Business development is a crucial function for driving growth at any company. It involves activities like building partnerships, attracting new clients, exploring new markets, and more. While business development professionals are usually skilled at networking and relationship building, it’s equally important to measure the impact of these activities. After all, how can you know what’s working if you don’t track your efforts? 

In this comprehensive guide, we’ll explore key concepts around measuring business development, including:

– Defining important metrics and KPIs

– Best practices for tracking quantitative and qualitative factors

– Calculating the return on investment (ROI) of BD activities  

– Leveraging tools to measure and gain insights

– Tips for setting up effective processes.

Monitoring and evaluating your business development initiatives will provide data-driven insights on what’s effective for lead generation and revenue growth. Read on to learn how to master measurement in business development!

What is Business Development?

Before diving into measurement, let’s align on what business development entails. 

Business development refers to pursuing strategic activities and tactics to grow an organization and achieve its objectives. Responsibilities may include:

– Researching markets and industry trends

– Identifying new business opportunities 

– Establishing strategic partnerships and alliances

– Supporting sales teams with lead generation

– Negotiating deals and closing new business

– Developing new products, services, and distribution channels

– Building relationships with stakeholders like customers, partners, and investors

The goal is to support profitable growth by expanding into new markets and verticals, forging value-driving partnerships, attracting and converting new accounts, and more.

Business development leaders possess a strategic mindset, communication skills, industry expertise, and the tenacity required to drive results. But to be successful, they need to be able to quantify the impact of their efforts.

Importance of Measuring Business Development Activities 

There are several key reasons why measuring business development activities is critical:

Demonstrate value and ROI: Business development efforts represent investments of time, resources, budget, and personnel. To justify these investments, BD leaders need to show concrete returns in the form of new revenue, customers, partnerships, etc. Quantifiable results are key for securing ongoing budget and headcount.

Identify what’s working: Not all BD activities produce equal results. Effective measurement provides insights into what tactics, campaigns, partnerships, and target markets are generating the most traction. You can double down on what’s working and refine or eliminate less fruitful initiatives.

 Inform strategy: Metrics reveal market trends, competitive dynamics, growth opportunities, and more. These data points allow business development teams to craft data-driven strategies aligned with the most promising opportunities.

Enable continuous improvement: Tracking performance over time enables you to set benchmarks and then monitor progress against goals. You can continually fine-tune processes to achieve better outcomes.

Prove accountability: There is no room for vagueness about what business development delivers. Concrete metrics demonstrate the function’s impact and accountability to executive leadership.

Motivate the team: Hitting targets and seeing progress motivates business development professionals. Metrics help create clarity around goals and allow the team to take pride in achievements.

In summary, measurements enable strategic alignment, optimize resource allocation, foster accountability, demonstrate ROI, and motivate business development teams to deliver tangible results. Approaching measurement rigorously and consistently is fundamental to maximizing business development success.

Key Performance Indicators for Business Development

Now that we’ve covered why measurement matters, let’s explore some of the most important metrics and key performance indicators (KPIs) for business development.

Quantitative Metrics

Revenue influenced: A core metric is tracking total revenue generated from business development activities. This includes sales directly sourced by BD and any pipeline influenced through channels like inbound leads, referrals, and partnerships.

New customer acquisition: The number of new logos and accounts originated by business development. May include completely new customers or upsells/expansions at existing accounts.

Deal conversion rates: The percentage of prospect meetings, pitches, or quoted deals that convert into closed business. Measures the sales conversion effectiveness of business development. 

Average deal size: The average revenue size of new deals originated by business development. Larger deal sizes often indicate pursuing higher-value opportunities. 

Activity metrics: Such as meetings set, referrals sent to sales, calls made, event attendees, etc. Quantifies key outputs of business development.

Sales pipeline influenced: The total volume of sales pipeline generated by business development activities. Assessed through metrics like prospect meetings booked, new contacts added, etc. 

Partner revenue influence: For channel, alliance, and partnership focused business development – the revenue or pipeline driven via these third parties.

Qualitative Metrics

Market intelligence: Business development professionals gather tremendous insights about markets, trends, competitors, technologies, and the broader ecosystem. Tracking this knowledge allows informed strategies.

Brand awareness: Activities may aim to increase visibility and brand recognition among target buyer groups and markets. Surveys, brand studies, and other instruments can measure progress.

Relationship development: One of the most valuable business development contributions is strategically expanding networks and nurturing executive relationships. Requires qualitative assessment.

Increased reach: New partnerships, channels, and campaigns widen access to new geographies, segments, and contacts. Estimate the expanded target audience reach. 

Leadership visibility: Events, content, and other avenues boost executive visibility and thought leadership. Target awareness surveys or measures of perceptions.

Sales enablement: Sales training programs, coaching, content, and other enablement improve seller effectiveness. Evaluate via sales feedback, win rates, and competency assessments.

Balancing quantitative and qualitative factors provides a comprehensive view of business development contributions beyond purely financial metrics. 

Quantitative Metrics to Measure

Let’s do a deeper dive on some of the most telling quantitative metrics and KPIs to track for business development:

Revenue Influenced

The most fundamental metric is revenue influenced – this represents the tangible business outcomes of BD activities. Revenue may stem directly from business development such as:

– A major account referral that leads to a significant new customer win

– Orchestrating a value-driving strategic alliance that unlocks new sales

– Structuring an OEM partnership that generates licensing revenue

You should also track revenue from inbound leads, channel sales, and other sources that business development played a role in impacting.

Tools like CRM and marketing automation provide attribution tracking to connect revenue to specific activities, campaigns, and behaviors. 

Aim to benchmark revenue generated by business development compared to targets, past performance, and as a percentage of total company revenue. Revenue influenced demonstrates ROI.

New Customer Acquisition 

A further refinement of revenue measurement is tracking the number of new logos and accounts originated by business development.

Focus on the quality and average deal size versus purely the quantity of new customers. Highlight major new logos as BD wins.

New customer acquisition shows market reach. It also indicates how well business development identifies prospects that represent good potential accounts. 

Compare new customer counts period-over-period and year-over-year to evaluate growth. Break it down by territory, industry vertical, or customer profile as needed.

Deal Conversion Rates

An excellent effectiveness metric is deal conversion rate: the percentage of prospects that business development engages and advances that close as revenue. 

You can assess conversion rates across the entire sales cycle. For example:

– Prospects engaged to discovery calls completed

– Discovery calls to proposals issued 

– Proposals issued to deals closed

High conversion rates signal business development is skilled at identifying and qualifying the right opportunities and effectively nurturing them through the sales process.

Look at conversion rates by business development rep, territory, campaign, and other dimensions to identify what’s working well. Diagnose where improvements may be needed.

Average Deal Size

Average deal size reveals the value of the opportunities pursued. Compare your average deal size by:

– Business development rep or team

– Strategy such as named accounts versus net new

– Industry, territory, or customer segment

Growing average deal size may indicate successfully upselling, landing bigger customers, or pursuing higher-value solutions and packages.

Shrinking deal size could signal problems like competing heavily on price, lack of upsell effectiveness, or misalignment in opportunity qualification.

Benchmark average deal size against targets and past performance. Break it down by product, service, and solution area too.

Activity Volume Metrics

While revenue metrics demonstrate outcomes, activity metrics reflect key outputs of business development. 

Capture volumes for activities like:

– Meetings, briefings, pitches conducted

– Demos given

– Targeted prospects engaged 

– Referrals provided to sales 

– Events attended

– Inbound inquiries handled

These demonstrate capacity, bandwidth, and effort. Look at trends over time and how activity translates to revenue.

Compare activity metrics to goals. They help ensure business development professionals maintain sufficient touches and engagement with priority accounts and prospects.

High activity without commensurate revenue developed indicates execution challenges to address. The reverse may signal a need to expand efforts.

Sales Pipeline Influence

Sales pipeline represents a leading indicator for revenue. Business development should track its contribution to building pipeline, such as:

– Dollar amount of new pipeline

– Percentage of net new versus existing account expansion pipeline 

– Number of active opportunities developed

Assess pipeline generated by territory, product line, industry vertical, customer profile, etc. 

Pipeline influence ties activity metrics to the prospects solidly moved into sales stages. Strong pipeline contribution demonstrates effectiveness developing opportunities with true revenue potential. 

Compare pipeline KPIs period-over-period and year-over-year. Pipeline coverage should align with revenue targets. Slowing or low pipeline requires examination to diagnose why.

Qualitative Metrics to Measure

For a comprehensive view of business development effectiveness, balance quantitative metrics with qualitative performance indicators.

These highlight the less tangible but still vital contributions business development makes to long-term success.

Market Intelligence Insights

Business development engagements produce tremendous market intelligence and insights around:

– Trends in customer needs, priorities, and pain points

– Competitive threats, product direction, pricing, and go-to-market

– Channel developments and partnership opportunities

– Regulatory and compliance impacts 

– Emerging technologies and solutions 

This high-value information shapes strategy, guides product development, informs marketing, and equips sales.

Track market intelligence gained through metrics like:

– Strategic briefings on key accounts delivered 

– Competitive updates compiled and shared

– Market analyses and landscape reviews conducted

– Advisory sessions held with company leaders 

Look to feedback surveys and usage indicators to rate the value of market insights provided.

Brand Awareness and Reach 

Raising brand visibility and reach among target segments represents a common business development goal. 

Assess efforts through metrics like:

– Impressions and engagement from content, events, and campaigns  

– Inquiries and web traffic from target accounts

– Growth in followers, network connections, or community members

– Surveys gauging brand awareness and favorability

Progressive improvement shows successful reach-building. Awareness metrics also tie to pipeline and revenue influence.

Relationship Development

Forging executive-level relationships is arguably the most valuable business development contribution.

It opens doors, provides insight, and nurtures opportunities over the long-term.

Relationship development is qualitative but can be measured by tracking:

– The number of C-level and VP-level contacts engaged 

– Speed of access and response rates from key accounts

– Repeat interactions and meetings secured

– Account feedback and testimonials

– Inclusion in RFP and consulting engagements

The depth and breadth of relationships cultivated serves as an indicator of business development effectiveness and strategic influence.

Sales Enablement and Productivity

Business development boosts sales productivity through activities like:

– Training programs and coaching

– Content and collateral creation

– Sales planning and account targeting

– Opportunity handoffs and pipeline reviews

– Event and  meeting facilitation

Measure the impact through:

– Surveys assessing sales readiness and competency

– Adoption and feedback on enablement content

– Sales performance metrics like win rates, deal sizes, and quota attainment

– Time studies on sales cycle and efficiency gains

Enablement metrics demonstrate how well business development sets up sales for success.

In summary, balancing quantitative outcomes with qualitative indicators provides comprehensive visibility into the total performance and impact of business development.

Calculating Return on Investment

One of the most crucial measurements is return on investment (ROI). ROI quantifies the financial return produced by business development initiatives relative to the costs.

To determine ROI:

Calculate Total Benefits

– Summarize the tangible value delivered by business development over a period, such as:

– Revenue influenced

– Sales cost savings from enablement, content, training

– New contacts and accounts engaged 

Calculate Total Investment 

– Add up expenses for staff, programs, technology, travel/events, and other costs to support business development

Divide Total Benefits by Total Investment

This yields the ROI, commonly presented as a ratio, percentage, or dollar return per dollar spent. 

For example:

– $5M revenue influenced / $2M costs = 2.5X ROI  

– $5M in benefits / $2M in investment = 250% ROI

– A $2.5M return for every $1M invested

Benchmark ROI against past performance, industry standards, and strategic targets. ROI makes the case for appropriate resourcing.

A 2X to 4X ROI or better is strong for business development. Use ROI data to double down on high-return activities and reallocate spending away from poor performers.

Tips for Tracking and Measuring Effectively

With the metrics framed, here are tips for actually implementing tracking and measurement effectively:

Build reporting into CRM and sales systems: Centralize data on prospects, pipeline, and revenue in tools like Salesforce or Microsoft Dynamics. Establish automatic reporting on key metrics.

Add measurement fields to activity trackers: Augment tools used to log calls, meetings, contacts, etc. with fields to capture business development specifics like lead source, PID, campaign influence, etc.

Enhance revenue tagging: Work with finance to append income statements with tags for revenue by source, partner, segment, and other attributes to slice by.

Leverage marketing automation: Platforms like HubSpot and Marketo allow you to track engagement through the funnel and attribute revenue back to campaigns, content, and behaviors. 

Conduct periodic business reviews: Hold quarterly or monthly reviews of metrics and trends with sales leaders and key stakeholders. Diagnose issues, share successes, and realign on priorities.

Build a metrics dashboard: Centralize key indicators on a shareable dashboard for visibility. Segment by business development rep, region, business unit or dimensions important for your strategy. 

Automate reporting: Use tools like Domo, Looker, or Sisense to automate reporting to business development teams. This provides fast access to numbers and trended metrics.

Train on disciplined data practices: Success requires habits like meticulous opportunity recording, tagging lead sources, updating CRM, and faithful activity logging. Prevent data gaps through training and standards.

Connect qualitative evidence: Have teams compile win stories, testimonials, account feedback, and strategic takeaways to put qualitative meat on the bones of reporting. 

Review metrics consistently: Establish a monthly or quarterly cadence to review metrics and performance. Adjust strategies and resource allocation based on data.

A data-driven approach positions business development to maximize results and accurately demonstrate its value.

Tools and Software to Use

Leveraging tools and technology is vital for efficiently capturing, analyzing, and reporting on business development activities and impact. 

Here are some recommended solutions:

CRM – Salesforce, Microsoft Dynamics, HubSpot, Zoho: Record contacts, accounts, and opportunities. Activity logging and pipeline tracking.

Marketing Automation – Marketo, Eloqua, Pardot: Attribute revenue through the funnel. Score leads and track campaign influence. 

Analytics – Looker, Tableau, Domo, Power BI: Centralize data, visualize insights, and create interactive reports.

CRM Add-Ons – InsightSquared, EverString: Enhance reporting, analysis, and orchestration for CRM data.

Sales Engagement – Outreach, SalesLoft, Groove: Track email and calling activity and effectiveness.

Event Management – GEVME, Eventbrite, Splash: Registration, mobile app, surveys, and attendee analytics for events. 

Relationship Mapping – LinkedIn Sales Navigator, Datanyze, Demandbase: Discover connections and track relationship developments. 

Business Intelligence – D&B Hoovers, Owler, Pitchbook: Databases for company profiles, org charts, funding, and more. 

Surveys – SurveyMonkey, Qualtrics, Typeform: Create brand, campaign, and relationship surveys to collect qualitative data.

Assemble an integrated stack across CRM, marketing, sales, and analytics domains to efficiently monitor business development performance.

Conclusion

Business development has traditionally been seen as an art focused on relationships and strategy. But results demand data.

Using metrics and KPIs outlined in this guide establishes clear accountability. Tracking demonstrates the concrete value business development drives in quantifiable terms that resonate across the C-suite.

A rigorous approach allows identifying the tactics, markets, and partnerships generating the highest returns. Resources can be concentrated on what moves the revenue needle.

Measurement provides a continual feedback loop for improvement. And it equips business development teams with the proof to justify resources and strategic investments.

Defining the right metrics and implementing effective tracking processes doesn’t happen overnight. But it’s a fundamental competency for all high-performing business development organizations.

Approach measurement as an opportunity to showcase your team’s unique contributions. The data tells a compelling story that underscores business development’s vital role in driving profitable growth.