Are you doing business development backwards?

If you start by hunting for contracts you’re going about it backwards

Developing customer relationships and growing customer intimacy is time consuming, and that makes it expensive. Many companies fall into the trap of believing they can’t afford to develop relationships with all their potential future customers. They trick themselves into thinking that if they can land a contract with a new customer, then they can develop a relationship with them. What they don’t realize is that by doing this they doom themselves to low win rates, low margins, and shallow customer relationships.

How do you win a contract with a customer who doesn’t know your value? You win on price. How do you build a relationship with a customer while managing the project to keep the cost below the ridiculously low price you bid to “get your foot in the door?” How do you build customer awareness, gather intelligence, and position for future work using the lowest cost project staff you can find? By falling into the trap of thinking that customer relationship building starts with landing a contract, you doom yourself to a future of just getting by.

If you put the relationship first, things play out differently. By putting time into getting to know the customer, listening to them instead of talking, but giving them tons of advice regarding options for solving their problems, you gain an information advantage that translates into a higher win rate. You also gain influence over the requirements and evaluation criteria. By proving your value before you get a contract, you give the customer a reason to evaluate you based on value instead of just price. You can win with a higher price. You enter the project with an existing relationship and the margins to grow that relationship.

However, this requires that you be willing to cover the upfront cost of the time it will take and have the patience to recover that cost over a time measured in years. How can you afford to invest like that in all your potential customers? That’s where strategic planning comes in. You don’t invest in all the potential customers, just the ones who meet your strategic objectives.

See also:
Information Advantage

This is a very different business model. It’s more like product development than hunting. You invest in strategic targets and recover your investment with sales over time. You won’t get there by trying to avoid investing and only hiring staff who are billable. You have to not only identify strategic targets, you also have to determine how much investment each target is worth.

When you decide to approach new customers as an investment instead of prospects, you begin focusing on smart investing. You not only have to select the right targets, you have to invest the right amount with the right timing. But keep in mind, your investing time. And how you manage and use time can be more important than how much time you invest. By making the most of the time you invest in developing customer relationships and growing customer intimacy, you maximize your return on the investment.

When you take this approach, your success at business development is based on the wisdom of your strategies and how effectively you invest time in relationship building. This is a much better path to success than bidding blind until you chance upon a win and then hoping that the customer likes your low-price performance enough to want to do more business with you in the future.

For some companies, this seems like too much work and too much risk. However, by skipping it they take on more risk with worse odds, bidding more with a lower win rate and ending up with lower margins. But at least they don't have to think so hard about it.

If you start by hunting for contracts you’re going about it backwards. You won’t increase your win rate by hiring a smooth talking hunter/salesperson or submitting more bids until something sticks. If instead of looking for the right contracts you look for the right strategies and follow them up with the right approaches for relationship marketing, everything you do will increase your odds of success.


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Carl Dickson

Carl is the Founder and President of CapturePlanning.com and PropLIBRARY

Carl is an expert at winning in writing. The materials he has published have helped millions of people develop business and write better proposals. Carl is also a prolific author, frequent speaker, trainer, and consultant and can be reached at carl.dickson@captureplanning.com. To find out more about him, you can also connect with Carl on LinkedIn.

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