Hiring a CRO

The timing of a Chief Revenue Officer (CRO) hire is a pivotal moment for any business. If you get it wrong you are wasting a lot of time, money and resources. 

In my experience hiring a CRO has one important subjective consideration. Are you ready to share the limelight with someone else? Once you bring in a CRO, the ecosystem you have carefully constructed in your company will start to change shape without your influence. Are you going to take a tighter grip to hold on to what you built, squashing new ideas or see this as an opportunity to increase the energy in your business? Until you think this through, be careful making this decision, you aren’t ready.

Of course size and scale matter, but only in terms of how close you are to product market fit and finding a core set of ideal customers you can build around to scale. A CRO is not a day one hire, it makes the most sense when you are getting ready for growth. 

Your experience and efforts in building a business idea from thin air, whilst impressive and unusual might not be ideal for scaling it. You might already be seeing some of the symptoms that you need some help with the commercial organisation. 

This post is for founders, CEOs or investors considering making this appointment, to provide an insight from my experiences on what really matters.

Emotional Readiness

The most important decision point for founders and investors is not an objective attribute of the company, it is an emotional one. When are you ready to let someone else have a major influence on your business? You are about to hire another C level executive, who will be communicating into the market and across your organisation as the voice of the company. In my experience this is a difficult moment for any founder or CEO. 

Are you ready to hand over some of the most important responsibilities to another person? Do you trust them and just as importantly, can they trust you? Are you clear about the remit? Who does what and why? In my experience the interplay and trust between these two leaders, the CEO / Founder and the CRO, is the real fulcrum for success. 

Your voice as founder or CEO is about to be diluted and you will need to deal with it. You are not just selecting another employee when you hire a CRO, you are hiring another partner. The investors that you have now, and those that you will want to court in future funding rounds will be as interested in the thoughts and capabilities of this person as they are in the founder or CEO. Dare I say it……maybe even more. Are you wincing yet? Feeling awkward? If you are then you are on the right track. If you are not then maybe you are not really clear about what will happen. Either way, keep reading.

If the new CRO and the rest of the staff get the sense of any disunity or divergence, then they will spend their time second guessing what the right thing is to do, and your company will be paralysed by self doubt. This person is probably going to be your most expensive hire, so don’t waste the investment by making them a puppet. Find the right person and make them a powerhouse. Their success reflects extremely well on you, embrace it, clear your head and you could be ready to supercharge your business.

Size and Scale

There is a lot of advice out there on the amount of the revenue, people etc that you need to have in your business before hiring a CRO. The answer is contextual, both on your company and the person you hire. This role is strategic so my advice is that you probably don’t want this person managing individual contributors. 

You can manage staff more cost effectively with managers or directors, and do you really want someone with this skillset managing frontline contributors? Wouldn’t they be better utilised making high leverage changes to drive the whole business forward? My advice is to wait until you have at least the first layer of leadership in place, Marketing leader, Sales leader and Customer leader. 

In my experience it is less about the amount of revenue in isolation, it is when you can prove that there is a market and you can afford someone. One of the roles of the CRO is about scaling, part of their job is to find the customers who can grow the most based on what you already have. Using this insight they will need to define an Ideal Customer Profile (ICP), and help the company identify how they can build a customer journey that suits this ICP to scale revenue.

If you have already found it, and you are scaling, you might consider that you need something different. In the early stages I would always counsel you to get specialists in the three key roles that I outlined above. You can get quite far with that group, certainly far enough to do some analysis and build a basic data driven model

I worked at one particular Fintech firm with about $4 million ARR, 75 customers and 15 staff across those 3 departments when I joined. The real ICP in the customer base was about 15 of the 75 customers, but there was enough to play with and sufficient resources to focus on the ICP and Customer Journey. It suited me perfectly, it might not suit everyone, it’s contextual. This team grew to about 50 people, once we added onboarding and international teams across a journey from Series A to C funding. That should give you a guard rail for consideration.

What are the symptoms that change is needed?

There are a few symptoms that might be useful to you, I am sure there are more but here is my summary list. If you are seeing these, then you will have teams executing separate missions, they will need alignment. 

1. Leads are up but sales are flat

Your marketing team has figured out how to get traffic and they are converting that into leads. But if sales are not increasing in line then they can’t be the right leads or your sales team has a problem. Your initial indicator is Marketing Qualified Lead (MQL) to Sales Qualified Lead (SQL) ratio. 

I prefer MQL to Sales Opportunity (which is an SQL that a salesperson has qualified and has created a sales opportunity in your CRM). If this is low or stagnant then something isn’t quite right. The marketing team is not providing the right leads as they are not converting to sales or the sales team are qualifying for the wrong opportunities. Ask them what ICP they are targeting, ideally in writing, If they don’t match up then you have your answer.

I guarantee they won’t be the same, these two departments, including the Business Development team, are not in synch.

2. Sales are growing but customer growth is not

This is a similar issue as the leads to opportunities ratio. If your customers are not growing then they are probably not the right customers. The more obvious indicator is churn, but you might be too early in the cycle to see that.  

If you have been recording the customers in cohorts based on months signed you might have better insight, you can pinpoint any changes to the changes in cohorts. The key metric here is the time to revenue from the sales booking and the percentage growth rate, once they are live, if the cohorts are young.  Ideally you will have some sort of Lifetime Value calculation if you have enough historical data. 

Customer growth at this stage of development is rarely to do with what is happening in the customer stage; it is typically to do with selection. Your reps are doing what you pay them to do, close deals, but they are probably the wrong ones. Your onboarding team might well have some answers on the best customers, along with your customer success team, based on speed to revenue and difficulty to onboard. Once again your teams are not in synch or communicating. 

3. You are getting a lot of product customisation requests

This is a really important signal to look out for in my experience every time I see this happening it means one of a few things. 

If customers have requirements that are not in your offering it means that there is a disconnect between sales, marketing and product. By profiling the new customers against the best customers you can see if they are aligned. 

You have not been feeding back what customers want back into Product, or the Product team is not appropriately engaged to decide what the ICP actually needs. Customers will always want something specific, it is not your company’s job to give them every feature they want. Either the capability doesn’t exist or your customer teams aren’t helping customers achieve their goals. Or……(sighs deeply) you have been closing the wrong ICP. 

Everyone has a different idea of what is possible with your product, but there is a lack of consistency of who the customer is and how you help them. The focus should be on what business outcome you create and how that happens when companies use your product. If you are seeing this then you need to consider bringing the understanding of all groups together. This will need documentation, training and application across the customer journey and all of the departments involved.

Summary

The symptoms above are of individual departments focussing on their own objectives without considering what is happening before or after in the customer journey. One of the key roles of the CRO is alignment, this is complemented with investment decisions on what to address first. 

To hand over your trust it is as much about the person as it is about their skills, there will need to be a lot of disagreeing agreeably so choose well. Once you have them make sure you have a clear remit, who is going to do what between the CEO and the CRO. There can’t be any confusion or dissonance that people can see. 

The fundamentals are really about you. Are you ready? You are hiring a senior person with a big responsibility, it really only works if you are on the same page and they have the freedom to put in effect the strategies you agree upon together. Anything short of that and you are heading for the rocks. Be honest with yourself, be clear what you want them to do and find someone you trust. 

Seems obvious but if that was the case then the average tenure for this role wouldn’t be 18 months.