This guest post was written and published by Adriana Zeman, Core member, VP Customer Success at SHYFT Analytics following a recent CRO Roundtable at Underscore’s Core Summit.
It seems like the role of the Chief Revenue Officer (CRO) has proliferated seemingly out of nowhere. Many tech companies are moving from the VP, Sales and transitioning to the CRO. But what’s the role? Specifically what is the CRO responsible for and when do you need one?
At the recent Core Summit, a CRO roundtable (interestingly only one officially titled “CRO” in the mix, though a lot of folks who are involved in revenue generation) talked about these specific questions. The group included SVPs and VPs of Sales, Business Development, Customer Success, Sales Operations, Account Management and COO — how is the CRO different from VP of Sales or is it? And at what point does the function begin and where does it end? And who plays this role during different phases of a company’s growth?
The high-level themes and the key take-aways that emerged from the conversation:
- The Chief Revenue Officer is a strategic not a tactical function. A true CRO is responsible for aligning the organization through a clear strategy to drive top line revenue growth, and is accountable for the cross-functional execution of the strategy from lead generation through sales execution and renewals. They’re like an Offensive Coordinator on a football team — they drive a game plan that’s executed by a number of areas of the company (more to come on that.)
- The CRO is head of sales but not the VP of Sales. You might be thinking, huh? As head of sales, the CRO is creating the sales strategy but the VP of Sales is a more tactical role, think of it as the QB that is driving the offense down the field, focused on sales execution and new business growth. The VP of Sales is a key partner in executing the strategy driven by the CRO.
- A CRO builds alignment across the entire sales funnel: lead generation, sales execution, and renewals. The role may not be organizationally/functionally responsible for the the three areas, meaning that they might not have all of the directly report to him/her, however the CRO drives the vision, leads through influence and partnership and is accountable for the results.
- The need for the CRO arises over time. As an early stage startup, or while the company is in an aggressive customer acquisition mode, the CEO largely plays this role since growing the top line is the primary strategic and financial objective for the company. As a company matures, the role of the CEO naturally needs to broaden so at some point he (or she) can’t play this role anymore.
So how do you know when you need a CRO?
The question of timing was a little harder to nail down — some people felt that there was a magic number in terms of revenue ($100 million+), others felt it was both a combination of revenue and also strategic focus of the CEO and how much internal alignment existed between marketing, sales, account management and customer success.
How do you know if you’re not aligned? There’s a couple of inflection points that participants mentioned:
- A breakdown between lead generation activities and sales pipeline. Does marketing think that their lead generation programs are successful, but sales feels there is no qualified pipeline? That means there’s a disconnect and marketing programs are not targeting the right customers and driving the right leads.
- Another breakdown is between sales and renewals. Sales is killing all new business goals, but then customers fail to renew or only renew a portion of their initial subscription. That would reveal a couple of potential issues — customers aren’t engaging with the products so what’s the engagement and customer success strategy? Or customers are being oversold and buying products they don’t need and therefore, they’re not seeing the value and not renewing part of all of their subscription, or potentially both.
One topic that was debated in the conversation was how you get the alignment without having direct responsibility. Does the CRO need to directly own every group (marketing, sales, account management and customer success) that touches or communicates with the customer in order to be effective? The answer to that was mixed. Some felt that the direct reporting line was important, but others disagreed; reporting structure was secondary to alignment in key performance metrics to drive the consistent focus and execution of the strategy.
Either or both of the breakdown scenarios would be a clear sign that your organization likely needs a CRO or someone to play the role. If your company has someone with the CRO title but their focus is truly closing deals or some other targeted part within the Customer Lifecycle, then you might not really have one at all.
The conversation was lively, thought-provoking and it was a great opportunity to share ideas and experiences with talented and diverse members of the community. Looking forward to the next gathering — thank you Underscore for creating this venue.