Business development issues in the space industry

There are some really good business developers at work in the space industry today - selling dreams backed up by stats, heritage, and engineering excellence, while acting with integrity, enthusiasm, and understanding towards their prospective customers.

But there are also plenty who . . . aren’t so good. Some, in fact, are downright lazy.

At satsearch we’ve been a part of hundreds of procurement discussions and have connected suppliers with potential business partners all over the world, at all levels of the supply chain.

Through this work we’ve picked up a wide range of recommendations that anyone serious about building a real business in today’s space industry needs to consider.

In this article we cast some light on common challenges with business development in space at three scales: opportunities, channels, and strategy.

Every company needs to extrapolate lessons and ideas from business development at each level to ensure an optimal overall approach. But the nitty gritty detail at each stage can throw up a lot of challenges.

(Business development for) space is hard

We all know that the space industry is complex. In many areas it’s a nascent market, with a mix of government bodies, legacy players, research institutions, and keen new startups intent on disruption.

And in some areas it’s not really a market at all.

For the business developer, this complexity is evident in several places:

• The products and services for sale,
• Their applications and use cases in space,
• The makeup of the companies, organizations, and mission teams that need them,
• The national and international regulatory context in which a sale is discussed,
• The extended sales and negotiation process that follows,
• The structure of financing, deals, service level agreements (SLAs), and contracts, and
• The provision of after-sales support and services.

In some places this complexity is irreducible. But wherever possible it should be mitigated by measuring and optimizing the effort and resources put into all of the operations required to attract, close, and serve customers.

The only way you can do that with any predictability is to spend the time to get a clear understanding of your operations and success. So let’s get into the details of how this can be done.

BusDev at opportunity level

First up let’s look at a few key business development processes at the level of an individual sale or procurement discussion.

There are three key areas where we’ve seen issues arise time and time again;

• understanding the prospective customer’s requirements,
• evaluating the costs and the benefits of each potential business opportunity, and?
• Taking all facets of your competition into account.

We’ll explore each of these in turn.

Understanding requirements

If you don’t know what the customer wants or needs, it’s pretty hard to convince them you have it.

Part of the challenge to making sales in the space industry comes from the fact that business development for products is fundamentally different to business development for services. And in space, although we often hear about standardized, modular components and commercial-off-the-shelf (COTS) subsystems, a huge amount of hardware and software is still custom-built.

This is just a commercial reality. Space startups all over the world might claim to offer only ready-made models for the mass market - but if Space Force requests 5,000 units with a different configuration, at full price, most companies will make the changes.

Because of this, space industry salespeople and marketers need to balance the tactics they use to generate leads for standard systems and bespoke solutions (which can cover everything from customizing a basic model to developing a unique, end-to-end, x-as-a-service package for a single mission).

Here's some recommendations from procurement discussions we've initiated for suppliers across the globe:

In practice there's never a clear dividing line between these activities of course. At each stage of the procurement process the good business developer will need to choose when to sell your products and when to sell your solutions or capabilities.

Lazy business developers don't do the hard work required to deeply understand the customer's real needs and pain points. As a result, they can’t tailor their messages and approaches accordingly, or evaluate the opportunity properly (more on this next).

Instead, they trot out boilerplate descriptions and features-based messages that can easily seem irrelevant, even if they aren't. Focus instead on how your offer solves the problem, once you understand exactly what that problem is, and how you can prove this is the case.

Get this right and you’re on your way to maximizing the value of every lead that your business can attract. But you need to be efficient about it in order to spend time on the most valuable leads for your company.

Assessing costs and benefits

As mentioned, on the satsearch platform we've facilitated hundreds of connections between engineers building missions and suppliers that can help them.

During this work we’ve observed that some suppliers focus only on the price they can offer and don’t take the time to work out the cost to attract and close the prospect. Space systems are of high value but can also take a lot of time and effort to sell, so assessing the Customer Acquisition Cost (CAC) is an important step that business developers shouldn’t overlook.

In addition, many companies focus too much on the potential profit of the individual sale and not on the Customer Lifetime Value (CLV) that a new relationship might bring. Selling a subsystem for use in a one-off university CubeSat project is different to getting it onboard the first mission of a new VC-backed constellation developer.

CLV is always an approximation and takes experience to calculate with any level of accuracy, but any steps you can take to get to a figure will help.

Then, a CAC:CLV ratio will enable you to work out how good any given opportunity is, in clear financial terms, for your business.

The only other factor is to consider whether the clout you’ll get from serving a specific client makes it worthwhile to accept a lower price.

But be careful here - in the space industry lots of organizations keep elements of missions secret for various reasons. So you’ll want to make sure you can actually use a sale for promotional purposes before agreeing to a lower price on that basis.

If you can clearly understand a prospect’s specific needs, match your offer accordingly, and assess both the costs and benefits of making the sale, you’ll be in a very strong and data-driven position for any given opportunity.

The final piece of the puzzle is to also take the competition into account.

Evaluating competition

You have competition for every target customer and in every sale.

While it’s true that space technology and services are highly specialized, there are always alternatives to every solution that a prospective customer needs.

We’ve seen many examples of business developers that don’t spend the time and effort understanding exactly who and what their competition is for a given procurement opportunity, and then sometimes losing out unexpectedly.

Broadly, competition is either direct or indirect.

Direct competitors offer like-for-like products or services with similar heritage and technical performance. Such choices then of course come down to typical assessments of price, lead time, vendor fit and so on.

Indirect competitors offer technologies that achieve the same result that the buyer is looking for, but in a different way. And assessing the options out there is a tricky thing to do.

For example, if you offer reaction wheels then you may be competing with suppliers who can provide torque. This group will include other reaction wheel manufacturers of course, but will also cover control moment gyroscope (CMG) makers for example.

But then, if the mission team explains that they actually require increased torque in order to reposition a satellite for enhanced Earth Observation (EO) data collection on each pass, you may also be competing with propulsion suppliers , camera manufacturers , and even edge computing suppliers who can achieve the same (or better) results with an alternative mission plan.

As you know, it comes back to deeply understanding the requirements first, but then also being able to take the time and effort to assess the market for competition and alternatives, so you can account for the associated trade-offs in the business development process.

None of this is difficult to understand, but it also isn’t easy to do. Just remember that results and progress will compound over time, provided you do the work to optimize your channels as well as your individual business opportunities.

BusDev at channel level

For your business to achieve real commercial success in the space industry, you need a predictable and sustainable growth engine.

For high-value sales (which characterizes most space technology and service categories) a growth engine is simply a system that can repeatedly deliver qualified leads to the sales team.

Deep understanding of the idiosyncrasies of your sales discussions described above (requirements, costs/benefits, and competition) give you a blueprint for designing your own engine.

And then you need to run that engine in a specific channel that will enable you to access prospects and attempt to convert them.

These channels may be your blog and website, social media, conferences, marketplace platforms like satsearch.com , an email newsletter, cold calls, offline advertising and so on.

Any channel can be effective, whether on- or offline (note that by 2025, Gartner predicts that 80% of B2B sales interactions will occur in digital channels) - and good business developers will constantly be thinking about how they can optimize each of them.

But we’ve seen a lot of issues with this process.

Business prospects in the space industry do have many differences, but not every sale is completely unique. You can extrapolate lessons learned on individual contracts to every opportunity from a specific channel.

If you don’t put in the work to qualitatively and quantitatively assess your strategies and see what’s working, you’re optimizing without data. Maybe in the entirely wrong direction.

Here are some specific examples of how you can use the data gathered about individual procurement situations (as explained in the previous section) to optimize business development across channels:

• If you are attracting prospects with similar problems from a particular channel, tailor your messaging in that channel to (hopefully) get more of them relatively simply (aka low-hanging fruit).
• Carry out upfront customer education in certain channels to expand your footprint and lower your CAC.
• Use sales conversations to identify channels with active prospects, but where your competitors aren't very visible.
• Conversely, for those channels where your competitors are very visible, assess whether you should also invest time and energy so you aren't conspicuous in your absence (believe it or not, this is the reason why many companies spend five figures or more on conferences every year).
• Answer questions received in one channel across all of your channels, proactively, to reduce customer education cost and, ultimately, CAC.

Optimizing each channel you use will enable you to get the right sales messages to the right prospects at the right time.

But this work isn’t easy and we’ve seen many times that business developers don’t take the time to consider how best to utilize each channel on an individual basis, driving by an overarching strategy.

BusDev at the strategic level

Long-term success in attracting and converting leads for your business will only be achieved with a strong strategy.

This will need to be clear enough that it can be followed by multiple people in your organization, but flexible enough to adapt to changing conditions and circumstances.

Here are some of the issues we have observed at a strategic level with business development in the space industry.

Poorly understood aims and objectives

Some companies simply don’t understand what their major business development objective is, or should be.

They haven’t spent the time to connect the potential outcomes of business development activities to the company’s strategic goals.

And when those activities are then carried out by more junior staff, things can get confused. Success or failure is unclear, resources are spent in the wrong places, and reputations can suffer.

Ensure that you make everyone involved in business development aware of what the actual, granular goals are.

If you’re building a business case around government-funded projects, your activities need to contribute towards that. Whereas if the commercial NewSpace market is your target, business development will look different.

Lack of channel optimization

We all know that what gets measured gets managed, so if you aren’t measuring your business activity in different channels effectively, you can’t manage it correctly.

We’ve seen many examples of companies that over-optimize in the wrong channels or don’t take the time to even assess which are likely to generate the best results.

Conferences and events are a good example, as mentioned. They are a significant expense, both financially and in terms of man-hours, yet many suppliers can’t begin to estimate whether they are worthwhile.

Understanding which channels work best for your company is a crucial activity for good business developers at all stages of the supply chain.

Ultimately, your business development strategy should move towards offering an omnichannel experience - where customer interactions are seamless and consistent across all different channels and sales funnel stages.

Ignoring reputational impacts

Space is a small industry and reputations matter. How you approach and interact with prospective customers will have an effect on how your business is perceived in the industry.

This doesn’t mean that you should spend as much time as possible nurturing every potential business opportunity - the advice on data-gathering and prioritizing effort stands. But the way that you communicate with the industry should always be positive.

We’ve seen plenty of examples of suppliers treat prospects poorly when the perceived value isn’t that high. This is often unintentional or is due to time constraints, but it affects reputations.

It's a fast-moving B2B market and today’s single unit GNSS research client is tomorrow’s end-to-end 12 satellite constellation systems engineer.

Or that NewSpace startup with 3 engineers in a garage that you refuse to have a meeting with might be a VC-funded 100-person tech powerhouse in 2 years time, netting millions in space agency contracts.

It pays to be responsive, respectful, and honest with everyone - as well as being organized enough to maintain relationships (within reason) for the long term.

Ineffective or irrelevant messages

As discussed, your channel plans determine how you send each message (what content types and formats etc.) but your strategy will determine what that message actually is.

The message needs to be tailored to the audience’s specific needs, pain points, emotions, and aspirations. And it also needs to be customized for the specific channel where it is being used.

You can’t just publish identical datasheets or sales presentations across social media accounts, or screenshot website pages to use as conference materials.

Good business developers will do the hard work needed to deeply understand how a channel works so they can optimise messaging and activity in it.

Poor followups

Following up and regular contact is so crucial in business development, as you know. Engineers think objectively and weigh up the pros and cons of procurement decisions, but human biases are always at play in sales conversations.

And this includes the view of the supplier - how engaged, motivated, enthusiastic, friendly, and energetic they are. So your prospects will be continually evaluating how often and how well you follow up, either consciously or unconsciously.

There’s a good reason for this too. Space missions require lots of collaboration between buyer and supplier teams - so you need to be able to work together as people, as well as have technologies that can be seamlessly integrated.

So assume the buyer is also judging how reactive the supplier is, how willing they are to share information on reasonable timescales, how well they follow up, and how they keep in touch and share updates.

- - -

These are just a few examples of strategic business development issues we regularly see in today’s industry.

There are lots of caveats and grey areas at each stage, but if you keep an eye out for these potential pitfalls, you can develop a serious growth engine that leads to your company’s success.

Conclusion

Business development is never easy. Everything (from products to prospects to competition to tactics) is a moving target and there are a whole range of factors that can disrupt the process at any time.

The key is to be proactive and to make all of this a learning system. Feedback needs to flow up from individual sales conversations (particularly for lost sales) to inform tactics, strategy, and even product development across the company.

Keep your prospect’s wants and needs in mind at all stages, but also spend time on your own operations to create a pipeline of opportunities and relationships that can sustain your long-term success.

Hopefully this article has given a few pointers on how to do just that, based on our own observations of sales, marketing, business development, and procurement right across the global supply chain.

Satsearch is a channel that can be leveraged by suppliers all over the world to optimize business development.

We enable suppliers to build interest in their portfolios and access business opportunities with organizations in over 100 countries, enabling companies to efficiently build a funnel to attract direct and indirect leads.

Take a look at this page to find out more about how we work with suppliers or go here to find out how to add your company's information to the premier marketplace in the space industry.

And we’d also be really interested in what you think space business developers often get wrong (and right) in today’s industry. Post your thoughts in the comments below!