If you’re thinking about hiring a chief revenue officer or just want to know more about the position, this blog is for you. I am going to walk you through the 4 W’s of hiring a chief revenue officer so you can make an informed decision when it comes time to hire for this role in your company. Let’s dive in…
This title has been tossed around too much and I simply don’t want to see it go the way of the SaaS VP of Sales (ie inflated title, tactical responsibility, 16-month average tenure, etc)
While I don’t believe this problem will ever go away, I do believe that company leaders need to better understand the role, its importance, and when to pull certain triggers so that a chief revenue officer can be a great strategic asset. Also, important to note, that every company doesn’t need a chief revenue officer. This decision is more about the founding team, the leadership team, and the skill gaps to fill in between.
Who is a chief revenue officer?
A Chief Revenue Officer is the executive tasked with all things revenue. This means they’re in charge of the following:
- Potential revenue (Marketing)
- New revenue (Sales)
- Direct revenue (To the Buyer)
- Indirect revenue (Through the channel)
- Upgrades and Renewals (Customer Success)
- Downgrades and Cancellations (Customer Success)
Since this position owns revenue, which encompasses different teams and departments, they are also responsible for ensuring all teams and departments are working together (aligned) and not against each other (siloed).
Simply put, if the chief revenue officer doesn’t own all buyer-facing organizations, then you don’t have yourself a chief revenue officer. In fact, I forbid you (in the words of Kevin O’Leary from Shark Tank) to place this title on anyone that doesn’t own it all.
Why hire a chief revenue officer?
The most important reason to hire a chief revenue officer is to take the company to the next level.
Yes, that’s vague, but that “next level” has many different starts and stops. Think about a pitcher in baseball/softball. You have starting pitchers, relief pitchers, and closers. Closers aren’t always coming in too close but sometimes they are. Starters are always guaranteed to throw the first pitch, but who knows when or if they need relief. Relief pitchers come in sometimes at different points in the game. A chief revenue officer is similar in that respect, and they can either be the relief or the closing pitcher depending on the needs of the company.
A chief revenue officer is needed when the skill gaps of the founders and/or leadership team need to be filled. There may be a great VP of Marketing, but that person has grown to need more than the CEO can provide. Perhaps sales and marketing are having problems that the CEO can’t solve. Maybe customer success and sales are fighting and blaming each other for bad customer experiences. This is when you should consider hiring a chief revenue officer.
When to hire a chief revenue officer?
The best compass to use when considering hiring a full-time chief revenue officer is during a Series A raise or when the company is planning to do around $20m in annual revenue.
Hiring below $10m in revenue, places the chief revenue officer in a tactical role, often overseeing small revenue teams. This becomes a weight on the salary constraint and forces more money into executive compensation as opposed to tactical execution.
I am a strong believer that the company budget needs to be invested in building the engine through tactical execution and individual contributors. Stretch the dollar as far as you can and build only the front-line contributor and front-line managers. You can get to $10m-$15m using front-line leaders who build teams of front-line contributors.
From $10m and up is when things start to get interesting.
This is when the VP level should be evaluated (NOTE: VP doesn’t lead front line contributors… which includes VP of Sales). A VP gets diminished when the role manages contributors. If someone is leading a team of front-line contributors, the role is a director or manager at the least. The VP should manage a leader of a team. Getting this hierarchy right is a necessity in scaling an organization. It’s important to note that I used the word “scaling” and not “growing.” The words have entirely different meanings.
What to look for in a chief revenue officer?
There’s a lot of shaming around chief revenue officers who come from sales, saying they aren’t fit to run marketing. While I don’t necessarily agree or disagree with that statement, it’s not as easy to make that declaration about everyone. Otherwise, we’re doing nothing but profiling and assuming.
First off, experience is overrated. The main reason why is because the experience isn’t centered on success, just that you’ve done something. Experience has no bearing on whether the company and people were worth a damn or not. There’s a lot to break down around experience and how that translates into skills or competencies.
Secondly, and maybe this should have been my first point, there’s no required path to success. There’s no formula. There are no prerequisites. If there were, no first-time founders, CEOs, leaders, etc would ever be successful. The truth is, it’s about the individual, not their past path.
A chief revenue officer is a big position to hire that requires a lot of thought and design. This isn’t just an elevated title for a tactical employee. Turnover cripples an organization of any size, small or large. Turnover during growth is worse. Turnover at the leadership and executive levels are by far the worst!
Please don’t treat this role like a middle management position and inflate the title so the incumbent can tout their chest. Empower the position appropriately, pull the trigger only when necessary, be clear about how this position will take you to the next level (i.e. define where you are today and where you want to be tomorrow), and please, for the love of all things…recognize that this role alone will NOT be enough! This position will need to be resourced properly to bring in teams, technology, and training. The planned budget for this role is beyond salary and fully loaded costs.
Ed Porter | Owner/Fractional CRO