Making the Case for Appointing a Chief Revenue Officer

I’m a great admirer of the work that Marketo has been doing to provide tools that transform the way sales and marketing teams work together. But I’ve also been hugely impressed by the thought leadership they have brought to the subject.

I’m therefore delighted that Phil Fernandez, President and CEO of Marketo, has given me permission to share his recent article on the case for appointing a Chief Revenue Officer. As Phil points out, the role of CRO is not just a new acronym for VP of Sales and Marketing – it implies new skills and a fresh perspective, with an emphasis on sustainable, scalable process.

We believe that whatever acronym you choose to use, this is truly an idea whose time has come. I hope you enjoy Phil’s article.

By Phil Fernandez, President and CEO, Marketo

In today’s still-challenging economic environment, where growth is the number one priority for most companies, the strategy of Revenue Performance Management is gaining traction. One outcome of this shifting focus is the steady emergence of the Chief Revenue Officer (CRO), a new C-level appointment with responsibility for all aspects of revenue performance. Recently, I spent some time talking with industry analysts as well as individuals who are serving in this role about the growth of the Chief Revenue Officer title and the responsibilities of this position. The following are some of my observations based on those discussions.

You Can’t Cut Your Way to Market Leadership

First and foremost, one needs to look at the current business environment to understand why this new role has been emerging. In this post-recessionary environment, companies are facing an urgent growth imperative, having gone as far as they can go with cost-cutting measures to improve the bottom line. As the old saying goes, you can’t cut your way to marketplace leadership. Achieving greater and sustained revenue growth is the order of the day, and that has heightened the need for companies to put a laser focus on their revenue creation and management operations.

Few CEOs Are Happy With Their Current Revenue Model

Second, many CEOs don’t believe in their current revenue model, as evidenced by a recent Frost & Sullivan CEO survey, which found that 80 percent of CEOs did not have confidence in their organizations’ abilities to achieve above industry-average sustainable growth rates. The reason frequently lies within their sales and marketing operations, which tend to be disconnected and sub-optimized in today’s web-driven marketplace where the buyer is increasingly in control.

These massive business and competitive changes have caused companies to rethink all facets of how their sales and marketing departments collectively create, drive, and manage revenue. This self-assessment inevitably has spurred the need to put someone in charge of driving the overall revenue strategy and mapping it out across the marketing and sales teams. Enter the Chief Revenue Officer.

CRO: Not Just a Retitled VP of Sales and Marketing

The CRO is not simply an expanded role for the VP of Sales or Marketing. A CRO’s role is to look at ways to generate and retain revenue across multiple channels with a long-term perspective, rather than the short-term horizon usually embraced by sales departments. The CRO takes a unified view of customer interactions across marketing and sales teams and puts the right strategies, tools, and metrics in place that will have the greatest positive impact on revenue growth.

The most productive CROs are transforming the way their sales and marketing departments work – and work together. They have adopted a strategy and discipline that applies similar principles and processes as Six Sigma did many years ago for the supply chain to ensure coordination and maximum revenue performance across the buying cycle. These processes include:

• Establishing an infrastructure where sales and marketing are fully integrated and equally responsible for revenue generation;
• Measuring and analyzing sales and marketing productivity across the entire revenue cycle;
• Identifying and removing defects to increase sales and marketing effectiveness and efficiency; and
• Implementing a systematic process of continuous improvement in ways that are repeatable and predictable.

Many individuals I have talked to agree that these revenue-related changes require a fundamental shift in both operations and organization, and companies need to understand that it is not something to be taken lightly. Because sales and marketing are extremely different functions – each requiring different personalities, skills and experience to master – there are very few people who are groomed to manage and understand both. The best CROs understand and embrace the differences between marketing and sales to get the best of both functions, while at the same time establishing the processes to ensure coordination across the revenue cycle.

The CRO and The Future of Revenue Performance Management

Revenue Performance Management requires some profound shifts in the way we do business. As part of this strategy, companies are adopting the CRO role for varying reasons – some very good, some probably not so good. Ultimately, the CRO role can have an important impact on a company’s growth and profitability. But, adopting the CRO approach should be done strategically, and in the context of a broader re-engineering of the traditional structures and strategies that businesses rely on to generate and manage the revenue growth process.

If structured properly and with the right talent, the new CRO role will bridge both sales and marketing functions and ultimately maximize companies’ ability to manage revenue in a much more effective and efficient way.

Reproduced with the author’s permission from the original article.