Rainmaking Problem #10: When Does Hiring a Business Developer Make Sense?
(This post is another in our series of Rainmaking Problems. We invite your comments on this problem and would also welcome any problems you would like to submit to get comments from other readers.)
In my last post, I argued that often the suggestion to hire a business developer is no more than a way to avoid taking responsibility for sales. But business developers can be highly effective at professional firms, increasing lead flow and helping to land new clients and new work. So, when should a firm hire a business developer? I would value your opinions.
February 18th, 2009 at 11:43 pm
When you need someone to create an opening into new clients? Someone to open the door, set up meetings between top decision makers and the consulting partner?
February 19th, 2009 at 1:45 am
I don’t know if I have a generalized case off the top of my head, but in some cases I have seen generalists who are hunting for new accounts in sparsely penetrated geographies used in biz dev roles as part of the door opening part of the sales process. At some point, however, it becomes necessary to bring in specialists and the principals/partners in as closers as the account prospect becomes better qualified.
February 19th, 2009 at 6:34 am
Gautam
It is so good tp hear from you.
This is an excellent list of BD (business developer) responsibilities. How can you, or need you, keep your partners from abandoning all efforts themselves after the BD is hired?
Steve
BDs are often focused on new accounts, as you suggest. I often hear that they become complacent if allowed to take too much commission from old ones.
Ford Harding
February 19th, 2009 at 9:40 am
Hello Ford!
While I completely agree that owners need to take responsibility for lead generation and sales; however, if it wasn’t for the many firms that do not follow this rule, I wouldn’t have a thriving business, particularly in this down economy. It’s interesting that when business is booming, and the work is flowing like a revolving door, some owners completely overlook the need to market. But as soon as the work dries up they want to don their BD/marketing hats though quickly realizing they have no clue where to start. So of course this is when they want to hire a business developer. Is it an appropriate time? Yes, if they want to stay afloat and eventually get back on their feet. Owners owe it to themselves and their employees to become better rainmakers no matter how dreadful. As a professional consultant I owe it to my clients to educate them of the benefits as well as provide training. As I tell my clients, “it’s all about baby steps.”
Rose Fetter
February 19th, 2009 at 11:14 am
Rose
That a business developer can serve as a trainer/coach to partners lacking sales know-how is an excellent point. Doing so, they can help build a sales competency within their firms.
It’s good to hear that you are doing well. We should catch up.
Ford Harding
February 19th, 2009 at 12:14 pm
I find that a good business development manager (BDM) is an essential part of the team. When they are good, they are excellent at focusing on embedding themselves in the client and walking the halls looking and weighing every available opportunity. A partner should certainly be walking the halls but they are thinking differently about a client than the BDM. The BDM is sniffing out all opportunity; the lead partner while always looking for opportunity is also cultivating an executive relationship with the client and seeks to build a bond and partnership. It is a subtle difference. This allows the Partner to focus on vetted opportunities to clarify and close the deal. In my career, I have worked with some awesome BDM’s Any business looking to expand into unchartered waters can definitely benefit from a good business developer.
February 19th, 2009 at 12:20 pm
Ford, your question, like many good questions, requires a studied answer. At 50,000 feet, the answer is both yes and no. A quick study of three factors will help readers decide if they should say “yes” or “no” to hiring a business developer. The three factors are: Goals, Partner Selling Skills and Partner Motivation.
Goals: They must be clear, numeric and contain a deadline. “We need to grow revenues by 5% by year end 2009″ qualifies. “We need more sales” does not. There should also be further definition provided, e.g., “we need to cross-sell in our existing accounts” and “we need to win back 10 accounts from our competitor in Dallas” are both good examples and will also be helpful in determining if a BD person should be hired.
Partner Selling Skills: Assuming a structure of either Partners who deliver services directly or Partners who lead a pyramid of personnel to deliver services, the question that needs to be answered is “how good are each of the partners at generating the type of business a company’s goals demand?”. Many Partners achieved and retain their positions on the basis of superb service delivery. This is critical for a company’s success however, insufficient to grow the business, especially in tight economic markets. Partners selling skills against the goals must be evaluated. If the goal is to “win 20 new accounts in 2009 for our new service line”, then independent of the Parnter team’s ability to deliver the service, the company must ask how likely is each Partner to be able to open the doors to a new account and proceed through the lengthier sales cycle to win business?
Partner Movtivation: If Partner selling skills are up to the task, then examine their motivation. Is their reward system aligned with the Goals listed? Even if Partners are skilled at selling new accounts, as per the last example, what is their motivation for taking the time to do so? Often, historical measurement systems such as billings are kept in place even as markets radically shift. In this scenario, even though the firm needs new accounts, each Partner will onlybe motivated to maximize her/his wealth by billing the most they can to existing clients, leaving no one to drive the 20 new accounts.
February 19th, 2009 at 7:08 pm
Anne
Your comment provides excellent balance to my last post. You clearly know what you want from a BDM and how to get it. I agree that a good marketing partner working with a good BDM can be a highly effective team. Thanks.
George
Thanks for this thoughtful response. Coming from you gives it great credibility. These are practical and useful criteria that I am sure will help many readers.
Ford Harding
February 25th, 2009 at 12:06 pm
In professional service firms with multiple partners, each partner tasked with bringing in work will focus on areas he or she is familiar with. Sometimes the marketing effort can become diffuse and uncoordinated.
There is always a temptation to jump on any lead available. If the firm is not strategically aligned towards that lead focusing on it might detract from other clients more suited to the firm in general.
Having a business development manager act as a lead generator is one method for success. The other possibility is that the BDM is gathering information from the principals and ensuring that they are marketing the correct types of clients. The marketing efficiency could go up as a result.
February 25th, 2009 at 4:01 pm
Adam:
You raise the important issue that whether you hire a BD depends on what you expect them tp do.
Ford Hardomg