The Three Things a CEO Needs to Ensure Their CRO’s Success

Since emerging over the past 10 years, the Chief Revenue Officer role has evolved into a core executive function within modern B2B businesses.

B2B CEOs in the tech sector now consider CROs to be vital pillars of their leadership structure. It’s the hot new title in the B2B space, and comes with many spoils: prestige, power, credentials, and opportunity.

The appointment, however, also comes with huge expectations and risk. Often, CROs are seen as miracle workers, rainmakers, and movers and shakers coming to the rescue to take the company to the next level of sales revenue growth.

It’s no wonder then that many CEOs have a relatively narrow view on the qualities an effective CRO needs to bring to an organization. Equally, very few organizations prepare themselves properly for their first CRO.

False expectations and under-preparedness can lead to disappointing results, frustrations, and wasted expense, time, and effort. There’s huge risk to appointing the wrong CRO – with huge consequences for the CEO, the organization, and the CRO as well.

At the CRO Collective, we have observed there are many questions about what a CRO’s actual responsibilities are.

• How does a CRO function, really?
• Ideally, where should a CRO sit within our organization?
• To be effective, where should the CRO focus?
• What are the CRO’s areas of oversight, scope, remit, and accountability?
• How should CEOs support the success of their CROs?

This lack of clarity can have dire implications for firms currently employing CROs, as well as for those considering adding a CRO to their leadership stack.

Fortunately, while the risks of getting a CRO decision wrong are huge, so are the rewards for getting it right.

To ensure the success of their CRO, CEOs should do three things.

1. UNDERSTAND THE REAL REASON YOU NEED A CRO

Most CEOs hire CROs for a few specific reasons:

• “It’s time I promote my head of sales – or he/she will leave.”
• “Sales are lagging, and I need an executive ‘circuit-breaker’ to shake things up.”
• “The company has reached a level of complexity where a CRO seems like the next appropriate leadership hire.”
• “I need a seasoned outside superstar to come in and take our sales org to the next level.”
• “A CRO will bring the revenue boost I need to satisfy my Board.”

Within all these rationales lie the core assumption that most CEOs make: CROs are exclusively sales-oriented leaders.

Out of more than 100 interviews I’ve conducted with B2B CEOs over the past year, 99% made this same exact calculation: The Chief Revenue Officer role is, at its core, an executive sales leadership role. Ninety percent of them – when asked to identify the person they were currently considering as their CRO – indicated that it was either their current head of sales or an outside sales leader who had generated spectacular results. The other 10% identified their CFO or their CMO as potential candidates. Of the CROs I spoke to, 100% had come up through sales or been promoted from a sales leadership role.

This is an understandable supposition. As CROs are mandated to increase the company’s revenue, it stands to reason that sales leaders would naturally become prime candidates.

This assumption becomes dangerous, however, when the CEO comes to realize that weak sales numbers are merely symptomatic of more complex organizational issues. In fact, the root of revenue deficits is historically due to deeper and more expansive organizational misalignment issues – which require a far more diverse skillset to solve than merely sales operations expertise.

What most CEOs (and the CROs they hire) come to realize too late is that the CRO role is, in fact, a complex strategic revenue leadership role encompassing three critical functional groups:

• Sales
• Marketing
• Customer success

These three functional areas are the most customer-facing parts of the company. Hence, for CROs to succeed, they must ensure that all three are in alignment culturally, operationally, and objectively. When these key functions are working together, revenues almost always increase (assuming, of course, there exists a competitive product and market demand).

Understanding the functional complexity and organizational scope of the CRO role is the first step toward ensuring the placement of a CRO will start off on the proper foundation.

2. BUILD A CRO-READY ORGANIZATION

For the role to succeed, the company hiring the CRO must already be structured in a manner that allows this key leadership role to mesh and flourish. Simply parachuting a Chief Revenue Officer into a disconnected and misaligned organization and rolling the dice on their grit and confidence is a dicey proposition – one that can result in months (perhaps even a full year) of wasted time and resources just to work out how to implement the role successfully into the organization. Not to mention the risk of failure.

The CRO role has such a significant impact on so many core business functions that, absent the proper organizational planning, the bureaucratic ramifications can easily become their own distraction. Before appointing a CRO, it is critical the CEO first set up the organization to function in a way that allows for – even demands – the placement of a CRO to lead the machine that has been set in motion.

To do this, the CEO must first use the blueprint from topic 1 and begin to re-configure the company to become more integrated across the three customer-facing functions.

Getting a company CRO-ready is no small feat. It requires a long-term planning mindset and an understanding of how all your enterprise components interact with each other and the rest of the organization. While challenging, this alignment is ultimately the key to unlocking the true power of all three of these functional departments. In fact, for any B2B business, this re-alignment process is necessary to achieve desired growth.

Core to the success of this process is the appointment of a dedicated executive to lead and maintain the resulting symbiosis. Without this leadership at the helm, the cooperation between these three functional groups will not withstand their natural entropy and will eventually devolve into misaligned factions.

This leadership placement is the Chief Revenue Officer who – equipped with the proper skills, competencies, and multi-disciplinary expertise – is uniquely positioned to oversee the resulting aligned functional group.

Once the CEO has built a synchronized revenue operation, the company has achieved CRO readiness.

For any CEO already tasked with an overwhelming role, the notion of building a CRO-ready organization can seem insurmountable. Many CEOs who succeed at it do so with the help of an outside fractional CRO advisor whose role is to provide expert guidance and blueprints designed to help wrangle the organization into a proper state for a permanent CRO to step in.

3. IDENTIFY, HIRE, DEPLOY, AND SUPPORT THE RIGHT CRO

Now that you understand why you really need a CRO – and also how to build a CRO-ready organization – the critical next step is to identify and hire a good CRO.

A good CRO is one who comes equipped with a unique and specialized multidisciplinary skillset. This person must not only possess the distinct nuances of leading a sales organization, but also have expertise in all aspects of marketing – particularly from a data and analytical perspective – and an understanding of how the customer success function is impacted by both.

Most importantly, this expert must understand how all three of these functions need to work together and possess the competence needed to lead them to form a unified revenue operation that scales and increases customer engagement, sales, and profitability.

Resultist Consulting, a leading organizational revenue research organization, describes a qualified CRO as: “a corporate officer (executive) responsible for all revenue generation processes in an organization. In this role, a CRO is accountable for driving better integration and alignment between all revenue-related functions, including marketing, sales, customer support, pricing, and revenue management. In short, a CRO is responsible for all activities that generate revenue. In most companies, the CRO is tasked with primary or shared responsibility for operations, sales, corporate development, marketing, pricing, and revenue management.”

CROs with these unique qualifications are very difficult to find. As we shared in the first section, the vast majority of CROs are hired up from sales organizations or previous sales roles. While doing this is understandable, our analysis clearly shows that a successful CRO needs to come equipped with a more comprehensive skillset than just sales.  

Key for the CEO is first to clearly identify and articulate the specific skills, areas of expertise, and combination of qualifications needed for the CRO candidates. Second, the CEO must be able to vet CRO candidates effectively to determine if/how they can seamlessly integrate and lead the newly formed CRO-ready organizational structure that has been put in place.

The key takeaway here is to ensure the winning candidate comes equipped with the proper multi-disciplinary profile required to lead the ongoing alignment of a sales, marketing, and customer success organization.

KEY ATTRIBUTES THAT DEFINE A SUCCESSFUL CHIEF REVENUE OFFICER

Market maker 

A CRO works closely with the executive team and others to craft and communicate the company’s vision and then transform that vision into a long-term strategy for pioneering new markets and opportunities

Wise organizational builder and leader 

The best CROs understand and embrace the differences between marketing and sales, while having a strong customer-oriented perspective on the business as a whole. At the same time, the CRO must establish processes to ensure their coordination across the full revenue cycle to ensure the greatest revenue growth possible.

Leading from the front 

A CRO must be able to see and clearly communicate the company vision and the revenue strategy across all relevant functions and ensure the right goals are defined and met.

Business acumen 

As a business leader first, a CRO must regularly measure and analyze productivity and effectiveness, form strategic product road maps, create market positioning and competitive advantages, and determine budget trade-offs with a goal of continually improving and developing sustainable results.

Data-driven/metrics-driven

The right CRO creates a culture of accountability by setting the right metrics and tying company performance, compensation, and promotions to tangible results.

Results-oriented

A CRO assumes a long-term, integrated perspective while also striving to drive quarterly revenue results. He or she commits to short-term results, forecasts future revenue, and takes accountability for both short-term success and longer-term strategy.

When a company has matured to the point where a CRO is the clear next addition, CEOs must have a clear and strategic understanding of how this role will impact critical business functions. While making this key appointment hastily comes with risks, these risks can be mitigated by clearly understanding what a CRO really does, applying a multi-disciplinary approach to functional alignment, and finding the right CRO who is suited for success.

The mission of The CRO Collective is to develop the best CROs in the world and help B2B companies negate the crippling misalignment issue they face when they fail to correctly appoint and implement the CRO role.