Knowing When to Hire a CRO or a VP of Sales
Revenue is the key driver behind the success of a business. Without revenue, a company stagnates and will eventually run out of money to pay its bills and the salaries of its VP sales, CRO, and other sales employees.
Thus, once a company grows beyond a basic startup mentality and needs to scale its revenue, it should hire a chief revenue officer (CRO) or a VP of Sales to ensure smooth sales processes and greater customer retention.
Many organizations confuse the difference between a CRO and a VP of Sales. After all, both roles concern generating revenue for a company.
Knowing the essential variations between each position and the business needs can help executives decide when they need a CRO or when a VP of Sales is the way to go.
Breaking It Down: CRO vs. VP of Sales
Both the CRO and VP of Sales share some of the same duties. In smaller organizations, the VP of Sales will take on responsibilities that a CRO would typically handle.
The CRO: A C-Level Revenue Executive
The organizational structure of businesses with CROs usually requires the CRO to report to either the CFO or the CEO. Sometimes, the CRO will report to both executives for separate responsibilities.
The CRO is accountable for all customer-facing departments. They will oversee marketing, sales, customer service, and production. Their job is to align these four departments, ensuring they all work in tandem to achieve the organization’s sales goals.
Typically, a CRO will regularly meet with all four departments to assess their efforts and quality of work. Their responsibility as a team aligner also requires them to hold regular revenue health checks with their department heads and staff.
Generating revenue is the name of the game for a CRO. However, a good CRO knows that creating revenue isn’t the sole responsibility of the sales team. They’ll work with marketing to ensure the company has a solid strategy that attracts new customers.
Time spent with the production department ensures the company is making products that meet the need of its clients. Finally, their efforts in the customer service department will seek to uncover any situations where clients are unhappy with their purchases.
The VP of Sales: Driving Revenue Through Sales Strategies
The VP of Sales is focused solely on the sales department. The VP of Sales drives efforts toward improving sales strategy, enhancing the skills of their sales team members to meet sales targets.
The VP of Sales typically reports to the CRO. However, in smaller organizations, the VP of Sales will effectively act as the CRO by assuming an enhanced set of responsibilities. The VP of Sales usually reports to the CFO or CEO if there is no CRO.
The VP of Sales works directly with the sales team to build revenue and enhance customer outreach. They’ll endeavor to uncover untapped customer markets and use sales agents to acquire new clients. The VP of Sales uses various methodologies and strategies to target individuals and entities and convert them to clients.
When Do I Need a CRO?
Companies that notice a misalignment between customer-facing departments, including sales, product, customer service, and marketing, often need the assistance of a strong CRO. Without sales leadership that oversees all four departments from a revenue perspective, these departments will often lean toward a silo structure.
Departments that operate as silos don’t reach out to one another to align their goals. Organizations find that their marketing department is working on a strategy to attract new customers, but their efforts don’t match those of the sales department.
For example, the customer’s advertising methods may promise certain benefits to potential clients, but the sales department isn’t aware of the advertising strategy and pursues something entirely different.
The CRO brings all four departments together, assuring that their goals meet the overarching objective of the company — to obtain more revenue.
When Do I Need a VP of Sales?
In contrast, the VP of Sales is solely responsible for sales efforts. Their team acts as the face of the company. The sales team:
- Meets with potential clients
- Demonstrates its products and services,
- Generally ensures that customers know how they stand to benefit from what the company has to offer
A good VP of Sales will:
- Examine the sales strategies used by its sales agents
- Determine what works and what doesn’t
- Align their sales methodologies to meet the goal of drumming up more revenue for the company.
If they find that certain sales agents aren’t as successful as others, they’ll upskill them and try to improve their sales abilities.
Hiring a VP of Sales is best when the organization needs revenue growth. The new VP of Sales will analyze current sales processes and determine new strategies to expand the business.
Another reason to hire a VP of Sales is if the company has no established sales processes. Establishing centralized sales procedures prevents the sales team from running amok and aligns everyone with purposeful techniques to drive revenue growth.
Measuring the Success of Your CRO or VP of Sales
Once an organization hires a CRO or VP of Sales, KPIs can help determine whether their efforts are working.
Since their roles are different, both positions use different KPIs to measure success.
KPIs for a CRO
As we’ve established, the CRO is there to align the efforts of all customer-facing departments. Thus, the metrics of a CRO determine how well the teams are working together. Typical KPIs that a CRO will incorporate include:
- Number of marketing-qualified leads (marketing team)
- Number of sales-qualified leads (sales team)
- Customer retention rate (customer service team)
These three metrics track the success of three different departments.
KPIs for a VP of Sales
The VP of Sales has a goal to generate new sales. Thus, the metrics they use are revenue-related.
- Annual recurring revenue (ARR)
- Net new revenue
- Average time to conversion
Over time, the details of these metrics help the VP of Sales determine what is effective and what’s not.
The Takeaway
Both a CRO and a VP of Sales are concerned with revenue but in different ways. As a C-level executive, the CRO oversees all customer-facing departments, while the VP of Sales is involved solely with the sales team. When determining whether an organization requires a CRO or VP of Sales, look at the unique needs of the business to make the appropriate choice.
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