Growing a company is an extremely challenging task with McKinsey citing that only 10 percent of S&P 500 companies have managed to grow beyond GDP growth consistently for 30 years or more.
Along with structural considerations like centralised or decentralised, geo-based versus service line selecting the right leadership with the right metrics is critical.
McKinsey further notes that high-growth B2B companies often share certain characteristics, with a major advantage being the seamless integration and reimagining of sales, marketing, and business development functions. Establishing new leadership to oversee not just sales and marketing is becoming increasingly crucial to navigate and capitalize on today’s complex customer journey and digital sales channels.
At the heart of successful growth companies that have optimised sales and marketing is a strong alignment between these functions. Some attribute this to the emergence of the Chief Revenue Officer (CRO). But is this truly the case, or is it a greater recognition of the importance of this alignment?
McKinsey posits the CRO is tasked with unifying the revenue engine—from lead generation in digital marketing to sales. The CRO’s responsibilities extend beyond sales and marketing to include the entire market landscape, customer journey, and strategic growth plans.
CROs possess a deep understanding of customer success and lead efforts to align people, processes, and technology throughout the entire revenue cycle, whether the company is a start-up, a unicorn, or an established firm. Essentially, a CRO integrates people, data, and metrics within its sales and marketing teams.
While the roles of a VP of Sales and a CRO might appear similar, they are indeed different.
Primarily, the VP of Sales concentrates solely on sales, without a lot of involvement in other teams. Their focus is on closing deals, making targets, building the pipeline, covering the market, early pipeline development, developing and coaching sales managers enhancing sales enablement, managing their teams, and ensuring targets are achieved within their department. Often there is close collaboration with customer service and also to varying degrees with the marketing team.
Conversely, a CRO focuses on sales in conjunction with all factors influencing them, such as marketing strategies, Go-to-market strategies and cross-sell and upsell. While both roles may collaborate to create sales playbooks and establish goals and KPIs, the CRO incorporates insights from various departments through broader expertise often gained in P&L management roles.
Moreover, a company typically has only one CRO, but it may have several VPs of Sales, depending on its size. For instance, there might be a VP of Sales for each region where the business operates.
Take the time to comprehend the distinctions and determine what your business truly requires, rather than following management trends.
There is increasing interest in the CRO role, with LinkedIn continuing to report a high number of available positions for this role. One reason for this is the CRO role is hard to fill. The seniority and experience required (often including P&L experience) are found in only a small pool of candidates.
The CRO's primary mission is to discover new market opportunities, connect isolated marketing and sales departments, and concentrate on one of the most vital aspects of a company's success - revenue.
McKinsey analysis shows that Fortune 100 companies that have a CRO-like role show 1.8-times higher revenue growth than their peers. And not only do incumbents benefit from bringing a CRO into their C-suite, but scale-ups benefit as well. When US-based software-as-a-service (SaaS) unicorn Snowflake brought in Chris Degnan as its funding CRO, he built a go-to-market strategy from the ground up, propelling sustained high growth and global reach.
To spur revenue, Degnan used more than 20 years of technology sales experience from diverse sales leadership roles at EMC and Aveksa. Under Degnan, Snowflake has grown its annual product revenue to $1 billion—from nothing.
It's not just the evident growth that is driving companies to incorporate a CRO role. With technology, particularly generative AI, transforming the landscape of marketing, sales, and revenue, there is a need for someone to manage the entire value chain and realise its full potential. Moreover, as automation increases, executives must act swiftly to stay competitive, necessitating a decisive leader to efficiently direct and synchronise all go-to-market strategies.
A CRO is not for everyone. There are many reasons why hiring a CRO may not be the best decision for your business. Culturally it may not be the right move. Perhaps your teams are fine as they are with good communication and collaboration. Maybe you have a Sales and Marketing Director who has both sales teams and a marketing team reporting directly to them. This can be a great model for many organisations, especially larger companies with multiple business units.
But if that's not the case you may want to explore what hiring a CRO would look like for your business as you may be able to gain a competitive edge if you get the right person and they have the support of the senior management team.
Start-ups are now appointing CROs sooner than before, with the United States at the forefront. Previously, companies often waited several years post-founding to hire a CRO. However, businesses established between 2016 and 2022 have been hiring CROs nearly twice as quickly as those founded between 2009 and 2015.
Although the overall rate of CRO adoption is similar between US and European unicorns, US scale-ups typically bring in their CROs about two years earlier than their European peers. The need to scale rapidly in a more unpredictable environment compels companies to better align and enhance their marketing and sales efforts under a CRO's leadership. The urgency to convert initial momentum into lasting growth is increasing, and it is anticipated there will be a rise in the number of CROs among unicorns as a consequence.
The CRO role is most commonly found in product organisations, but it's increasingly appearing in professional services firms. Unlike a Chief Marketing Officer (CMO) or Chief Sales Officer (CSO), a CRO adopts a more comprehensive perspective, aligning all functions related to revenue. In a consulting firm, this would encompass:
The CRO's main objective is to develop a cohesive revenue strategy that encompasses the entire customer journey. In professional services firms, a CRO can be especially beneficial. The functions of business development, marketing and client management are often siloed, but increased collaboration among these teams is known to significantly enhance revenue generation.
By fostering a culture of open communication and teamwork, companies can break down silos that often hinder the flow of information and ideas. This collaborative approach allows for the sharing of insights and strategies, leading to more innovative solutions and a more cohesive effort in targeting and engaging potential clients.
As a result, the alignment of goals and resources across business development, marketing, and client relations not only streamlines operations but also maximises the effectiveness of each department's contributions to the overall revenue objectives.
This synergy ultimately drives higher sales, improves customer satisfaction, and strengthens the company's competitive position in the market.
The timing is crucial and largely influenced by your business model. Deciding when to bring on a company's first CRO is significantly shaped by the nature of the business. For deep tech or engineering firms with intricate products, the initial focus should be on developing a functional product before scaling sales.
Although the advantages of appointing a CRO for company growth are evident, it doesn't ensure success. It's crucial to select the right individual with the appropriate qualities when hiring a CRO. Here we highlight four key traits:
1. People
What makes a good CRO and how can companies build a high-performing team around them?
Substantial prior experience is essential. To make the most of this position’s possibilities, organisations need an executive with in-depth experience in sales, marketing, product, and even technology. Seventy-two percent of externally hired CROs bring more than 15 years of senior-level sales and sales management experience to the role, 76 percent have worked previously at a start-up, and 96 percent have had experience at corporate incumbents.
CRO is not a career path or promotion from Chief Marketing Officer. It simply doesn't work, your best salespeople won't want to work for a marketing leader, and a CMO won't have any experience in closing deals, and won't be able to give insights or valuable guidance on negotiation strategies and trends to avoid.
The CRO guides but does not replace marketing and sales leaders. While the CRO often has experience in sales, this role should not be mistaken for that of a vice president of sales. Instead, about 65 percent of unicorns with a CRO also have a head of sales, a head of marketing, or both.
Rather than overloading the leadership team, this dual-level structure is crucial for success. Heads of sales or marketing concentrate on tactical, short-term goals within their areas, whereas the CRO oversees both, treating sales and marketing as parts of a unified revenue-generating system that supports the company's long-term success.
The CRO assigns tactical tasks to department heads and emphasises strategic planning and visionary leadership. This work should be more than collaboration; alignment strategies should be about creating a seamless customer experience. When these two functions work in harmony, organisations unlock growth potential, enhance customer satisfaction, and drive sustainable revenue.
With B2B Sales it is necessary to routinely test various demand generation techniques in order to measure the success of sales and marketing campaigns. It is up to the CRO to make informed decisions on where and how to allocate resources for optimal growth.
Understanding funnel metrics is critical to the role of a CRO. When data are limited and sales cycles are long, focusing solely on converting opportunities into deals is not always effective. Instead, a pipeline should be built.
CROs should set the target ambition, then cascade these targets—including the number of new customers and opportunities needed to achieve the targets—down to sales activity levels.
This can be accomplished by using conversion rates and average revenue per deal to define the number of leads needed at each stage of the outbound-sales funnel.
For example, if data show that to reach company targets one deal per month needs to be closed, it can be determined how many active, winnable opportunities and sales-qualified leads need to be generated to secure that deal.
Combining this information with the activity of a sales agent also provides a CRO with information on the required size of their sales team. As more data and learnings are generated, CROs should not be afraid to update the targets accordingly.
To unleash the power of the pipeline, a CRO should ensure that all activities are focused on targets and that progress is monitored: tracking the number of daily qualified calls and emails, the number of marketing-qualified leads and sales-qualified leads generated each week, and the number of quotations received.
With this data, the CRO can not only increase the motivation of sales representatives but also set clear expectations an
From experimenting with different demand generation strategies to evaluating the effectiveness of sales and marketing initiatives, the CRO is responsible for making strategic decisions on resource allocation to maximise growth.
Grasping funnel metrics is essential for a CRO. When data is scarce and sales cycles are lengthy, merely focusing on converting opportunities into deals isn't always efficient. Instead, a pipeline should be developed.
CROs need to establish ambitious targets and then break these down into sales activity levels, including the number of new customers and opportunities required to meet these goals.
This can be achieved by utilising conversion rates and average revenue per deal to determine the number of leads necessary at each stage of the outbound sales funnel.
For instance, if data indicates that closing one deal per month is needed to meet company targets, it can be calculated how many active, viable opportunities and sales-qualified leads must be generated to secure that deal.
By integrating this information with a sales agent's activities, a CRO can also assess the necessary size of their sales team. As more data and insights are gathered, CROs should be willing to adjust the targets as needed.
A CRO prioritises outbound activity metrics and removes deceptive vanity metrics, like counting partners as customers or overvaluing long-term potential that might not materialise.
CROs need to build a robust revenue generation engine to achieve scalability.
To transform past experiences into valuable insights, continuous improvement, and repeatable processes, CROs must develop a unified revenue generation engine. This involves overseeing the collection, storage, analysis, and optimisation of marketing and sales data, and leading the implementation and integration of all aspects of the engine.
All marketing, outbound sales, and inbound activities produce data. The CRO is responsible for ensuring that this data is accurately tracked, aggregated, and centrally stored in a data warehouse to serve as input for the entire engine.
Before exploring specific strategies, it's important to understand that acquiring and retaining customers are linked processes. The customer lifecycle includes phases like awareness, consideration, purchase, and loyalty, each demanding a unique approach.
From the outset, the central CRM system is crucial to the revenue generation engine. It is connected to advanced AI tools that perform analyses and generate insights, such as scoring and evaluating relevant leads. The CRO should ensure the deployment of a comprehensive toolkit with increasing automation of marketing and sales processes to generate insights for decision-making and customer engagement.
The CRO manages the integration of these insights into go-to-market strategies and communicates them to the customer success, sales, and marketing teams. This includes using data to tailor social media messaging and websites and creating automated content to attract customers. The aim is to document and maximise revenue potential.
Regular communication bridges gaps and fosters alignment - establish a feedback loop where sales and marketing share insights, challenges, and successes. This could be a combination of;
Regular Meetings: Organise sessions to evaluate lead quality, assess content impact, and review campaign outcomes.
Integrated Tools: Implement CRM systems to monitor leads, opportunities, and customer engagements.
CROs must take decisive actions when others hesitate, demonstrating a proactive and forward-thinking approach that sets them apart in the competitive business landscape. Effective CROs possess the ability to not only identify trends ahead of the competition but also to thoroughly analyse these trends to understand their potential impact on the market and the company.
This foresight allows them to strategically position their company to capitalise on early opportunities that others might overlook or be too slow to act upon. By spotting new trends and understanding their potential impact early, CROs can guide their companies to enter emerging markets with confidence and precision.
This strategic entry enables them to establish a strong foothold, which is crucial for gaining a competitive edge. As a result, companies led by such visionary CROs often experience higher profits and accelerated growth, as they are able to leverage their early market presence to capture significant market share and build lasting customer relationships.
This proactive approach not only drives immediate financial gains but also sets the foundation for sustained success in the ever-evolving business environment.
An established company is not exempt from disruptions or technological advancements like generative AI, making the CRO crucial in managing these changes. Currently, only 11 percent of Fortune 100 companies have a CRO. Unlike start-ups, these companies have entrenched and complex executive structures, which can complicate the introduction of new roles. Altering these structures requires time, and many companies are still learning how to adapt to this evolving landscape.
Initially, a CRO should assume full responsibility for revenue, even at the level of individual business units. To prevent delays, organisations with intricate structures can start by focusing on a single business unit and then gradually expand the role across the entire organisation.
Additionally, a CRO should establish clear analytics and automation processes for all go-to-market activities. An example of this could look like this - set up a comprehensive, generative-AI-driven go-to-market engine, automating every phase from content creation to campaign execution and management.
Before rolling out the new automated processes organisation-wide, a clever CRO will establish and communicate clear guidelines. These guidelines should identify which applications are appropriate for the generative-AI go-to-market engine and which are not to ensure the technology is used effectively.
Ultimately, the client experience is the firm's most valuable asset. A deeply engaged client base that readily advocates for and recommends the firm is among its greatest strengths. A CRO:
- Manages the complete client journey from acquisition through retention
- Formulates strategies to boost client lifetime value
- Aims to improve the firm’s value proposition throughout the entire client lifecycle
In numerous companies, the three distinct functions rely on separate data sets. Marketing teams focus on lead generation and engagement, business development teams prioritise win rates, and client delivery teams concentrate on client retention and timely deliverables.
An effective CRO examines all these data sources to make strategic, overarching decisions. This could involve:
- Establishing methods to assess client satisfaction and loyalty
- Incorporating analytics throughout all revenue-generating functions
- Creating significant KPIs to monitor performance at various levels within the company
- Utilising data to pinpoint trends and growth opportunities
As an example, a CRO might use analytics to identify which types of clients are most likely to have unmet needs that would lead to expanded engagements, allowing the firm to focus its efforts more effectively.
To successfully adapt to ongoing market changes, organisations must be agile, strategic and, above all, sustainable. Sales and marketing should no longer operate in isolation but must work together towards the shared objective of enhancing customer experience and driving revenue growth.
A proficient CRO can synchronise these efforts, enabling a flourishing business to scale faster. In theory this sounds pretty straightforward. Sadly, this is not the case and with any change program, people resist, so its often easier said than done. In fact, not only is it hard to achieve, in some cases it is impossible. Know the challenges upfront and mitigate the risks wherever possible.
Further reading
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