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 no doubt that the business development function in an early-stage, entrepreneurial business has grown in status. This is consistent with the increased funding available to founder teams to focus on growth and development. Once successfully having raised funding there is an immediate need for these teams to substantiate the investment by gaining measurable market traction.
Management teams need to put in place strategies to grow revenue in order to validate “product market fit”. On the surface, this is a function of customer acquisition which is a sales team initiative often driven by the business development team. For instance, the mandate is to sign up partnerships focused on acquiring new customers. Being a sales team deliverable the KPI’s and OKR’s to measure success are sales orientated. However, in order for these partnerships to be effective, they need to be commercially driven and therefore, structured and measured in terms of their financial attributes and metrics.
Business Monetisation is about delivering on financial performance with measurable metrics.
Today’s digitally-driven consumer marketplaces involve dealing with diverse user groups. Namely, customers, suppliers and service providers. Consequently, a company needs to be innovative and flexible, in order to, service and monetise each of these user groups effectively. 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. In particular, 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/or customers, www.medium.com/networkeffects-explained. Users transact based on their immediate needs and the interdependencies that they share with each other. Therefore, 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 role of the Business Monetisation leader.
In conclusion, in my experience working with growth companies, the deliverable is to execute on a commercially driven as opposed to a sales orientated customer acquisition role. For this reason, the ownership, including strategising and negotiating of this function, as well as, the related Objectives Key Results and Performance Indicators to measure success should fall under the Commercial leadership of the business with the responsibility to execute falling under the sales team.
Monetisation Growth Strategies.
Chief Executive Officers and founder teams 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 is a great read that highlights the need for management teams to focus on economic value and financial metrics when pursuing a growth strategy. The book offers valuable insights and learnings relevant to all founder teams. Blitzscaling