What Does a Small Business Need Most – Business Development or Just Plain Selling?
During my years in the corporate world, I witnessed significant misuse of the term ‘business development’ and of the people who carried the title associated with this activity – business development manager. I really thought I knew my way around such corporate-speak terms and to an extent, I suppose I did, but when I entered the world of small business on my own, my understanding changed quite radically.
The lessons I have leaned these past few years have had a profound effect of my understanding of business and business processes. In this post I’m going to focus on Business Development vs Sales.
Starting a Business and Needing Leads
Unless you are positioned to receive leads from your previous employer’s, then no matter how needed and how good your offering is, no matter how well you have differentiated your products and services, the most critical task you face is acquiring customers. Once you have an established customer base, opportunities multiply, but until then, you NEED SALES ABOVE BUSINESS DEVELOPMENT.
Many of you may disagree with me, but I speak now as the owner operator of a small business, where gaining a sale this month means paying the rent this month! All start-ups and young business go through this phase unless they are prepared to experiment and use up the founders’ savings (which we know all about!).
Sales is not synonymous with Business Development
When we started our business, we did appreciate this, but we made mistakes anyway. Our plan was to pay for leads and win work to cover current costs while we were busy with business development by spreading the good news about our products and services online. And here’s the problem:
Paying for leads in some businesses is the fast road to hell!
1. Paying for leads to survive becomes a major preoccupation because you write a quotation for every lead which takes a lot of time. So, business development comes to a grinding halt.
2. On websites where you pay for leads, many, if not most the leads come from people with little intent of buying (from anyone) – they are tyre-kickers.
3. On websites where you pay for leads, almost all of the customers are looking for the lowest prices and so even when you spend a great deal of time analyzing their business needs and presenting a professional quotation, they go straight to the bottom line and your effort is wasted. There are strategies for dealing with this, such as including options that only add to the visible cost when ticked, but for generally low value clients, this is simply a waste of time.
We did acquire one very valuable long-term industrial customer over 12 months during which we paid for approximately 100 leads. We also acquired a few more companies and charities who we love working with and who have provided some referrals. But as an overall exercise, the whole period can be written off as a 95% waste. Which brings me to my next point:
It all Depends on what type of Business You Are
At Sydney Business Web, our products and services are for the long term and require close cooperation with our customer. For instance, when we provide SEO services (just one of our offerings) we do an analysis of the competition that our customer’s business faces, how strong or weak its on-site SEO is and where the company needs to grow.
This is complex, but we are well equipped to deal with it both by experience and academic qualification. We don’t sell these solutions to companies that require a $250 miracle’ – and that pretty well describes many of the customers we’ve encountered on paid leads site. But that doesn’t mean that paid leads are useless for every business or that evrything should stop whie you pursue your business development program.
Companies That Can and Should Use Paid Leads
There are many businesses that are needed by customers in a hurry. For example:
- Gas fitters
These businesses have common factors:
- To be found on the web at all, they need to rank very high for their category, or they need continuous expensive advertising online.
- Once they are found, they must be extremely fast and easy to contact
- The work is short term and often there is no repeat business unless the business manages itself online extremely well and stays in touch with customers throughout the year,
- To some extent, urgency can overcome price sensitivity
- The intent to purchase for most searches on the web is very high – often, people don’t search for a domestic electrician unless they need one now.
- The work is generally B2C rather than B2B.
This is quite different for an architect or a web designer, as should be apparent because these companies simply cannot rely on price-driven short term leads - their business development program and networking should not be delayed for short-term gain.
What Paid Leads Offer – and what they really do
The company we contracted with presented us with leads that we were promised only went out to five companies. In practice, we were told by several persons that as soon as they pressed the ‘Go button’, their phone rang and rang and rang! We leave you to draw your own conclusions!
The next problem was that every single lead that popped up on or phone for work in Sydney was simply gone before we could press the response on our phone. This caused endless frustration. When we complained about this, we were offered ‘auto-submit’ on some quotes but then found that the quotes submitted for us were generally for jobs that no one else wanted.
Shortly after that, we abandoned ship and terminated the service – almost a year after we should have done. Mea culpa! Now we are undertaking a focused business wevelopment programn in the manner we should have from the beginning – building relationships and providing value continuously to our customers and contacts. This was an expensive lesson for us. As an aside, here are some notes on the services we have used We won’t name them, but if anyone needs to know confidentially, we will assist – just call or email us.
Paid Listing Services – what they offer and what they really do
When a company is not ranking on Google and needs orders fast, a listing site can fill the gap for a while. Thus, when someone types in ‘builder Caringbah’ it’s possible for your company to rank on a listing site that is highly ranked.
The trouble is that most listing sites, even the best-known ones are just not trusted, and people skip over them. These sites tend to be general purpose listing sites that accommodate everything from architects to zoologists. We’ve broken that pattern with this and set up a new geo-referenced site for the building and trades industry only.
We did this because we found that despite a professionally designed placement and high ranking on Google, we did not gain even one inquiry in six months from our listing.
Part of the problem for local business is that when somebody searches for a ‘plumber near me’ – they want a result now – not the privilege of reading a list of local providers (to an extent).
Other Solutions to the Ranking Problem
We have analyzed a good deal of data and found that local businesses with related activities are missing out greatly through lack of interconnection. For instance, if a customer needs a plumber, finds a plumber’s website and also needs a local electrician, why can these two businesses not cooperate and make each other visible on each other’s sites? Why can local builders not have a contact forum where they can speak with local architects where they can exchange project information? The answer is – they can – and we have made that possible.
Conclusions on Business Development vs Paid Leads
1. If your business needs business development because your products and services are designed for long-term relationships then paid leads will mainly waste your time.
2. If your business is for urgently needed services, and you are not ranked on Google, then test a paid lead service for a month. If the return is not worthwhile, dump it. Even if the cash ROI is positive, ask yourself how much time you are spending on quotes for ‘tyre kickers.’
3. In our experience, paid listings on general purpose listing sites do not work, at least for businesses such as ours. Others may differ and I am extremely interested to hear your experiences and opinions.
4. Ranking high on search engines, and particularly on google must be a business priority – control your own fate.
5. Don’t sacrifice business development for lead-chasing. Business development will bring you a sale pipeline that is at least partly self-filling, whereas paid leads will eat your time and slow down the growth of your business.
Warning: This article describes our experience and opinions honestly and openly. Nevertheless, other equally honest and experienced people will doubtless disagree with us in some ways. So don't take this article as advice - Please consult a range of opinions before acting on any of our statements and do the best job you can of deciding which solutions are best for your business. If you would like to ask us questions, please start the discussion on Linkedin or Facebook. We welcome all your inputs.