It seems like everywhere you turn these days, companies are appointing “Chief Revenue Officers” (CROs) – especially at hyper-growth startups like AdRoll, Mixpanel, and New Relic. While the title is becoming increasingly common, each company tends to define the role in a slightly different way. As a former CRO myself who worked with other CROs daily, it’s been fascinating to see how this new breed of executive is evolving and spreading.
So what’s up with this CRO thing?
The title is still largely (but by no means exclusively) a SaaS and Silicon Valley thing. This makes sense, because so many of those CEOs have product and engineering backgrounds. They want revenue and customer DNA to complement their skills and interests, and they want a sales leader who will be able translate initial traction into lasting growth.
Building scalable and sustainable revenue generation is the best way to gain first-mover advantage in a new category. I think Silicon Valley realizes that in a land-grab world of innovation, the first winner takes most of the spoils. Competitors will come, but a CRO is the best chance you have to dominate a market first and fastest.
What does the job really look like?
As a CRO, no matter how broad or limited your reach may be in a company, you still need to close deals and build lasting and profitable customer relationships. You’ll carry a comp plan like a sales rep. You’ll lose your job if targets are not met. Hustling deals is job #1.
Some CROs act more like a COO. For example, while I spent a lot of my time on 1) sales deals and issues, 2) marketing and the demand funnel, and 3) customer success and renewals, I also spent fluctuating amounts of time with product, business operations, finance, sales operations, business development, and people ops. Many are operators with a strong deck of experience scaling revenue ops.
All CROs have purview over sales. Many also oversee customer success. A small number also manage the marketing function. The CRO’s purpose is to align and optimize the entire customer experience with the aim of increasing revenue. They spend time thinking about common goals and metrics, often connected to KPIs and dollars coming in across the departments they manage.
To accelerate revenue generation, a CRO needs really strong data skills. What algorithms do you have as the basis of your forecasting? What are your rep productivity targets by segment and why? What third-party source do you use for compensation benchmarking? What’s your customer acquisition cost (CAC) by lead source, and to what degree is it tied to gross margin? How has your average selling price (ASP) changed over the last year? What is your top churn reason this quarter? How do you measure and improve website and contact-me form conversion rates? I could go on and on.
Key ingredients for CRO success
A great chief revenue officer cannot be a one-trick pony, they have to find any and every go-to-market motion that provides leverage. As noted above, metrics and analysis and data benchmarks are vital. The job is to test demand generation, selling, growth hacking, etc., to measure success and failure, and to know when and where and how to double down.
If a CRO is coming in early to a company, they better have demonstrated an ability to lead across a number of different stages of company growth, and they better not just try to slap playbook pages from a prior business onto the new business. A great CRO must be able to wedge into any aspect of the company to lay the underpinnings of a scalable revenue engine and tune everything for execution.
I always looked for friction in the current process. I always asked customers how we could deliver more value over time. I always asked my people what they would do if they were CEO of the company. I ended up with a never-ending list of things to get done. Many can be nailed quickly, and over time you start to pattern-recognize consistent themes. These distilled themes often started to look a lot like strategy that was important for the long haul. Learn how to look around corners in the name of building strategy today!
The CRO-hiring trend
I suspect that we’ll see even more CROs getting hired, especially in SaaS and Silicon Valley. I believe focusing on lasting revenue generation is the best way to dominate a new market early and quickly, and make things less interesting for future competitors. I also think we will see more CROs in larger and more diverse companies as well. A company never loses by maximizing growth, or by hiring the best sales leader it can find.
While many view sales leaders as a fairly homogeneous group (I’ve always eaten nails for breakfast!), I believe that a new breed of company builder is needed to be successful in the CRO role, one who can broker any number of diverse go-to-market strategies through to scale. There’s so much more to doing that than just closing deals.
Originally published in VentureBeat.