What is a Chief Revenue Officer & Why Your Company Needs a CRO
Growing business revenue is never easy. Even more difficult is achieving consistent revenue
growth across the lifetime of a business.
To address this challenge, a growing number of companies are restructuring their leadership framework to add a C-level position, a Chief Revenue Officer (CRO), to their team.
What Is A Chief Revenue Officer?
As the name suggests, a Chief Revenue Officer (CRO) is an executive who is responsible for all
aspects of a business that generate revenue. This individual may be involved in the business’ new
sales, existing client base sales, marketing, and collaboration, and partner strategy. Usually,
when a company adds a CRO to its hierarchy, it sends out the message that ‘we are passionate to
grow and we’re doing so by adding a growth hacker to our team’.
A business may not require a CRO in its initial stages, but as it evolves to become a more robust
company, the role of CRO may become more apparent. It is important to note that like other
executive-level positions, there is no “one-size fits all” job description for a CRO; it will depend
on different factors, such as the requirements of the business, the type of industry it operates in
and so on. However, the ultimate goal is the same – driving revenue into the company while
achieving consistent revenue growth over the long run.
In large companies, the CRO is expected to not only scale the revenue to hundreds of millions,
but also build lasting relationships and lead large sales teams in the most efficient way possible.
On the other hand, small companies usually look for individuals who can deliver rapid and
sustainable revenue growth. Either way, the CRO should have basic knowledge about both sales
and marketing, including cross-channel and digital marketing as these branches of marketing
play an important role in today’s world.
Why Your Company Needs A CRO
If you are the owner or CEO of a company that has not explored the option of hiring a CRO, you
might want to give it some thought. Here are two key reasons why your company needs a CRO:
They Can Identify and Explore Multiple Sources of Growth
Be it a conglomerate or a simple business selling a single product or service, every company has
distinct sources of growth. These sources are independent of the product or services your
company sells or the industry it operates in. Rather, they are dependent on the tactics and
strategies that you use to run your company. As the leader, you need to first identify these
sources and then explore them in-depth.
There are four common sources of structural growth: retention of existing customers, increased
sales to existing customers, sales to new customers in existing markets, and lastly, sales to new
customers in new markets. Since growth does not originate from a single source only, a CRO
will identify and explore the untapped potential in these sources, thus enabling the company to
maximize its revenue.
They Achieve Growth through Cross-Functional Teamwork
Another key aspect of a CRO’s job is to enable cross-functional teamwork that will allow the
company to achieve stable growth. Successful business growth does not occur overnight; it is the
result of active participation of multiple business functions, mainly sales/business development,
marketing, direct sales, and customer service.
To maximize the potential growth from the sources identified above, it is important that these
business functions are in sync. The activities of these business functions need to be strictly
planned and coordinated, meaning that they must collaborate with each other. The CRO is
responsible for this planning and coordination. By supervising these business functions and
helping them on the way, he will ensure that the company achieves maximum growth in
minimum time.
These circumstances create a strong argument in favor of companies employing a chief revenue
officer who can manage and coordinate between different revenue-generating activities. Hiring a
CRO is one of the key steps towards optimizing revenue growth, which a business indefinitely
needs to survive in today’s world.
The 3 Growth Stages of Sales Hiring for Your Startup
At the very beginning stages of a startup there are very few employees, and most of the time a sales representative is not one of them. This means you, as the CEO or founder, are likely the person in charge of pitching and selling the product to potential clients. At this point in time, you should be doing sales exploration to gain a deeper understanding of your customers while also testing different sales strategies and gaining insight into the overall market.
As the CEO of the company, it’s likely sales are not be your favorite aspect of running a business. You’d much rather be focusing on new innovations and conceptualizing ways to improve your product, but sales are how you grow. Your first few sales and the market research you collect are vital for achieving the next three phases of startup sales growth.
Stage 1: Your first two sales reps
The next stage in the growth of your startup is to hire your first two sales representatives. At this early stage, you should be looking at young sales reps who are just starting out, not a veteran representative. You want the fresh-faced sales reps for a couple of reasons.
- Young sales representatives are often eager to develop their skills and try new sales methods to see what works for your company.
- Less-experienced sales reps are cheaper to hire. You can bring two salespeople onto your team right at the beginning to increase your outreach without paying them quite as much as a more veteran sales leader.
Before diving into hiring, however, you need to make sure your business is ready for this growth stage.
Timing is key
It can be difficult to pinpoint exactly when you should hire your first couple of sales representatives. You need to ensure you have room in the budget for another salary, plus you need to make sure you fully understand your market and sales cycle. Below are a few key milestones you should hit before hiring your first sales representative.
- 10 clients
You should aim to have at least 10 solid customers before you start outsourcing any sales talent. Ten clients tell you two important things. One, you know people are willing to buy your product/service, and two, you understand how to sell your service. - Solid sales process
You really shouldn’t hire a sales representative if you don’t have a sales process in place. You want your new hire to jump right into the sales game with a structured sales framework, not a haphazard vague idea of how to approach customers. A sales playbook will give a new sales hire all of the information they need to succeed and make your company successful, too. The following is a list of a few details your sales playbook should include:- Summary of the company and product/service
- Outline of the sales cycle
- Customer profile
- Call scripts and email templates
- Key performance indicators
- Established lead generation strategy
You’re definitely ready to hire some sales help if you have more orders/clients coming into your pipeline than you can manage alone. Lead generation helps keep potential customers cycling into your business, so once that is set up and running smoothly, you’re ready to hire more help.
Stage 2: Establishing sales leadership
By stage two of startup growth, you should be seeing consistent sales and growth within your company. You have an effective sales strategy and sales funnel as well as 3 to 15 sales representatives working for your company. At this point, it’s time to start hiring sales leadership positions such as a sales manager or sales director.
What to look for in a sales manager
When reviewing possible candidates for your sales manager, you want to find someone with experience leading teams as small as three people to as many as 30. Look for a candidate with a background as a junior sales representative who worked their way up to a leadership role. The sales manager will help ramp up your company’s growth and expand your capabilities.
The main three goals of a sales manager should be to refine the sales process, effectively manage the sales team, and lead the team through various training and coaching. Below are a few main characteristics you should focus on when reviewing potential sales leader candidates.
- Passion
You want a passionate sales manager on your team. A person with passion who believes in your company will work much harder and be more engaging than a sales manager who is just in it for the money. - Persistent
Working for a startup takes a certain level of persistence. You need a sales manager who is willing to go the extra mile for clients and who can push a sale like no other. - Tech-savvy
The ever-evolving digital landscape makes tech-savvy leaders imperative to the growth of your business. This is particularly important if you run a SaaS startup. Your sales leader needs to not only understand your product, but also how it fits into the industry and market.
Stage 3: The senior sales leader
The next move to stage three of your startup sales hiring is crucial. A senior sales leader will play a major role in your growing company. Not only is this position important, but it’s also expensive. To lure a VP of sales to your startup, you’re going to have to offer a hefty salary as well as equity in your company and extremely competitive benefits. Of course, the high price point that comes with hiring a VP of sales is worth the return.
Once you reach 25 or more sales representatives, it could be time to start thinking about hiring a senior sales leader. It’s around 25 sales reps that you start needing someone who can manage all of your sales directors/managers. Along with managing the junior sales leadership, the VP of sales is responsible for opening new offices, closing big client deals, and scaling your sales channels, just to name a few. An experienced senior sales leader has the potential to skyrocket your company growth, so make sure you put serious consideration into the candidate you choose for the role.
Cowen Partners is a national sales leadership recruitment firm and has a strong record of identifying and recruiting sales leadership for fast-growing public and private companies. Contact us if you would like to discuss recruiting an exceptional sales team or leader for your organization.
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