Monetisation delivers economic value, whereas, Business Development focuses on customer acquisition.
Is the role of the Business Development Manager living up to its title? Does the required deliverable of product and/or service monetisation fit within the sales mandate? Is the responsibility to originate, negotiate and execute complex and financially driven commercial deliverables a pure sales function?
There is little doubt that the business development function in an early-stage, entrepreneurial business has grown in status. This is consistent with the increase in funding available to founder teams to focus on growth and development.
The Challenge – there is an immediate need after successfully raising funding to substantiate the investment by gaining measurable market traction.
Management teams are driven to implement strategies to increase revenue to validate “product-market fit”. On the surface this is a function of customer acquisition, a sales team initiative driven by the business development team. Think about the negotiation of partnerships focused on acquiring new customers. Being a sales team deliverable the KPI’s to measure success are sales-orientated. However, for these partnerships to be effective, they must be commercially driven and therefore structured and measurable based on specific financial and qualitative metrics.
Business Monetisation is about delivering on financial performance with measurable metrics.
Todays digitally-driven consumer marketplaces involve dealing with diverse user groups. Namely; customers, suppliers and service providers. Consequently, in order to service and monetise each of these user groups effectively management need to be innovative and flexible. It is no longer sufficient to structure a one size fits all sale price point, consideration needs to be given to each user’s specific needs and value expectations. Specifically, focusing on the interdependence of various users within the marketplace and broader supply chain.
In a vertical market, the sales focus is skewed toward targeting specific buyers. Conversely, when dealing with platform economies, network effects turn all users into potential suppliers and customers, www.medium.com/networkeffects-explained. Users transact based on immediate needs and the interdependencies that they share with each other.
To convert users into loyal customers the sales strategy needs to be commercially driven.
Is ownership of this deliverable a finance or a sales team function?
To succeed and to create a meaningful proposition for all platform users requires understanding the value proposition relative to each user. Thereupon, structuring and negotiating a pricing arrangement tailored to deliver value. Introducing the important role of the Business Monetisation leader.
In conclusion, as a result of my experience working with growth companies, the deliverable is to execute a commercially driven as opposed to a sales orientated customer acquisition strategy. Consequently, the ownership, including strategising and negotiating of of Business Development partnerships should fall under the Commercial leadership of the business.
Monetisation Growth Strategies.
Chief Executive Officers need to focus on originating and implementing customer and product monetisation strategies. Above all, the focus needs to be on generating high margin, sustainable cash flows from diverse user groups.
Blitzscaling by Reid Hoffman of Linkedin fame highlights the need for management teams to focus on economic value and financial metrics when pursuing a growth strategy. The book is loaded with valuable insights and learnings relevant to all founder teams. Blitzscaling