The Role of a Chief Revenue Officer in a Tech Company and Considerations for Hiring One

As tech companies scale and expand, the need for a Chief Revenue Officer (CRO) becomes increasingly important. The CRO is critical in leading revenue growth and ensuring the company's long-term success. The CRO is responsible for creating and executing a revenue growth strategy that aligns with the company's overall objectives. However, hiring the right CRO can be challenging, especially for companies in different funding stages. Finding the right CRO for a tech company requires careful consideration and planning. We will explore the concerns that tech companies should consider when hiring a CRO and their expectations for success after the first 90 days, 180 days, and one year.

The Role of the CRO

The CRO is responsible for overseeing all go-to-market activities within a company. The CRO's responsibilities include sales, marketing, and customer success. The CRO's primary objective is to drive revenue growth and profitability while ensuring the company delivers high customer satisfaction. Successful CROs must have a deep understanding of the company's products and service offering, as well as the needs and preferences of its customers.

An effective CRO can impact a company by:

1. Increasing revenue: Highly effective CROs can create and execute a revenue strategy to significantly increase a company's performance. It is achieved by identifying new revenue streams, optimizing existing ones, and improving sales processes and techniques.
2. Improving sales team performance: Strong CROs will help develop, enable, and lead the sales team, ensuring they have the necessary resources, training, and support to succeed. Effective enablement can lead to better sales performance and more revenue.
3. Improving customer experience: High-performing CROs can enhance customer experience by ensuring the sales team is responsive to customer needs and knowledgeable about their products or services. It can lead to increased customer satisfaction (NPS) and loyalty.
4. Improving data-driven decision-making: A CRO will implement data-driven processes and systems to track sales performance and customer behavior. It can provide insights that can inform strategic decision-making and improve revenue growth.

The successful hiring and onboarding of a CRO requires a focus on developing a scalable and data-driven sales process, investing in sales training and coaching, resources for expanding the sales team, and creating new sales and marketing initiatives. 

Considerations for Hiring a CRO

When hiring a CRO, tech CEOs should evaluate several considerations. First, the CRO should have a proven track record of success in driving revenue growth in a similar industry. The CRO should have a strong understanding of the market sector and the specific challenges and opportunities that come with it.

When hiring a CRO, companies must consider the experience level, business and strategic acumen, and maturity required for their funding stage. Companies in the early stages of funding (Seed and Series A) typically look for CROs with experience in sales leadership and a proven track record of building a successful sales team. For example, a CRO for a Seed-stage company may have experience as a VP of Sales at a startup or a Director of Sales at a larger company.  

As companies move into later funding stages (Series B and beyond), they often look for CROs with experience scaling sales operations and managing large teams. For example, a CRO for a Series B company may have experience as a Chief Sales Officer or a VP of Sales at a larger company. They should have experience with complex sales cycles and managing a sales team coordinating with multiple stakeholders. In addition, the CEO needs to consider target customers when defining the criteria for the CRO: are the target customers small and medium-sized businesses (SMB), commercial, government, enterprise, or a combination? 

Another important consideration when hiring a CRO is their cultural fit. The CRO must be able to work collaboratively with other executive team members and amplify culture in the sales organization and with employees at all levels of the organization. They should also be able to align with the company's values and vision and effectively communicate that to employees, customers, and investors.

Prior Experience

The experience required for a CRO varies depending on the company's funding stage. For example, companies that have raised Series A funding typically require a CRO with five to seven years of experience in a sales leadership role. Companies with Series A funding typically require a CRO with 5-7 years of experience. On the other hand, Companies that have raised Series B funding (or later) will require a more seasoned CRO with 10-15 years of experience leading an entire go-to-market organization.

The most successful CROs have a proven track record of driving revenue growth in previous roles. In addition, CROs should experience developing and executing revenue strategies closely aligned with the company's overall goals.

A CRO must have a track record of driving revenue growth and a deep understanding of the industry and market in which the company operates. For example, a CRO in the SaaS industry should have a deep knowledge of subscription-based revenue models (including revenue recognition) and customer retention strategies. In addition, seasoned CROs should have demonstrated experience leading lead generation (if not reporting to marketing), pre-sales or solutions consulting, direct sales, and sales operations.

Expectations for Success

Once hired, companies should have clear expectations for success for their new CRO. Within the first 90 days, the CRO should focus on deeply understanding the company's products, services, and customers. They should also establish relationships with key internal stakeholders, including the CEO, CFO, and heads of sales, marketing, and customer success.

By the 180-days, the CRO should have developed a comprehensive revenue strategy with clear objectives and KPIs. They should have also begun implementing changes to the sales, marketing, sales operations, and customer success teams to improve overall performance.

After their first year, the CRO should have demonstrated substantial revenue growth and profitability results. In addition, they should deeply understand the company's customer base and leverage that knowledge to drive further growth. They should also be able to effectively communicate the company's progress to investors and other stakeholders. Finally, the CRO should demonstrate clear progress toward achieving the company's revenue goals and have a track record of success in developing and fulfilling revenue strategies.

According to a study by the Boston Consulting Group (BCG), CROs should focus on three key areas:

1. Building a solid foundation: In the first 90 days, the CRO should focus on understanding the company's vision, product, and market. The CRO should also build strong relationships with the CEO and other executives. The CRO should assess the sales pipeline and determine whether it's healthy and scalable.
2. Developing a revenue strategy: In the first 180 days, the CRO should develop a revenue strategy that aligns with the company's vision and goals. They should work with the marketing team to create a go-to-market plan and identify target customers. The CRO should also establish key performance indicators (KPIs) and set targets for revenue growth.
3. Executing the revenue strategy: In the first year, the CRO should focus on achieving the revenue strategy and driving growth. They should hire a high-performing sales team and implement sales processes that are scalable and repeatable. The CRO should also optimize the sales funnel and improve customer retention.

Collaboration with the CEO

One critical consideration when hiring a CRO is their ability to work effectively with the CEO and other executive team members. Companies with high levels of collaboration between their CEO and CRO tend to see higher revenue growth than in environments where the two positions operate independently. Therefore, it is essential to look for a CRO who can work effectively with other members of the executive team, especially the CEO.  

Conclusion

Hiring a CRO is critical for tech companies looking to grow and scale their operations. Companies should look for CROs with a proven track record of success in driving revenue growth based on the organization's state of funding (or evolution) and a strong understanding of the tech industry and the needs of its customers. In addition, the CEO should clearly understand the expected outcomes from when the CRO joins the company throughout the first year. They are setting clear expectations for success and providing. Finally, the CRO's ability to complement the culture of the leadership team and working relationship with the CEO is paramount to their ultimate success.