Since you’re reading this blog, you know – or are committed to learning – something about sales organizations. You are probably already familiar with the sales organization structure referred to as Hunter/Farmer. But to make sure we’re all speaking the same language: The Hunter brings in the new business (new logos) and the Farmer works to grow the customer thereafter. There are as many nuanced variations of this approach as are there are sales titles that avoid using the word “Sales”, but this is a solid definition for our purposes today.
The Hunter/Farmer approach is often used when a significant portion of customer lifetime value (LTV) is earned after the initial sale. The Farmer’s job is to make sure the company realizes that value, whether by renewing, cross-selling, upselling, or increasing adoption. It’s not the only way to structure a sales organization, but when done correctly, it can be efficient and effective in driving revenue growth (if you’re curious about other approaches that might suit your company, check out our Sales Org Evaluation Tool).
If you think you and your customers might be best served by a Hunter/Farmer approach but haven’t been able to justify the move, you might want to take a look at the hidden costs of NOT making the change. The difference may tip the scales for you.
Before jumping into that, it’s important to clear up some common myths:
What’s Not True
- One role is more important than the other. No way. Obviously, hunting must happen before farming can begin, but in many cases the farmer drives the majority of LTV and so is equally important. They are also in the position to bring invaluable feedback to the company, drive innovation, and fine-tune or even invent products. Excellence in farming can have a major impact on company value and the bottom line.
- Farmers are really just customer service. If that statement CAN be true for your company, you’re looking at the wrong model. However, if you need strategic-minded people to close that next renewal, sell that new product, and find reasons for your customer to do more business with you while making them feel great about it, you need the subtle sales hand of a sophisticated farmer.
What is True
- Both the hunter and the farmer are sales people (whatever the titles may say). And the best sales people love to close deals. The difference is that one is wired to close deals with new relationships, and the other is wired for existing relationships.
- Not respecting the wiring can burn you. Betting against human nature is always a risky business.
Now we can get on with the hidden costs.
What You May Not Be Seeing
If you and your customers benefit from an ongoing farming relationship AND you’re depending on your farmers to go bring in new logos, you’re not only missing out on the greater growth a Hunter focus can bring, but you’re also losing ground to your competitors in less obvious ways:
- Cognitive Switching
This is a term that is often used when describing (or debunking) multitasking, pointing out that the brain can really only focus on one thing at a time. Each time you switch focus, you incur a cognitive switching penalty, i.e., the effort and friction it takes to shift focus (costing as much as 40% of a person’s productive time). There’s a similar cost to sales person’s time when they are asked to do both hunting and farming: switching from the new relationship focus to the existing relationship focus can take significant energy and drain efficiency – just ask someone who’s done it. And if someone is wired much more in one direction than the other, that switching cost is even higher.
- The Short End of the Stick
Most sales people are wired more strongly for either New Relationships or Existing Relationships. If they are handling both, either your new logo prospects or existing customers are getting the short end from that rep. This can show up in poor closing ratios, customer churn, or general dissatisfaction. If you have a mix of orientations in your sales force, you might get okay results overall, but when you dig into the numbers you might see costly patterns.
- Talent Cost
Here’s the biggie: if you ask experienced sales leaders, most will tell you that their best talent is either good at hunting or really good at farming – rarely does the highest proficiency for both exist in the same person. If you were to plot it out, it might look something like this graph. This shows A-players clustered around either end of the Selling Relationship Spectrum – the end where they focus on their strength – while those that are “pretty good at both” tend to cluster in the B- and C-player middle. If you’ve been forcing a balance of hunting and farming activity on each of your sales reps, you may already be left with the “mediocre middle” and not even know it: The A players have already left, and A candidates turn up their noses at the blended role. How much do you think that is costing you?
If you add these costs into your equation, you might find it justifies the change. The good news is that – if it’s been allowed – your sales reps might have already self-selected, quietly emphasizing their strengths. If so, identifying the right people for the more defined roles may not be hard (as Ryder found out), and the change will be welcomed. But if you’re still not sure and need help considering the change, that’s what we do. Let us help you weigh the hidden costs and Make Your Number.