Salesperson Ambidexterity: Not One Size Fits All
February 19, 2021 | By Ryan Decker
Researchers: Ashish Sharma
Imagine you are a salesperson, and you have been tasked with improving sales growth for this quarter. How would you go about accomplishing this? Would you search for new customers or reach out to existing customers and try to sell them additional products or services?
This decision is often likened to the process of hunting or farming for resources. Salespeople can either search for new customers (i.e. hunt) or revisit existing customers (i.e. farm) to increase sales. Consider IBM’s customer relationships. IBM hunts for new customers to sell cloud solutions; IBM farms existing cloud customers for network and security services.
If IBM salespeople engage in both hunting and farming, shouldn’t all companies? In a groundbreaking new study, Ashish Sharma (University of Arkansas) with co-authors Son K. Lam (University of Georgia) and Thomas E. DeCarlo (University of Alabama – Birmingham) show that the effectiveness of salesperson ambidexterity, the ability to engage in both hunting and farming activities, depends on the characteristics of their customer base. Their article, “Salesperson ambidexterity in customer engagement: do customer base characteristics matter?” published in the Journal of the Academy of Marketing Science, explains how customer base characteristics impact salesperson performance outcomes.
“Ambidexterity refers to individuals’, subunits’, or firms’ engagement in both exploration and exploitation activities,” the authors write. “While conventional wisdom suggests that ambidexterity is generally beneficial, empirical evidence indicates that the effect of ambidexterity on individual performance is not always positive.” As such, managers and salespeople would benefit from knowing when to and when not to be ambidextrous.
In this paper, the authors conducted two studies using survey data from B2B (business to business) salespeople to understand when ambidextrous behavior is beneficial and how salespeople allocate resources between hunting and farming strategies. To determine when ambidextrous behavior is successful, they examine the effects of two characteristics of a customer base – size and newness – on how salespeople engage with customers.
Salespeople face high resource demands by hunting and farming activities, causing them to believe it’s difficult to pursue both. So, salespeople tend to focus on one or the other. The authors propose that customer base characteristics, such as size and newness, buffer this perceived difficulty, actually affecting the likelihood of ambidextrous behavior. They examine how customer base size impacts when salesperson ambidexterity is successful and how customer base newness impacts resource allocation between hunting and farming activities.
When Ambidexterity Works
In many firms, salespeople generally get to decide whether they engage in hunting, farming, or both. Therefore, understanding when ambidexterity drives sales growth allows salespeople to improve their performance. In their first study, the authors examine how customer base size affects the relationship between ambidexterity and sales growth. From surveying salespeople and reviewing theories, the authors introduce two competing perspectives around how customer base size impacts sales growth.
The authors evaluate competing hypotheses regarding the effect of customer base size on salesperson ambidexterity. On one hand, large customer base size can offer more resource slack, making it easier for a salesperson to engage in ambidextrous behavior. On the other hand, a small customer base can induce less role stress as the limited salespeople resources (such as time, attention, etc.) get divided among fewer customers.
The results of the study support the first hypothesis, suggesting that “when salespeople have a large customer base, ambidexterity in hunting and farming orientation is beneficial in driving sales growth.” When salespeople have a small customer base, however, engaging in either hunting or farming – but not both – results in higher sales growth. “This pattern indicates that ambidexterity can improve or impair sales growth, depending on the salesperson customer base size.”
How Salespeople Allocate Their Time
“Acquiring new customers is generally considered more time consuming, requiring significant incentives, with a higher rate of failure than farming existing customers,” the authors write. If a salesperson succeeds at converting prospects into customers, do they continue hunting for other new customers or decide to devote more time to farming instead? The authors introduce two competing perspectives around how customer base newness impacts time allocation between hunting and farming behaviors.
The first perspective considers customer base newness as a success trap: as salespeople succeed at either hunting or farming, they decide to stick with what works and devote more time and effort to the strategy. In other words, salespeople choose to refine their existing strategy rather than develop a new strategy because they can more-easily adjust their future actions based on what worked in the past.
On the other hand, the second perspective considers customer base newness as a task-switching lever. Research shows that people tend to allocate more time to goals that are furthest from attainment. For example, if a student studied a lot for a big exam and got a better score than they expected, they may spend less time studying for the next exam since the first one was easier than they expected. In sales, a high level of customer newness signifies success in hunting, causing a salesperson to devote more effort to farming in the future.
Surprisingly, the authors found different results for hunting and farming. Salespeople engaging in hunting behaviors are more likely to switch to farming after succeeding at hunting. This pattern supports the task-switching perspective that “recent past exploration (hunting) success shifts future effort to more exploitative (farming) activities.” For salespeople engaging in farming behaviors, however, the opposite was true. Salespeople tend to become trapped in the less-risky farming behavior over time.
Ambidexterity: Not for Everyone
This research provides interesting implications for managers and salespeople looking to improve performance and efficiency. Contrary to conventional wisdom, salesperson ambidexterity does not always drive sales growth. Salespeople who focused on either hunting or farming – not both – achieved stronger sales growth when they had a small customer base, likely because of lower stress. Thus, if you manage sales staff who work with small customer bases, then promoting ambidexterity among your salespeople might not be your best option.
Among firms with many customers, however, salespeople who focused only on hunting performed the worst in terms of sales growth. Rather than generate revenue from existing customers through up- or cross-selling, these salespeople preferred to hunt for new prospects. Their low performance shows the importance of devoting equivalent time to both hunting and farming efforts when the customer base is large.
Results may not appear immediately from hunting efforts, but hunting is necessary for long-term firm success. While salespeople can easily switch from hunting to farming, salespeople become trapped in farming activities when they receive positive feedback. To promote hunting activities and prevent perpetual farming, “managers need to rely on incentives that reward hunting efforts rather than hunting outcomes,” the authors write.
Interestingly, the authors find that salespeople who prefer hunting for customers tend to be more satisfied with their job. “It is possible that satisfied salespeople are more motivated to achieve even better performance and, as such, are more open to engaging with new customers to do so,” they write. Improving the work environment and investing in employees can increase job satisfaction, and in turn, contribute to the long-term growth of the company.