In my experience, hunters will do anything for a buck. Why then, would you pay them to shoot fish in a barrel?
Whether you’re an established player entering a new market or a new entrant into an established market, your commercial strategy must be agile and adaptable. As organizations typically scale and mature, they (hopefully) gain share while their growth rate slows and the two key metrics of CAC:LTV and Net Churn will have an inverse relationship.
However, even the most successful organizations are slow to adapt their sales strategy and shift commercial focus as their markets and customers evolve.
- Is your client renewal/retention rate consistently at or above benchmark, but your relative acquisition cost trends remain relatively high, even with less net churn?
- Are you paying hunters based on renewal business?
- Are your hunters holding on too long before transitioning to an account manager?
If yes (or unsure) to any of the above, then your sales organization may have fallen into the trap of paying your hunters for deals that are already won. Here’s why…
At today’s speed of business, prospects are often coming to you to ‘seal the deal’, requiring very minimal effort on hunter’s part. Let’s examine how the right GTM structure and pay mix can optimize effectiveness while being mindful of maximizing the client experience.
Crystalize the Sales Priorities Without the Magic 8-Ball
Sales organizations will often leverage their best talent as a crutch to maintain & grow ARR, instead of shifting the GTM strategy to maximize salesforce effectiveness while also lowering net churn. The framework must establish & clarify the objectives for the sales organization to grow revenue and reduce churn.
Is your goal to:
- Book as much new annual recurring revenue (ARR) as possible or add as many new logos as possible?
- Optimize deal size or ‘land and expand’ to maximize focus on market share gain?
- Sign longer term contracts or ensure customers are happy after purchase so they will remain long term customers?
- Drive the maximum renewal rate or drive expansion revenue within the existing base?
While there are trade-offs between sales incentives and GTM priorities, do you really need to pay a hunter for a ‘renewal’ or ‘client retention’ with the opportunity of upsell/cross-sell?
This quasi-sales function is often better served with a more traditional farmer rep or even perhaps the lighter touch of customer success team.
We can bifurcate this market challenge into two specific journeys, external and internal, depending on your sales focus and organizational design.
Shifting to an Outward-In Focus
As an emerging best practice, more organizations are shifting to the customer success team to create not only an enhanced CX but also a simpler renewal process with less friction than the potentially abrasive hunter. Not all customer success functions are created equally, but the market demand for a differentiated experience to gain and sustain client loyalty continues to intensify. As more organizations adopt this function, CS will continue to shift from best practice to standard operating procedure. Those whom under-invest or under-resource will feel the pain of market share erosion.
For further insight into execution: Will a “Traditional” Customer Success Approach Work For You?
To benchmark your strategic framework, download SBI’s 2019 Customer Success Strategy
Can You Hear Me Now?
“It ain’t what you don’t know that gets you into trouble.
It’s what you know for sure that just ain’t so….”
The 19th century writer Josh Billings wasn’t referring to NPS, but customer feedback often provides us with an asymmetric picture from which we derive false narratives and plenty of potential blindspots.
To illustrate, here’s a quick exercise to test your conviction (Read Aloud):
- We know how our customers are buying vs. how they want to buy.
- We have identified the most critical points of their purchasing journey and have allocated resources to what they care about most, new logo or renewal.
Regardless of your conviction level, all organizations need constant feedback. Issues of misalignment between buyer and seller are ubiquitous, from the sales organization to marketing, product, etc.
However, the good news is that these blindspots can be revealed with some simple diligence in a market listening and touchpoint analysis exercise.
To read more on how to optimize the customer journey click here:
Sales Team Coordination – the Missing Link in Implementing a Customer Experience Framework
For an interactive guide click here: SBI CX Strategy 2019 Workbook
Stay in Your Lane
Now assuming we know how the customer wants to buy and how to keep them happy, have you truly done your homework on which B2B sales organizational models best serve your current customer base and go-to-market strategy?
Based on your sales objectives, you may have a blend of pre-sales or middle of the funnel specialists focused on segments, verticals, or product SMEs, to help win new logo business when their involvement isn’t until the buyer is already 50-75% down the pipeline.
Based on market feedback and sheer CAC economics, many industry leaders have simplified their organizations to a Hunter/Farmer designation to reduce costs and redundancy.
Simply put, hunters go after new business and farmers cultivate cross-sell/up-sell of existing accounts. The emerging best practice twist: Farmers are rapidly converging into the Customer Success team. For more detail on the organizational transition read: How Switching to a Hunter-Farmer Sales Structure Could Cut Your Costs
Who’s on First?
The most common tactical solution: ‘The Hybrid’; i.e. some combination of two or more of the organization models listed above. Widely adopted by new & legacy organizations with new product launches, or a legacy organization gradually shifting models to adapt to the market.
The most common pitfall: Role corruption; the silent killer of any successful sales organization. i.e. hunters focused on upselling clients rather than new logos will not enhance the client experience while also adversely affecting CAC-to-LTV ratios.
For more depth on focused roles read: Go-to-Market Strategy: The Hunter Misconception
While an increasing ARR can mask this, the top performing sales organizations realize that role clarity is the foundation of sustainable growth.
In any GTM sales model, enhanced collaboration will reduce friction and increase win rates, while lowering acquisition costs and driving profitability in the long-term. Prioritizing your business objectives will clarify how to drive the sales compensation accordingly.
To ensure you’re not paying hunters based on renewal business and that hunters don’t hold onto the account too long before transitioning to an account manager, then maybe It’s Time to Start Thinking About 2019 Sales Compensation Design.
Schedule a working session at SBI’s Studio.
Located in Dallas, TX, our facility offers state-of-the-art meeting rooms, lounge, full-service bar, and a studio used to tape our TV shows. SBI provides the location and facilitators, all at a compelling price point.