Tuesday, December 2, 2014

Sales hunting, farming, and compensation

The November/December 2014 print issue of Sales & Marketing Managment includes an article entitled "Sales suffer from too much farming and not enough hunting." It references the thoughts of Mike Weinberg, but those thoughts aren't new to 2014 - he actually shared them in May 2011.

But before we get to Weinberg's observations, we need to define the terms "hunting" and "farming." Here's how Steve Martinez defines them:

We essentially have two ways to generate business. One is through the process of hunting for new business and the other is farming our existing clients for new business....

Hunting is when we seek out new business and try to take business away from another company. The other method is to use our existing client base for referrals and references and grow through client share and vertical markets....

When it comes to hunting or farming, I think hunting is harder. You might liken it to chasing rabbits.

All other things being equal, hunting truly is harder. When you farm (in a sales sense), you already know who to talk to - just talk to the same people that you've been talking to all along. When you're hunting, it may take some time to find out who to talk to, and it will take additional time for your prey (in hunter terms) to figure out who YOU are.

So if you recognize that hunting is harder than farming, and that human nature causes us to gravitate toward easy things - when was the last time you personally slaughtered an animal to put meat on your dinner table? - then you can guess what happens when someone is supposed to hunt and farm - the focus of Weinberg's May 2011 post. Of course, Weinberg has to get our attention first:

The single biggest problem I see contributing to lack of new business development success is the hybrid hunter-farmer sales role.

Toward the end of his discussion, he asks the following question:

Is your sales compensation structured in such a way that a dollar sold to an existing account pays the same commission as a dollar sold to a new account? Year after year?

Eliot Burdett agrees:

If the strategy is to enter new markets, the commissions will need to be sufficiently high to justify the additional effort required to break new ground – otherwise reps will stick to what they know will put commission in their pockets.

Conversely, if your chief goal is to service existing accounts, you'll flip your commission structure the other way. But if your commissions are flat regardless of the type of customer, you may not get the behavior that you want.
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