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Strategies for new customers

# 34 – August 2013

Finding new customers is a top priority when asking management what they expect from their sales organisations. The process of attracting a new customer consists of many components. The main topic for us, when discussing this with our customers, is to find the best organisational structure.

Here we see two main strategies – both with pros and cons.

1. Having the general sales force to prioritise new customers
Existing customers often consume a lot of the sales person’s available time. There could be relevant and justified reasons for this: The customers may require or have high expectations on service provided by the sales people. Or the sales people need to be close to their customers in order to protect them from the competition. But the reasons could also be emotional: It’s usually more comfortable and pleasant to deal with an existing customer than to break new ground.

There are some obvious benefits from letting a sales person handle both existing and new customers. They can leverage the experience and knowledge from the existing customer base when establishing new ones. Case stories, testimonials and the industry knowledge that follows, clearly helps in finding new customers.

The big drawback is that the sales person sets a lower priority for the new customers, whether this is done consciously or not. In order to succeed, the company needs to formulate clear expectations and targets and to follow up on these consistently. If this could be achieved, this strategy has a lot of merit.

2. Establish a specialised sales force for new customers
The expression ”hunters and farmers” are quite often heard when discussion this model. It is based on the concept that some personalities are better equipped in getting new customers – ”hunters”, while others are better equipped to nurse an existing customer relation – ”farmers”. Whether this theory of sales personalities is valid is debatable. But that the “hunter” personality is a scarce resource, most people would agree upon.

If we disregard the personality theories, the organisation model with dedicated resources has some clear benefits. You will have sales people with no other focus than to establishing new customers. And it will be easier to manage and train them for that specific purpose.

The obvious drawback is that the role is extremely demanding and difficult to handle from a motivational standpoint. The high effort needed to bring in new customers only to hand those over to a “farmer” could be tough to bear over time.

Some companies use this as a career path. A new sales person has to prove himself in acquiring new customers before moving on to general sales. The drawback of this model is that if you want to succeed in acquiring new customers you will need a lot of experience and competence – precisely what a new sales person lacks.