The estimated reading time for this post is 6 minutes
Companies of all sizes, from small IT service providers to midsize commercial real estate brokerages, are seeking efficient solutions to spur revenue growth in today’s brutally competitive business environment.
Businesses require a committed leader who can focus their sales efforts in the proper direction if they are to successfully traverse these choppy waters. Enter the Chief Revenue Officer (CRO), a key position that has the power to make or break a company’s sales trajectory.
Having a CRO on your side can create new options and help your business succeed, whether you decide to hire a homegrown CRO or utilize the skills of an outside partner.
Businesses may optimize their potential for revenue growth and retention, promote sustainable growth, and outperform their rivals by leveraging the strategic insights and revenue-focused attitude of a Chief Revenue Officer.
Any company’s revenue formula is simple: Existing Customer Revenues – Customer Lost Revenues (Churn) + New Customer Revenues = Total Revenues.
By having a C-Suite executive in charge of ALL revenues, the C-Suite is now focused on driving revenue growth through all its resources and mechanisms.
The Rise of the Chief Revenue Officer
Today’s rapidly evolving business landscape demands a holistic approach to revenue generation. As the traditional silos of sales, marketing, customer success merge, the need for a unifying force becomes paramount.
This is where the Chief Revenue Officer steps in. By owning the entire prospective and existing customer journey, the CRO creates alignment between marketing, new business acquisition (sales, partnerships, business development) and existing business service (account management, customer success or service). By breaking down departmental barriers, improving communication and creating shared resources, the CRO fosters a cohesive revenue strategy that drives tangible results.
The Benefits of Having a CRO
With a deep understanding of the customer journey, a CRO can align sales and service tactics with customer needs, resulting in improved conversion rates and higher customer satisfaction.
Revenue Growth Acceleration
A CRO focuses on revenue generation from all aspects of the business, including sales, marketing, and customer success. Accordingly, the CRO ensures that each group has the resources they need to be successful in their functional roles and ensures that the corporate strategic vision is translated into each of these teams.
As a result, marketing is able to build market brand equity that assists the new business acquisition team to find revenues and the customer success team is able to ensure that churn is minimized and recurring customer revenues are stabilized.
Enhanced Sales Performance
As the Chief Architect of the prospect and customer experience, your CRO can bring a data-driven approach to sales, services and marketing. As a result, they leverage analytics and market insights to identify new opportunities and optimize revenue processes.
And it’s not just pretty CRM or BI Dashboards. The right CRO gathers human intelligence from the team, customers and the market to provide context for the numbers found in the reports.
As a result, your CRO understands most, if not all of the levers, that drive revenue performance of the organization and thus can quickly make course corrections so that the paths to revenue are aligned.
Streamlined Sales and Marketing Alignment
One of the core responsibilities of a CRO is to bridge the gap between sales and marketing teams.
By fostering collaboration and communication, a CRO ensures that sales and marketing efforts are aligned, leading to a cohesive customer experience and more efficient lead generation.
As a result, marketing campaigns are aligned with the needs of new business acquisition and improved brand equity and conversely, market intelligence is fed back to the marketing team to enhance messaging.
Improved Forecasting and Predictability
A CRO’s expertise in data analysis enables accurate sales forecasting, helping the organization set realistic revenue targets and make informed business decisions.
With a clear understanding of market trends and customer behavior, your CRO can guide the company towards predictable revenue growth.
Decreased Customer Churn and Increased Account Expansion
The best customer revenues are those from your existing customer. So reducing existing customer cancellations and/or obtaining increased revenue are essential for revenue growth. As the owner of the customer journey, your CRO will work with your account management leadership to create offerings to existing customers that will entice them to stay longer or increase the services they’ll use.
To be successful in this area, your CRO will require close coordination between the product, marketing, customer success and account management teams. But as the ultimate leader of these teams, your CRO will ensure that these objectives will be attained.
Strategic Growth Expansion
Not everyone reporting to the CRO will have a direct impact on revenue growth in the near term. The Partnership, Enterprise Account (specialized or not) and Business Development teams that create longer term revenues streams (think OEM partnerships) that are force multipliers to revenues.
Without clear leadership and coordination with other revenue-facing teams, these Strategic teams will flounder and even likely implode under the C-Suite’s desire for immediate results. Your CRO can not only set strategy and direction for these teams, they can act as the coordinator with other organization functions to drive improved performance.
Is a Homegrown or External CRO the Right Choice?
Homegrown CRO
Most boards and C-Suite executives feel that hiring an in-house CRO (hired from someone internally) gives you direct control over the revenue strategy and customer journey and allows for seamless integration with the existing team.
With prior market experience or broad business understanding, a homegrown CRO can develop deep knowledge of the company’s products, industry, and customer base, leading to tailored strategies or has the time to do so.
On the Downside, your homegrown CRO will likely be missing some of the key learnings, best practices, skills or tools that have been developed in the market because they’ve been expending their time on internal matters.
A full time CRO is a member of your executive team and as such requires an executive level compensation program that can be outside the scope of your current budget. Lastly, as an executive leader, the recruiting process can be time-consuming, requiring a robust recruitment process and ongoing training and development.
The salary of a Chief Revenue Officer (CRO) can vary based on factors like company size, industry, and location.
In the US, the average base salary for a CRO is $283,983, with a median salary of $250,000. The top 10% of earners make over $400,000.
Here are some industry examples of On-Target Earnings (OTE) for CROs:
- Technology ($500,000)
- Financial Services ($450,000)
- Healthcare ($400,000)
- Retail ($350,000)
- Manufacturing ($300,000).
External CRO
Engaging an external or fractional CRO brings fresh perspectives and industry expertise to the table.
An external CRO can provide immediate impact, leveraging their experience and best practices from working with diverse clients.
Outsourcing the CRO role allows companies to tap into specialized knowledge without the overhead costs of a full-time executive.
However, external CROs may require a period of familiarization with the company’s operations and culture.
To stay ahead in today’s hyper-competitive market, it’s imperative for companies, regardless of their size or industry, to embrace the role of a Chief Revenue Officer. Whether you opt for a Homegrown or external CRO, the CRO represents the modern-day currency of success. The CRO’s implementation and continuous optimization can be the differentiating factor that sets your business apart.
