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The Making of a Leading Chief Revenue Officer

Working with client organizations, the primary frustration I've heard from CEOs, specifically in revenue management, is centered on finding a Chief Revenue Officer or Head of Sales who grasps all the functions that go into managing and developing a growth strategy.


I usually then respond with, "can I see the competency map and the description for your CRO role?" They then provide a job description but rarely a competency map of what skills are key to being successful in leading 2x growth.




My notes and key points on what makes an effective CRO follows:

A Chief Revenue Officer (CRO) is a key executive responsible for developing and executing strategies to increase a company's revenue. To be a great CRO, an individual needs a combination of specific behaviors, experience, and background.


Top Behaviors:

1. Strategic Thinking - The ability to think long-term and develop a comprehensive revenue growth strategy. This is more than a year out plan or strategy. I recommend a three year view into how they envision the journey.

2. Leadership - The ability to inspire and motivate a team to achieve goals and improve performance.

3. Data-Driven - The ability to analyze data to identify trends and insights that inform business decisions. I have used Tableau for over a decade and can showcase examples of strategies and plans that are based on my actual hands-on analysis. Have them actually show you their data/analysis skills.

4. Customer-Focused - The ability to understand customers' needs and preferences and develop revenue strategies that align with them.

5. Results-Oriented - The ability to set targets and measure progress against them, and deliver results. Have they achieved 2x growth in three years?


Experience:

1. Sales - A CRO must have a deep understanding of the sales process, including lead generation, qualification, and closing deals.

2. Marketing - A CRO must have experience in marketing to develop and execute a comprehensive revenue growth strategy.

3. Operations - A CRO must understand the intricacies of a business's operations to identify areas for revenue growth.

4. Finance - A CRO must understand the financial implications of revenue growth strategies and be able to manage a budget effectively.


Background:

1. Industry Knowledge - A CRO must have experience in the industry in which the company operates to understand the market and competition.

2. Entrepreneurial Mindset - A CRO must be comfortable with risk and uncertainty and have an entrepreneurial mindset to drive revenue growth.

3. Executive Experience - A CRO must have experience in executive leadership roles to manage a team and drive revenue growth at scale.

4. Analytical Skills - A CRO must have strong analytical skills to make data-driven decisions and identify opportunities for revenue growth.


A great CRO needs a combination of strategic thinking, leadership, data-driven decision-making, customer focus, and results-oriented behavior. They should have experience in sales, marketing, operations, and finance, as well as industry knowledge, an entrepreneurial mindset, executive experience, and strong analytical skills.


The top ten activities and metrics that a Chief Revenue Officer (CRO) typically cares about are: 1. Sales Revenue - The total revenue generated from sales. 2. Customer Acquisition Cost (CAC) - The cost to acquire a new customer. 3. Customer Lifetime Value (CLTV) - The total revenue generated from a customer over their lifetime. 4. Sales Pipeline - The number of potential customers in the sales pipeline, and the value of those potential sales. 5. Sales Conversion Rate - The percentage of potential customers who become paying customers. 6. Sales Cycle Length - The length of time it takes to close a sale. 7. Customer Retention Rate - The percentage of customers who continue to use the product or service. 8. Net Promoter Score (NPS) - A measure of customer satisfaction and loyalty. 9. Marketing Qualified Leads (MQLs) - The number of leads generated by marketing that meet certain criteria. 10. Sales Qualified Leads (SQLs) - The number of leads that have been identified as potential customers and are being pursued by the sales team. The CRO may track these metrics through various activities, which may include: 1. Sales Forecasting - Predicting future sales revenue based on historical data and current trends. 2. Sales Training - Providing training to the sales team to improve their skills and performance. 3. Marketing Campaigns - Developing and executing marketing campaigns to generate leads and increase brand awareness. 4. Customer Feedback - Collecting feedback from customers to improve products and services. 5. Competitive Analysis - Analyzing the competition to identify areas for revenue growth and differentiation. 6. Pricing Strategy - Developing and adjusting pricing strategies to maximize revenue. 7. Sales Process Optimization - Streamlining the sales process to increase efficiency and effectiveness. 8. Customer Success - Ensuring that customers are successful in using the product or service and are satisfied with the experience. 9. Cross-selling and Up-selling - Identifying opportunities to sell additional products or services to existing customers. 10. Partnerships and Alliances - Developing partnerships and alliances to expand the customer base and increase revenue.


What about the Org Structure?

The organizational structure of a company with a Chief Revenue Officer (CRO) can vary based on the size of the company, industry, and other factors. However, a typical organizational structure for a company with a CRO may include the following key functions to support the CRO: 1. Sales - The sales team is responsible for generating revenue through direct sales to customers. They work closely with the CRO to develop and execute sales strategies and achieve revenue targets. 2. Marketing - The marketing team is responsible for generating leads and creating brand awareness. They work closely with the CRO to develop and execute marketing campaigns that support revenue growth. 3. Customer Success - The customer success team is responsible for ensuring that customers are successful in using the product or service and are satisfied with the experience. They work closely with the CRO to identify opportunities to improve the customer experience and increase revenue. 4. Business Development - The business development team is responsible for identifying and pursuing new business opportunities. They work closely with the CRO to identify potential partnerships and alliances that can support revenue growth. 5. Sales Op Finance - The finance team is responsible for managing the company's finances, including revenue, expenses, and budgeting. They work closely with the CRO to ensure that revenue growth strategies are financially sustainable. 6. Revenue Analytics - The analytics team is responsible for collecting and analyzing data to inform business decisions. They work closely with the CRO to develop and measure revenue growth strategies using data-driven insights. The CRO oversees these key functions and is responsible for developing and executing strategies to increase revenue. The CRO works closely with each function to ensure that revenue growth strategies are aligned with overall business goals and objectives.


What are the challenges a CRO might face?

The ten biggest challenges that a Chief Revenue Officer (CRO) may face are: 1. Balancing Short-Term and Long-Term Revenue Goals - The challenge of balancing short-term revenue targets with long-term revenue growth strategies. 2. Managing Sales Performance - The challenge of managing the performance of the sales team to achieve revenue targets. 3. Increasing Customer Acquisition and Retention - The challenge of increasing customer acquisition and retention rates to drive revenue growth. 4. Staying Ahead of Competition - The challenge of staying ahead of the competition by identifying and capitalizing on new revenue opportunities. 5. Managing Revenue Growth with Limited Resources - The challenge of driving revenue growth with limited resources, including budget and staffing. 6. Aligning Sales and Marketing Strategies - The challenge of aligning sales and marketing strategies to maximize revenue growth. 7. Responding to Market Changes and Trends - The challenge of responding quickly to changes in the market and shifting customer needs. 8. Managing Complex Sales Processes - The challenge of managing complex sales processes to close deals and increase revenue. 9. Developing and Implementing Effective Pricing Strategies - The challenge of developing and implementing effective pricing strategies to maximize revenue. 10. Measuring and Analyzing Revenue Metrics - The challenge of measuring and analyzing revenue metrics to identify areas for revenue growth and monitor progress. Strategies that a CRO may use to overcome these challenges include: 1. Developing a Comprehensive Revenue Strategy - Developing a comprehensive revenue strategy that balances short-term and long-term revenue goals. 2. Providing Sales Training - Providing sales training to the sales team to improve their performance. 3. Improving Customer Experience - Improving customer experience to increase customer acquisition and retention rates. 4. Investing in Research and Development - Investing in research and development to stay ahead of the competition. 5. Implementing Efficient Processes - Implementing efficient processes to manage revenue growth with limited resources. 6. Aligning Sales and Marketing Strategies - Aligning sales and marketing strategies to maximize revenue growth. 7. Staying Agile - Staying agile and flexible to respond quickly to market changes and trends. 8. Automating Sales Processes - Automating sales processes to manage complex sales processes more effectively. 9. Testing Pricing Strategies - Testing pricing strategies to identify the most effective pricing model. 10. Analyzing Metrics - Analyzing revenue metrics to identify areas for revenue growth and monitor progress towards revenue targets.


The CRO Budget:

The typical leading expense or budget ratio of sales expense to revenue can vary across industries and companies. However, in general, a common benchmark for the sales expense to revenue ratio is between 20% to 30%. This means that for every dollar of revenue generated, a company spends between 20 to 30 cents on sales expenses, including salaries, commissions, travel, and other related expenses. This ratio can also depend on the size of the organization, the nature of the sales process, and other factors such as the level of competition in the industry. Companies may aim to keep this ratio as low as possible while still achieving their revenue targets and maintaining a high level of sales performance.


Chat with us at M. Allen and see how we can help your team close more deals. Email us at mslonaker@mattallendevelopment.com.


About the author:

Matt Slonaker is a revenue growth and financial services business executive, with a strong track record in generating revenue growth and leading teams. He has experience working with both startups and multibillion-dollar market leaders, and has managed over a billion dollars in revenue in the last decade. He has founded his own company, M. Allen, and served over 20 clients since 2020, and has also worked in executive roles at global companies such as Firstsource, Morgan Stanley, JP Morgan Chase, and H&R Block. He is skilled in operations, revenue enablement, information technology, and other areas. Additionally, he is a US Military Combat Veteran and a career coach for military veterans in transition to the civilian sector since 2017.

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