What to look for in a CRO
Hi and welcome to this week’s issue of The Revenue Architect. If you’re a regular reader finding the content thought-provoking, please share it with your colleagues! And if you’re here for the first time, welcome and please consider subscribing.
A ton of companies are looking to hire a Chief Revenue Officer right now—at the time of writing LinkedIn has 2,000 open CRO jobs in the United States alone, as well as many more searches being run privately by executive recruiters.
With so much demand for the role, its useful to take a look at what a CRO needs to do to be successful, when to hire one and where to find a great one in today’s competitive job market.
To make an impact on the growth of a company, a CRO needs to do 3 things well:
Architect the go-to-market motion
Build the go-to-market team
Instill an operating mindset
Architecting a go-to-market motion
GTM architecture involves defining the stages of the customer journey, the components in each stage, how they fit together and who does what.
By the time a CRO typically joins a company, the stages are usually informally defined and many of the components exist, however they are often disjointed due to having been developed in departmental silos using disparate approaches. Some of the common symptoms of this are:
Marketing has developed an ideal customer profile but Sales has an account list that doesn’t match it.
Sales has a process for closing deals but lacks the tools and insights to improve the win rate because Marketing is more focused on generating leads than on removing friction from the sales process.
Customer Success has an onboarding process but doesn’t know who all the buying stakeholders are and what impact they are expecting because only the day-to-day contacts were handed off by Sales.
Upsells and Expansions are important growth drivers but its unclear who owns them between Sales and Customer Success.
The first step to solving problems like these is to diagnose the existing customer journey using a framework. The ideal framework is one that spans the entire customer journey (pre-sale and post-sale), as it helps you figure out where in the customer journey you can achieve the greatest impact. One example framework is the the full funnel analysis I wrote about a few months ago, which also lists out some of the common issues you are likely to find.
The second step is to design and build (or refine) the components for each stage of the customer journey. Here are the key components:
Ideal Customer Profile—essential for every company as it creates focus for both the GTM team and the product development team. The key pieces are company profile, personas, pain points and discovery questions.
Target Account List—should be driven by the Ideal Customer Profile, because you want to be prospecting people at companies who are likely to have the pain points that your product solves.
Processes—all B2B companies need clearly defined processes for Demand Generation and/or Prospecting, Sales, Onboarding, Impact & Growth, and all processes must be measurable in order to gauge their adoption and impact.
Enablement—people need tools and content in order to execute each process. However, its important that the process informs the tools, not the other way around.
Skills and Org—can only figure this out once you know who you are selling to (ICP/Target Account List) and how (Processes). If you build your org first, you won’t know if you have the right people in it and you will end up compromising on process to placate your org.
Incentives—this is the last piece of the GTM and primarily there to ensure that teams are aligned on goals and outcomes. It’s not a growth driver. Tweaking sales compensation to fix revenue growth is like trying to fix a restaurant by adding more seasoning right before serving. It doesn’t work.
Building a go-to-market team
A CRO typically oversees all client-facing teams i.e Marketing, Sales, Customer Success/Account Management and Revenue Operations. However, when a CRO joins a company, these teams will be often be in varying stages of maturity, depending in large part on the seniority and tenure of the team leader.
The CRO needs to assess the potential of each leader to lead and scale their team. Many execs do this by pattern-matching against their previous experiences, however this often leads to a decision to bring in someone more senior, which is expensive and disruptive. A more balanced approach is to evaluate existing leaders against the skills and org defined in the architecture, as this creates more opportunities to develop existing leaders, which in turn creates a positive culture in the rest of the team.
Senior leaders will likely be in place for key functions like Sales and Marketing, however Customer Success is often under-staffed and Revenue Operations is usually distributed across a number of roles in Finance, IT, Sales and Marketing. Bringing in senior leadership for Customer Success is critical because you can’t rely on new logos to fuel revenue growth. And centralizing Revenue Operations is critical to implementing a GTM architecture and instilling an operating mindset.
Instilling an operating mindset
Even with a cohesive architecture and a stellar team, it’s easy for teams to live in their own worlds without an operating structure and mindset to bring them together.
The core pieces of an operating mindset are:
Focus—no matter how big you are, you can only do a few things well at any given time. This applies to all companies from seed stage to public. The #1 way to create focus in a B2B company is with a very clear ideal customer profile as it captures who you are selling to and why (and therefore who you are not selling to and why not).
Growth Model—think of this as the equation that expresses your growth outcome (e.g. New ARR) as a function of your inputs (e.g. prospects, deals, win rate, ACV etc). The clearer your ideal customer profile, the simpler your growth model can be.
Planning—this is a regular process (ideally quarterly) of determining what you are going to do to drive growth, who is going to do it, by when and what the expected impact is. Aligning your plans around the ideal customer profile and growth model keeps the planning process short yet still effective.
Accountability—plans are pointless if you don’t measure your progress against them on a regular basis (ideally bi-weekly). There will always be some variance to a plan and the further ahead you plan the larger the variance will generally be (this is another reason to plan quarterly instead of annually). Accountability is about individuals taking ownership of and addressing these variances.
For a deeper dive on operating frameworks, check out my previous post, how to turn your great ideas into actual results.
When to hire a CRO
If you’ve read this far, you’ve probably realized that many of the 2,000+ companies currently looking for a CRO probably aren’t far along enough yet to need one yet. The minimum milestones a company needs to reach before thinking about bringing on a CRO are:
A cohesive group of customers. The simplest threshold for this is if 80% of your customers and revenue are derived from the same product solving the same use case.
At least $5M ARR, unless ARR is growing very fast (>100% per year).
At least 5 salespeople with $1M/yr quotas (or more salespeople if quotas are smaller).
If your company doesn’t meet all of the above, you are generally better off hiring a VP Sales instead of a CRO and saving the CRO layer for later. (It’s a really bad idea to hire a VP Sales and give them the CRO title but not the responsibility for marketing and customer success).
Where to find a great CRO
While you can always try to hire someone who has been a CRO before, with 2,000 companies currently looking for one, the likelihood is that you will have to broaden your search outside the existing candidate pool. I’ve seen great CRO’s come from a range of backgrounds Here’s a quick run down of where to look, what they’ll be strong at and where they’ll need to develop.
Sales. Historically the most common career path in SaaS. A VP Sales will usually be strong at building a team and instilling accountability, however will have some gaps when it comes to architecting a go-to-market motion that spans marketing and customer success and will need to be paired with a strong head of revenue operations.
Revenue Operations. The fastest-growing career path in modern B2B companies, as candidates from senior rev ops backgrounds have the experience and skills to architect a go-to-market motion and create the structure to instill an operating mindset. When paired with a strong sales leader, they can be very successful.
Marketing. Analytical candidates out of performance marketing backgrounds can be a great profile for a company who’s ideal customer profile is a small business that buys primarily online, as the initial go-to-market architecture can be simpler and more heavily weighted towards marketing. However, at some point the business will need to add an expansion process to drive revenue growth, which will require more of a human-driven sales effort and strong leaders in sales and customer success.
Finance. I’ve seen some great CROs come out of operating finance backgrounds and go into marketing-led B2B (and B2C) businesses. They are naturally strong at instilling an operating mindset and have the problem-solving skills to build a go-to-market architecture, however will need to be complemented by strong leaders in customer success.
Product. Probably the least common route to being a CRO, but since I came from a product background I would be remiss not to mention it :) CRO candidates out of a product background can be a great fit for a company that has a strong product/engineering culture, as they are naturally customer-centric and data-driven, which helps create focus and instill an operating mindset and have the problem-solving skills to put together a GTM architecture (which is highly analogous to a set of APIs for handling customers). When paired with a strong sales leader, they can be very effective.
Thanks for reading and if you haven’t already, please consider subscribing! I’m going to close out the year next week with a recap of the most popular posts of the year.