Business Development: How much is enough?

SellingWhen I speak with consulting colleagues who are solo’s or small companies, one of the topics that comes up a lot is,  “how do we balance our workload between generating new business and delivering the business that we have already sold?”

When we’re in delivery mode, we often become totally consumed, and we just don’t get around to doing the routine business development activities such as keeping in touch with former clients and approaching new ones. We wind up paying the piper for that when our current work is finished and we’re on the bench until we can generate more. With sales cycles getting longer, that means lost opportunities, and big swings in our revenue production.

But how much business development is enough?

To answer that, let’s begin by considering a simple case study:

Let’s say that we offer a one-day business planning workshop and we charge $5,000 for customization and delivery. We would like to sell an additional 12 workshops each year (one a month) for a revenue increase of $60,000. How much additional selling activity should we plan for, to meet this goal?

First we need to look at our buying and selling process:

Situation: The buyer has realized they have a problem with business planning and they would like to provide some training to help their people improve.

Activity: They begin to look out through all the marketing and information sources that are available to them. They find us! They do some preliminary evaluation, most likely from our web site. That goes well, and we look like a good fit.

Positive Decision: They decide to hold an initial exploratory meeting

Activity: At the first meeting, we mutually share information about the need and our capabilities. They’re considering capability, value for money, and our ability to implement. We’re considering our solution fit, whether they have access to enough budget to pay us, and whether there is adequate urgency to the business need that we think they will make a timely decision.

Positive Decision: We mutually agree to a complete evaluation of the need and our solution. (Sales people would say we have qualified the opportunity.)

Activity: Over a number of meetings, the buyer makes a detailed assessment of our capability, pricing, and ability to implement. As the seller, we are continuing to test whether our earlier decision to quality the opportunity remains valid, i.e. solution fit, availability of budget, and likelihood of a timely decision. We know from experience this activity requires about a month.

Positive decisions: 1) The prospect chooses us. 2) We continue to believe that this is good business. 3) We execute a contract.

Disclaimer: Very few buying and selling processes are this simple or this linear. But this simple model is still useful to answer the question, “How much activity is enough”. Bear with me…

That’s nice, but how much incremental business development activity do we need?

Answer: We need to design our marketing campaign to result in six initial meetings every month.

How’d we get that?

Let’s say that we know from experience that we win about half of the opportunities that go through a detailed evaluation. That’s a probability of 1 in 2.

Let’s also say that we know that about one out of every three initial meetings results in a detailed evaluation. That’s a probability of 1 in 3.

We got the estimate of six meetings by multiplying the two probabilities from the two steps and then inverting. 1/3 time 1/2 equals 1/6. That gives us the probability of a single initial meeting turning into a contract being 1 in 6. To get one contract, we need to hold six initial meetings.

Because real world situations are messier than this example, you should probably “round up” your estimate of the initial meetings you need. Keep track of your experience and refine your goals accordingly.

And here’s the hard part!

Plans are great but we have to execute. We need to hold ourselves accountable to creating those six meetings, and monitor how well we are progressing them through decisions to evaluate, and decisions to engage.

Month after month…

Want to know more?

The smartest guy on the planet on this topic is Martyn Lewis, president of Market-Partners. If you’re interested in a deeper dive, check out his informative white paper, written from his 20 years of experience consulting on this topic: Managing the Business of Sales

Register below for our free webinar to ask your questions in a live meeting of your colleaues and share your knowledge and experience with them.

Net-net: Never, never, never stop selling. Benches have splinters…