthing and prioritising problems, pushing them for greater value than even they had initially envisaged. It can also be deployed to open up new markets or launch new solutions and can be ground breaking to the extent that a partnership is formed to unlock previously untapped growth.
This is all centred around a challenger based or forward thinking outlook. The key angle is that it’s focused on a big curve sales growth. This is prioritised on solving complex business problems with innovative solutions. They are harder to sell, but they unlock more value for the client. This generally gives access to bigger deals, greater revenues and a longer customer lifetime value. All components across marketing and BD need to be fully aligned and functioning well, to efficiently segment and target large ticket opportunities.
BD people can be expensive and they will be senior, have a strategic mindset and/ or a proven track record selling big ticket client-centric solutions already. Seeing as they pursue clients over the medium to longer-term, they can be aligned to specific key clients and should focus on the ones with the largest growth potential.
Many professional services firms are seeing the benefit of this role progressing from the partner centric approach, towards a BD team getting in front of the key clients and helping massage the relationships, prioritising the longer term higher value opportunities and driving them forward, providing a consistent face while partners might get swamped in other client delivery and ensuring the client knowledge is leveraged.
Sales – often called ‘transactional sales’:
Key Differences says “sales involves offering product or service at a stated price, to the target audience” and gives some interesting comparisons on the differences.
Shorter term and fairly reactive to client needs as they actively look in the market for an adviser with a specific set of requirements. It’s more often associated with selling product (rather than selling solutions, like with BD). It often has a lower customer value and is easy to commoditise, price chip and replace. The customer lifetime value can also be much shorter. But the speed from lead to close is often very fast.
This might purely be a lead generation team that books meetings with targets and attend those meetings to help open the relationship up. It could be a sales team focused on selling the lower value, more commoditised or digitally enabled, services directly in the market. Or it could be a team of people working on the smaller growth clients but handling a lot more of them as a result.
Ultimately this saves professional services partners from having to spend so much time with new business lead generation across the smaller opportunities or embryonic growth clients.
These people are cheaper than BD resource. They can usually be found with a background in recruitment and are incredibly good at starting new relationships, both in person or over the phone.
Internally facing
Sales support – often called ‘client success’:
The most tactical one. Generally sector or capability team BD, pursuit and proposals, data and analytics, internal key account management, client feedback (sometimes face to face but often online and phone based), pricing and project efficiency, etc.
All of these roles are traditionally where professional services firms have focused their efforts. These people are experts in their own right and become much more valuable to firms as they navigate through the different functions, building skills and experience along the way. This does in turn run the risk of creating ‘jack of all trades’ that can lose touch with a vertically focused niche that dramatically modernises with new trends and technology.
I prefer to have a balance across all three commercial disciplines and think it can be pretty dangerous to put all the focus on just one component. But where to start and how quickly can you scale a commercial team?
Observation 2: calculate what commercial function you can support for growth, not purely to increase brand presence
Over the years I’ve struggled to properly position the ROI of my team, and often haven’t even been asked for ROI in the first place. I’ve seen the easy route where many firms allocate a % of turnover to their sales and marketing function, without actually knowing much about the ROI beyond click-thru stats, blog shares and delegate rsvp data.
There’s much to be learned from start-ups in building a solid commercial function that’s fit for today’s market, but also something that can scale profitably.
Calculating sales growth will not only help you scale a sales and marketing team that you can afford, it will also help you know the pricing parameters or client verticals you need to stick to.
How to calculate sales growth?
Looking at client financials, like a start-up, means at least doing this annually to benchmark investment and progress with the client gross margin:
- Client acquisition cost (CAC) and management costs (overall or by client verticals if they have different characteristics)
- Number of new clients won
- Client lifetime value (CLV)
- Cost of services sold, from implementation to ongoing management.
Start-ups often look for a baseline ratio of at least 3x CLV to CAC.
If you fail to meet the benchmark: target bigger deals, raise your prices, focus on the highest value customer segments, try to keep profitable customers for longer, prioritise or reinvent the route to market or remove the worst performing verticals.
When you’re comfortable with the numbers, you can grow the function in increments that gross margin allows.
Observation 3: strategy and tactics are key to prioritise what’s important
I’ve always struggled to scale a team if I don’t have the right building blocks in place to support it. So if you’re bringing in a new commercial team, what is essential for their success?
- Have a go-to-market strategy, differentiated solution matrix and decent value proposition – I didn’t used to spend enough time on this and the lack of traction was poor. Based on research with target clients, existing clients and your market, not purely on internal perception. Know where you want to grow the most lucrative clients and stick to it.
- Define the sales process and make it repeatable – A robust sales process will help solve the biggest problems, develop a client obsession, and establish a vision and roadmap for disrupting the market. Buy one off the shelf or develop your own one, above all make sure you have one. And if you need to teach people on how to use components of the sales process well, like properly qualifying leads and using CRM pipeline, then give this appropriate focus to help teams engage.
- Develop a commercial playbook and teach, coach and mentor – I wish I’d done this more often. Make the approach clear and repeatable for what’s being sold, but also link into the sales approach to find, inspire and close the best clients. For the avoidance of doubt it sets the scene perfectly.
- Educate the market – I’m a huge advocate of The Challenger Sale, by the CEB. Give people what they actually need, not what they are currently looking for. Educate and change the game for them. This also means all sales people need to engage in social selling alongside face to face activities.
- Key client focus on growth – My biggest learning is to put the best people, method and resource against the top clients that will grow the most. Deploy account based marketing (ABM) and prioritise resources to this methodology. Do this as a higher priority to finding new clients. That doesn’t mean you don’t want to find new clients, you do, just prioritise growing your top existing clients.
Note: I purposefully avoided the whole recruitment, on boarding and performance benchmarking piece here. That’s for a separate blog at some stage!
Observation 4: add a CCO, before you scale
There is a tipping point when you are more able to sustain more than one person and are able to hire a team. This is especially relevant if your first hire has worked their socks off and faces burnout. It’s simply not sustainable or healthy.
The tech start-up I worked for took their best performing sales person and had them lead the sales team. Guess what happened? Yep, sales went down. Why? Because he was no longer doing what he was brilliant at.
HBR has proven the PeterPrincipal is true in today’s sales world. Top performing sales people do make bad managers, IF they have not conducted collaborative enterprise sales in a team on the way to promotion. It also provides evidence of the different tracks that sales people can follow. This is where a top performing sales person gets uncapped commission, prestige and the ability to migrate across different territories and products to reward their efforts, and the top performing sales managers get stock options, team commission and team promotion to reward them.
Any commercial team needs a leader and in this case I’m going to title the role Chief Commercial Officer (CCO). A big no-no is expecting a CCO to be selling in the market AND managing a team. That doesn’t mean they don’t spend time with the most important growth customers or work on the must-win deals. They have to be.
They also need to help their team members by coaching, shadowing and leading when a sales team member needs help. This is really important. It’s more about showing by example that it can be done.
If a CCO is the first sales hire (with the ambition to scale a team up over time) they will have to face the market initially, but with a short term sales target that allows them to start recruiting. This short term sales drive will also allow them to implement the building blocks for observation 4, before hiring.
Ultimately it is more important for them to hire and oversee the team, than do it personally with a huge personal sales target.
A CCO is where you want experience. Someone who has successfully built a commercial team from scratch. There are many ways to bring in CCO talent and you can dial up or dial down aspects that are more or less relevant to your business. You will need to mull over strategic focus, management approach, process skill set, technology awareness and people experience.
There are some neat ways to interview a first CCO appointment with role plays, scenario analysis, presentations and even psychometric testing.
Need help in determining what sales and BD support you need? Contact Edler Consulting for an initial conversation so you can build a commercial function that delivers growth.
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