How CRO’s Are Leading a New Model for Revenue Management
Companies in Ed Tech and beyond are learning to think more holistically about revenue generation.
HighFive has seen this trend up close: we have successfully closed multiple searches that reflect an accelerated market interest in talented professionals capable of filling a Chief Revenue Office role. The budding interest in this relatively new c-suite title is indicative of a broader transformation of how businesses conceptualize revenue management.
In this article, we break down the thinking driving the ascension of the CRO and consider options for sourcing the right leader for this position.
The Emerging Value of a C-Suite Executive with Ownership of the Entire Revenue Funnel
Companies traditionally tended to envision revenue as a “chain.” In this model, one department always “hands-off” ownership of opportunities to the next. The names of the departments involved may change, but the underlying assumption stays the same: revenue generation is best-managed by allowing each department to own their discrete part of the chain. And that process ownership is evaluated via associated metrics and KPI’s, like Win Rate for the Sales Team.
Marketing owns one part of the customer journey, sales the next part, and so on. A prototypical process may look something like this:
- The marketing department generates demand, manages branding, and leverages strategies like content marketing and paid advertising to generate contacts with potentially relevant customers.
- These contacts are passed off to an outbound sales team, which qualifies leads and passes prospects on to account executives.
- After a sale is complete, customer success manages the long term customer relationship to help ensure satisfaction and promote repeat business.
Many companies are learning that this model of revenue generation has some key structural limitations. Operational business units within the revenue funnel have essential perspective--but not always the breadth of perspective needed to solve problems that stretch across multiple business units. Each of these functions is essential to finding, securing and keeping great clients. Yet in a traditional business hierarchy, there’s often no individual taking direct overall responsibility for integrating their work across the entire revenue funnel.
In short, no individual is tasked with overall, cross-functional accountability for revenue generation.
This lack of cross-departmental ownership can drive serious business problems. Like marketing delivering a high quantity of leads that aren’t relevant enough for sales to convert. Or sales over-promising to inflate their win rate with prospects who are a lose-lose proposition for customer success, hurting retention metrics (and the brand’s reputation). When revenue growth isn’t meeting targets, but every department is meeting their own KPI’s, no one is tasked with “seeing the forest for the trees,” in the overall revenue generation funnel.
Worse still, this lack of perspective on revenue generation can cause metrics to actually obscure underlying issues. In this example, poor retention is likely to be blamed on the customer success team unless management goes into the weeds examining individual prospects’ sales journeys.
That’s where the Chief Revenue Officer enters the picture. The CRO works to de-silo the perspectives of business units like Marketing, Sales, Sales Operations, and Customer Success.
The CRO seeks to drive organic, long term revenue growth by aligning workflows across all revenue-generating business units. An impactful CRO functions as a communication nexus between departments, helping these individual groups to work as a cohesive whole. Most importantly, the CRO needs to be an outcome-oriented leader with who assume overall responsibility for all revenue-related activities.
An impactful CRO sees revenue generation not as a chain, but as a web. The CRO has to lead with the perspective needed to analyze revenue generation from above the artificial divides between corporate departments. She needs to understand how intermediate goals like Win Rate interact with the ultimate goal: more revenue
But where can we find someone with that capability?
Who is Right for the CRO Role in Ed Tech?
The CRO model is especially relevant in Ed Tech, where sales relationships are more likely to be managed through complex organizational ties with a college, school district, government entity, or company than a single all-defining “sales pitch.” This industry is full of good ideas. And the ability to generate a sustainable revenue model is the key differentiator between a promising startup and a company that begins realizing dramatic growth.
The CRO model continues to proliferate for a reason. But sourcing the right talent for the CRO role can be tricky. Because this title is so new, not many candidates will have a proven track record as a CRO. Furthermore, this candidate needs to assume credible leadership over a diverse set of underlying teams.
Companies looking to bring on the right talent to assume this role will need to be creative.
One approach is to focus on a successful leader with deep domain expertise in marketing, sales, or customer success, hiring them with a plan for developing the cross-functional perspective needed by the CRO. A second option is to consider candidates who, while lacking deep experience in these areas, have proven high-level management expertise overseeing the workflows of multiple business units.
A breadth of experience can be just as important as sales or marketing knowledge. Jim Herbold, CRO of the predictive marketing firm Infer, writes that while sales and marketing make up the core of his job, “I also spend fluctuating amounts of time with product, business operations, finance, sales operations, business development, and people ops. Many of us are operators with a strong deck of experience scaling revenue ops.”
Management experience with scaling up ops is key, as the CRO often provides the locus for future team building and hiring decisions. The CRO needs to not only integrate the activities of different business departments but help define how these departments need to evolve to help the company grow.
The key factor to recognize when hiring a CRO is that rigorously pursuing either of these options requires a hiring process with a systematic approach for getting into the weeds to find the right candidates. A candidate with the perfect CRO resume may not even know it, and the requisite skills can come from a variety of professional backgrounds. An effective CRO search can’t just rely on resume line items; a granular approach for considering a candidate’s aptitudes is essential.
HighFive has completed several successful searches for high impact CRO positions. We’ve seen up close that these positions are rarely simple to fill, but that the right candidate can be found with a creative search strategy and network.