Picture the ideal chief revenue officer: eager, tenacious, data-obsessed, and ready to adjust course on the fly. That last one is particularly important because, sadly, they don’t tend to keep their jobs that long.
Data crunched by compensation management company Pave tells the story: CROs last an average of 1.8 years (our friends in the finance department tend to last a little longer). This lifespan is shorter than two sales cycles at some companies and is bad news in more ways than one. A report published by Harvard Business Review last year explored “The High Costs of Chief Revenue Officer Turnover”—it’s grim reading.
We spoke with two go-to-market experts on the opportunities and pitfalls of the burgeoning role.
Define your CRO
C-suite leaders are not created equally, and CROs are perhaps the most likely to deviate from the job description.
“It’s a combination of faulty expectations, misunderstanding, and/or misdiagnosis of the business,” said Scott Travis, founder and CEO of StageWise GTM.
Travis says there is no generally accepted standard for the scope of the role, no doubt due to its relatively recent emergence. “Everybody seems to define it in their own way,” he said.
CROs are brought in to oversee go-to-market teams, unify business functions, and make sure all top-line generating levers are pulled. It’s a wide lens, which can lead to confusion.
Nick Toman, president of growth advisory firm SBI and coauthor of the Harvard Business Review report, says there is a tendency to hire CROs with proven playbooks, which can quickly backfire. “The CRO comes in and operates their playbook and the operating conditions don't match where they had success previously,” he said.
Toman says CROs being unable to use data to adapt plays for new environments is also a problem, and data itself becomes a double-edged sword. “They are so closely measured, when underperformance is observed, boards get very antsy very quickly,” he said.
Short-term vs. long-term strategy
CROs are often given a mission to quickly implement a fresh revenue strategy or to act as a catalyst for immediate growth. Though that may be needed in some cases, Travis says it’s not a winning formula.
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“They’re brought in for those short-term objectives when really [they] should be brought in to design the revenue system and begin to build a scalable revenue system the business can be operated under,” Travis said.
Toman takes a different view here, saying most CROs are hired with a long-term outlook, but things change once they’re on the job. “They show up Day One; they realize all the fires that are in place, and you go into immediate, short-term survival mode,” he said.
That pressure is surely heightened in a business environment keen on 90-day plans and an eye on quarterly targets. Toman says most strategies are therefore reactive by nature. “The numbers come in. The numbers are missed. A CRO panics,” he said.
Striving for longevity
CRO tenures don’t have to be one of the shortest among the C-suite. Not only is the position gaining in popularity (Pipe is the latest tech company to hire for the position), but it is also emerging as a legitimate stepping stone to the corner office.
It seems a crucial step is defining the role and its expectations from the outset. Travis suggests companies start with fractional CROs, especially if immediate wins are the priority. “It’s kind of a ‘try before you buy’ scenario,” he said.
Toman says keeping the customer front and center will help. “This is where CFOs can get along with CROs, can get along with heads of customer success, can get along with heads of marketing,” he said.
While the modern CRO is still in the early innings, it seems the bases aren’t quite loaded yet.