#18: What's My Take on Biz Dev?

Can anyone fit their view on something as complex as business development into one newsletter? I tried.

If I were to start an agency now, in 2024, I'd hire a full-cycle sales manager responsible for generating their own pipeline, handling sales calls, and closing deals. From several previous newsletters (#7, #13), early on, your lead generation will consist of semi-automation (cold email, LinkedIn outreach, Twitter, Upwork) and thought leadership (content on LinkedIn, strategic partnerships), participating in events, and generally being active in the industry.

So, either you are that executive generalist who will do all of this, or you'll find yourself a lieutenant for this role. Either way, building a business development team doesn't make financial sense early on.

You don't know what kind of agency you are building until you reach $2M in gross revenue and a team of 20-30 people. Until that time, business development is primarily the owner's focus, or you bring in a full-cycle sales manager.

Now, that's not what I did when we started. Furthermore, Belkins doesn't have full-cycle sales executives even today; the responsibilities of driving new sales are split between the Business Development Representative (building a pipeline) and the Sales Executive (moving deals to close), which differs from what I just described. Are you confused?

I'll explain in a second why we did it and why today I am suggesting doing the opposite, but first, I'd like to give a short history lesson for those who are more curious.

Who is Aaron Ross?

Aaron Ross, notably recognized for his tenure as Director of Sales at Salesforce between 2000-2005, developed a system that he later termed "Predictable Revenue."

This system revolutionized the structure of sales teams by dividing them into two distinct groups: the outbound team, tasked with lead generation, and the account executive or sales executive team, responsible for responsible for closing those leads. Each team was assigned specific KPIs: for the outbound team, these were MQLs (Marketing Qualified Leads), SQLs (Sales Qualified Leads), and opportunities scheduled. In contrast, for the account executive team, the focus was on revenue generated.

While I won't delve into the specifics—partly because I don't fully remember them and also because it's not the central theme of this newsletter—what stands out as Aaron Ross's significant contribution, and for which I am personally grateful, is his role in popularizing, or perhaps even introducing, the concept of top-of-the-funnel building. This realization led companies to understand that they don't necessarily need an in-house outbound team, along with the associated overheads, for pipeline development.

Fast forward 20 years, and we have companies like Belkins, which evangelize and continue to advance the practice of outbound outsourcing. Aaron Ross also established a Predictable Revenue company specializing in SDR outsourcing around 2008-2010, which is still operational today.

Aaron Ross's approach to sales, as outlined in his "Predictable Revenue" model, was groundbreaking for several reasons, all contributing to its success:

1. Division of Responsibilities: This model allowed for specialized roles within the sales team, enabling individuals to focus on what they do best—either generating leads (BDRs) or closing them (AEs). This specialization improved efficiency and performance in each area.

2. Measurement and KPIs: By breaking down the sales process into distinct stages, it became easier to measure efficiency at each stage and set clear KPIs for BDRs and AEs. This clarity in measurement facilitated better management and optimization of the sales pipeline.

3. Recruitment and Training: The Predictable Revenue model demonstrated that generating new business didn't always require the skills of experienced AEs. Much of the process could be standardized and managed by less experienced sales personnel or BDRs fresh out of college, who didn't necessarily have deep industry or product knowledge. This realization made the sales process more accessible and easier to scale.

4. Cost Optimization: With different roles in the sales process, companies could structure compensation differently for BDRs and AEs, optimizing the costs associated with lead generation and deal closing. This also created a career progression path from BDR to AE, providing a clear development trajectory for sales personnel.

5. Scalability: The clear definition of roles, KPIs, and training processes made it easier for companies to scale their sales efforts. Businesses could hire more personnel, assign specific industries or regions, and manage lead lists more effectively, covering more ground and scaling operations efficiently.

These foundational principles are why B2B tech companies like Salesforce, Gong, HubSpot, Outreach.io, and others have succeeded. They excel in top-of-the-funnel building through outbound efforts, leveraging the structured approach pioneered by Aaron Ross.

These reasons highlight why I adopted Aaron Ross's Predictable Revenue approach at Belkins, focusing on my strengths as a sales executive while allowing the business development team to concentrate on pipeline generation. However, the landscape in 2024 presents compelling reasons to reconsider Aaron's approach, especially in professional services.

Here is why:

• Automation in Acquisition Channels: Today, most acquisition channels, such as Apollo, Clay, Reply.io, and Expandi.io, can be fully automated. Once these tools are set up, they consistently generate leads at a significantly lower cost. There's no need for ongoing manual maintenance, which means you can avoid the cost of a full-time salary for such tasks. In our experience, little to no adjustment was needed after initial setup in platforms like Reply.io or Apollo and outsourcing the setup as a one-time service from companies specializing in tool integration, like ColdIQ or Darwinian Ventures, proves to be cost-effective.

• Outsourcing to specialized companies for specific channels, such as Belkins for cold email, ClickRoads for paid advertising, or Kalyna Marketing for content writing, has simplified the process significantly. Attempting to develop these channels in-house over time would require a budget potentially a hundred times greater than outsourcing to experts.

I've invested over $500K in content from 2018 to 2022 with minimal returns, but partnering with a content specialist like Kalyna Marketing changed the game. We began seeing significantly improved results, all at a fraction of the previous cost.

• Buying habits in B2B have changed, now there are two predominant ways to attract leads:

  1. Grab attention → Nurture (drive leads with one channel, then stay on top of them for a longer period until the buying intent shows up)

  2. Fulfill the buying intent (be easily searchable and visible for clients to find you if the intent is there)

With both scenarios, leveraging one of the most cost-effective channels that you have access to, like for me it’s cold email, for someone else it can be ads because they have Google credits, or LinkedIn as they have a strong audience. This will generate attention. Meanwhile, with the right go-to-market strategy and well-rounded approach, you can become visible for buying intent.

I’ve spoken about this a few times already and it’s worth mentioning it again: testimonials, case studies, reviews on websites like Clutch, social posting, and expert content should always be your go-to.

Now, I didn't want to confuse you with all of this; my goal was simply to highlight that the rules have changed. If you're at a stage where you make less than $2M in revenue and have a team of 30 people, then it's not yet time to consider business development as a standalone unit. However, if you're pushing towards $5M+ and have a dedicated professional sales team, then part-2 of this newsletter will be relevant to you.

Here is Part-2

Your business development team is, on one hand, part of your marketing team and on the other, in your sales team. This should reflect in how they work, how they are compensated, and whom they report to.

If your focus is on generating more LEADS (Marketing):

• The goal here is quantity over quality, typically spanning multiple channels simultaneously to achieve larger volumes.

• Your Total Addressable Market (TAM) should be substantial (25K-50K companies within your target), necessitating higher budgets. (Refer to my previous newsletter on high volume and average volume sales for more insights.)

• Emphasize multichannel marketing, integrating both inbound and outbound strategies.

• To streamline this, your team works under marketing leadership, collaborates with the website team (to tailor landing pages), tracks marketing analytics, conversion from lead to SQL, and cares about paid ads, content, newsletters, social media, and essentially anything that can attract attention.

• The team should be compensated based on the number of appointments booked, for instance, the KPI could target 50 appointments per month.

• Given this, the costs you incur on your marketing are significant here, so your north star metric is Cost per New Deal or CPD.

In this scenario, you don’t actually mind which channel brings you leads as long as you get them consistently, at the right volume, and at the lowest cost. If I need 100 new deals a month and my team can drive them consistently at $400/deal, then it doesn’t matter whether these deals come from conferences, outbound cold email, LinkedIn, or paid ads. It does take time to find the balance and the ratio, as not all channels cost the same (here is a newsletter that talked about the cost of acquisition broken down by channel).

Such a focus on getting more leads will give you volume. Yes, you want volume for sure. Over time, it will get your costs down as you optimize some channels, learn better messaging, better ads, get more leads in.

Your approach here is:

1. You try everything or as many channels as you can.

2. You organize your team to support them consistently.

3. Your job is to optimize.

4. You always add new channels and new tools.

While reading this, did you picture this ocean wave of leads flowing to you? If you did, then here is how it might hit you hard:​​

• If you don’t have a deal scoring system, then you won’t be able to tell which channel generates leads based on your ICP and with higher quality. The image below is from our HubSpot, where the BDR team scores each new deal from -10 to +10 using the HubSpot playbook.

There are several sets of questions for the BDR to answer; you might have your own tailored list. Here is what we use:

Depending on the answers, BDRs assign -1, 0, or +1.

Then, for those deals that have less than +3, we disqualify them; those that are +3 and higher go to the sales team.

Now, because this effort is run by the marketing team, we have all our analytics on HubSpot and can determine which marketing channel brings unqualified deals and then optimize it.

• Another point in this section is about Ideal Client Profile and buying personas. Here, you need to regularly align your BDR team with high-potential deals and closed-won deals from the sales team, and cross-reference it with the client delivery team to focus on industries, locations, types of clients, and buyers who check all these categories:

  • have marketing potential

  • have sales potential

  • have delivery potential

The practical way to do this is to export data from your HubSpot on leads and new deals that entered the pipeline, add HubSpot sales pipeline stage, and the companies that progressed to the later stage, then determine top patterns connecting the best in each department and compare it with data from your client management team.

We use this beautiful tool, PlanHat, which allows us to export all current client data based on all parameters, including NPS, health score, LTV, LT, ACV, and other fancy financial metrics to determine both operational fit but also highlight the best business fit clients and then, together with BDR and sales, attack the top-10 matches.

Repeating this exercise every 6-12 months, and you'll have a very effective acquisition process.

If you focus on getting more CLIENTS (Sales):

Here, your business development team is part of your sales team and is managed by your head of sales. There is a distinct difference in this approach as long as you attack the market, you are likely to close with higher conversion, then it’s not the quantity of conversations but quality.

In this scenario, business development plays the role of the junior sales executive, and usually, there are even pairs BDR+SE that work in tandem to focus on certain markets, industries, sub-industries, or in case of ABM, even accounts.

Such sales are usually intent and relationship-based, with multiple touches and a lot of out-of-the-box approaches in acquisition. The targets for BDR here could also be X opportunities generated, but also it should be tied to closing and revenue generated. It can also mean that BDRs will take a smaller percentage of closed deals like sales executives.

Business development in this scenario is similar to classic outbound exactly to what Aaron Ross was teaching us, just mixed with 2024 mainstreams: some automation, AI, maybe expensive Outreach.io, some cold calling, and of course access to intent data.

The way I look at it, BDRs are more proactive, and they generate most of the new opportunities for your sales team, not marketing, therefore they have access to more resources and that would also mean hiring more experienced, skilled reps.

With the getting more leads (marketing) approach, classic business development is secondary, and your job is to build a scalable system that brings X at the X investment, whereas in this later (sales) example of getting more clients, you cannot build an actual system that runs itself, rather it is a live pipeline that will be rep-based and depending on the person who is doing it, that would mean the results you generate. BDRs here are almost self-managed, they should be like a Swiss knife, all-know-how, and don’t wait or expect that marketing will generate inbound for them, it’s a luxury.

From the descriptions above, I hope you got the sensation and now see the difference. There is no right or wrong answer, but it’s better for you to be acquainted and clear about where you are.

• With the former, you are marketing-based with systems, channels, and a BDR team that looks at conversations across multiple channels, and in a semi-automated manner executes these channels, perfect for scale.

• With the latter, your business development acts as pre-sales, starts relationships, and mainly opens doors with new opportunities by means of classic sales tools which will give us the clients we need to get to close, but is heavily dependent on personality. Such BDRs will grow into excellent Sales Executives in the future. Perfect for when you are starting out or for the boutique style.

If you’ve been a reader of my newsletter, then you know I like projections, so here is my projection for when and what type of business development scenario to implement:

• Year 1-3 or up to $2M gross - No dedicated BDR team, all new business goes via sales.

• Year 4-7 or up to $5M gross:

  • If low-volume sales - either full-cycle sales, or a business development unit as part of the deals team managed by the head of sales.

  • If high-volume or average-volume sales - sales and business development are separate teams, with the latter managed by the head of marketing.

• Year 8-10 or up to $10M gross - you are doing great, just keep doing what you are doing and don’t listen to me =)

Thank you for reading From Zero To Agency Hero! Until next week!