This guide is designed to help you decide if your B2B sales organization should have separate (specialist) new logo hunter account executives (AEs) and existing account farmer account managers (AMs) OR generalist (hybrid; full-cycle) AE/AMs.
Decision Tree
Factors Influencing the Hunter-Farmer-Generalist Decision
(prioritized)
#1 Sales Team Size (within a segment)
The context for sales team size is the segment a group of sellers is focused on. Typically, a segment is a combination of customer size (# employees or revenue), industry, and/or geography. Very small startups might have just a few sellers serving all types of prospects and existing accounts. Even medium-to-large organizations can have a small team size, especially when expanding into a new segment.
If a sales team is small, certainly 5 or fewer, then start with generalist AE/AMs since the benefits of specialization tend to come with scale. In the early days of a new segment, it is difficult to assess the other decision factors such as the true new logo potential. It might even make sense to stick with generalists until you can fully staff at least one full team of AEs and of AMs each under their own first line manager.
For larger sales teams, one must consider additional factors to determine the optimal role structure.
#2 New Logo Potential
Most thriving businesses have high new logo potential, either in the number of prospect accounts, the dollar value of prospect accounts, or both. However, in the event a company has saturated its market – for instance, they have already landed most/all telecom carriers in a given geography – then the generalist approach is best as one would not have sufficient scale to staff specialist AEs.
One could have a small number of new logos yet have very large new logo potential if the dollar value of those prospect accounts is large.
For organizations with significant new logo potential, one must consider additional factors to determine the optimal role structure.
#3 Year 1 Expansion Potential & Complexity
#4 Years 2+ Expansion Potential & Complexity
I’ve isolated Year 1 from Years 2+ since the former is the period during which account knowledge accumulated and relationships built during the initial land will matter most for expansion. In later years, customer organizations will have shifted their priorities and people will have moved to new roles or departed making the pre-sale ancient history. Your sellers, in time, may also have shifted territories, been promoted, or moved on.
As with new logo potential, most healthy organizations have high expansion potential. Similarly most organizations have significant expansion opportunities in Year 1. How could it be that expansion potential is low in Year 1 yet high in Year 2+? This is not uncommon for products with long-implementation times or for sales with a built-in, multi-year ramp.
I’ve combined expansion potential and complexity. Here are examples of the various combinations:
- High potential / high complexity: Selling a large, competitive new deal to a different business unit or subsidiary.
- High potential / low complexity: Expanding product usage or users. This is very common for products with usage-based pricing.
- Low potential / high complexity: Selling a small but unrelated additional product. This is generally rare and justifiably so since it is highly inefficient.
- Low potential / low complexity: Adding additional users. This is common with ‘wall-to-wall’ deals such as in HR tech where one might have sold essential payroll services to a slow-to-moderately expanding customer.
If expansion potential is high and complex in year 1 and years 2+, then generalist AE/AMs will be best positioned to accumulate account knowledge and build trust-based, value-added relationships that help grow the account over time.
If year 1 expansion potential is high and complex but years 2+ are low or non-complex, then allow AEs to hold accounts for the first twelve months when their knowledge and relationships have the most impact. Then, transition accounts to dedicated AMs at renewal. Renewal s should be handled by CSMs (or by AEs, with appropriate incentives, if one does not have a CSMs).
If year 1 expansion potential low or non-complex but years 2+ are high and complex, then the best strategy is to hand the account off from the AE to the AM after the initial land. This way, AEs stay focused on hunting new logos while AMs can start accumulating knowledge and building relationships as early as possible.
Finally, if expansion potential is low or non-complex in year 1 and years 2+, then, since we are on the the path with high new logo potential, organizations should keep their hunter AEs focused on acquiring new logos. Moreover, in this instance, organizations should leverage combined CSM/AMs for the sake of efficiency; in fact, with low NRR, one should think of these people as pure CSMs since the cost of AMs is not justified.
Factors Not Influencing the Hunter-Farmer-Generalist Decision
Complexity of Initial Land
The reason this is not a decision factor is since it can swing the decision equally in either direction.
One can argue that a complex land means you need specialist AEs wholly focused on managing new logo opportunities in order to maximize win rates and deal sizes.
One can also argue that the account knowledge accumulated and relationships built in a complex sale carry through to expansion so one should instead have generalists. (See expansion potential & complexity above).
New logo lands could be complex due to the dollar value of the sale, a complex/technical product, or lack of market awareness of your product category or company.
Seller Responsible for Customer Success
Generally, one should not burden sellers with non-commercial responsibilities when those can be completed by more capable, less-expensive resources. Hence, this is a broader strategy decision not a seller role structural factor. The only time commercial and non-commercial responsibilities should be merged in a single individual is when expansion is either low-potential or non-complex for the foreseeable future.
Selling in a Highly Competitive Market
This is at best a minor decision factor which is otherwise accounted for by land or expand complexity. But sure, independent of all other factors, selling in a highly competitive market would tip the scales toward specialists since AEs gain offensive skills and AMs gain defensive skills.
Pre- and Post-Sales Process Definition/Rigorous Adherence
Good process definition and rigorous adherence is simply good hygiene. Don’t use structure to compensate for weak strategy and/or execution.
Target Customer Size
SMB tends toward specialists and Enterprise toward generalists. However, this can vary and is more tied to SMB-focused teams tending toward small or non-complex expansion opportunities and ENT tending toward large and complex expansion opportunities.
New Logo Lead Source
Inbound/PLG- or, especially partner-sourced leads give sellers more time to focus on managing opportunities since they may not have to be as focused on pipeline generation. However, this ‘extra’ time and energy can be spent on either new logo acquisition or on account expansion.
Weak New Business or Expansion Performance
At first glance, weak new business or expansion performance would suggest turning to specialists for improved focus. However, these are product, marketing, execution, revenue strategy, and/or market considerations to be addressed independently of sales role structure.
AE Ramp Time (and new hire morale)
I cannot dispute the compelling argument that new hire generalists ramp faster than dedicated new hire AEs. By serving existing accounts, sellers can be better equipped since they not merely are speaking with prospects but more crucially are learning from clients.
However, the sales role strategy decision is based on optimizing for efficient growth. Seller ramp is an important factor but not the most important. Hyper-growth organization, typically those exceeding 100% growth per year, benefit most from shorter ramp time. However, those companies are often in demand-capture mode and therefore need specialists focused on new logo acquisition.
To improve AE ramp time, invest instead in sales enablement. To address low new hire morale caused by slow quota attainment, provide a non-recoverable draw of suitable duration (typically equal to training time + median sales cycle duration).
Other Key Considerations
Right-Sizing Territories
When operating a generalist sales organization, right-size territories on a periodic (typically annual) basis. For instance, one organization I worked at reset everyone to a $1M book of business each year. The company had 85% GDR and the sellers had a quota of getting to a $1.25M book by year end. Hence, AE/AMs were on the hook for $400K which could come from new logos or expansion. Every 4 reps would generate an additional $1M which allowed the company to hire a 5th rep. A virtuous cycle indeed that not only fueled growth but also lowered risk by ensuring reps were not ‘parked’ on a massive, mature set of accounts.
Hiring True AMs
Many leaders make the mistake of treating the AM role somewhere between a CSM and an AE. Great AMs are true professionals able to navigate complex enterprises and develop whitespace. As such, they can command compensation equivalent to AEs albeit with higher quotas.
Switching From Specialist to Generalist or Vice-Versa
When a new sales leader arrives, s/he will often prioritize switching the model on the assumption, right or wrong, that the GTM structure was as least one major cause of their predecessor’s downfall.
Switching from one model to the other is fraught with complexity and risk. I recommend piloting the shift with a single team (or a handful of reps) to work out the kinks before making a wholesale shift.
Issues to watch out for when switching from specialist to generalist:
- Most former specialist AMs will struggle with new logo acquisition.
- Some former specialist AEs will struggle with their account management duties.
- Generalist compensation tends to be lower than pure AE compensation so you’ll need challenging quotas since lowering OTE is more certain to be a non-starter
Issues to watch out for when switching from generalist to specialist:
- This is likely the easier of the two ways to switch. For the AE role, seek generalists who have proven to be superb new logo hunters. Perhaps the biggest challenge is that you may not have enough of them. To this end, Bill Binch (Battery Ventures; Pendo; Marketo) recommends setting AE and AM comp identical except that AMs have much more aggressive quotas to offset the extent to which it is an ‘easier’ job. Then let people opt-in to either role based on fit rather than chasing the almighty dollar.
- Compensation can get trickly since AEs tend to make more than generalists and AMs less.
Making Specialist or Generalist Work Independent of the Key Factors
I’ve spoken with very smart colleagues who say, “Let the leader decide on the model. Either can work and they should run the model they know. Also, if you don’t let them, then will tend to use the limitation as a scapegoat.” Perhaps one should make CRO hiring decisions based on knowing how to run the ‘right’ model for your context but that is often viewed as a nice-to-have versus more pressing requirements.
At least for now, I agree with these colleagues. Here are some brief thoughts on making the ‘non-recommended’ structure work.
Operating the Generalist Model when Specialist is the Preferred Model
The main concern with the generalist model is that AE/AMs will gravitate toward expansion which is easier in nearly all circumstances. To combat this:
- Supplement seller self-prospecting with a strong demand generation engine via one or more of:
- xDRs
- Marketing to drive qualified inbound leads (SEM, SEO, events, etc.)
- Channel partners
- Construct your compensation plan achieve the desired new logo focus. For instance,
- Maintain separate new logo and net expansion quotas
- Pay higher rates on new logos than on net expansion
- Make qualifying for accelerators dependent on hitting new logo goals
- Ensure managers and leaders are closely inspecting new logo pipeline generation achievement versus target
- Set up territories so that sellers have (almost) no way to hit quota unless they win new logos
Operating the Specialist Model when Generalist is the Preferred Model
The main concern with the specialist model is losing knowledge / breaking relationships by handing off accounts ‘too early.’ See here for guidance on handoff best practices.