Chief Revenue Officers: Why They Are Replacing CMO’s
SaaS companies are all over the globe, especially in tech hubs like Silicon Valley, are now seeking a new kind of expertise for their leadership teams.
Historically, in large, established organisations, the CEO has relied on the Chief Marketing Officer (CMO) to drive demand, growth and align sales/marketing teams. Many fast-growing companies are asking themselves if that’s still enough to drive growth. The blurred lines between sales and marketing are becoming ever more exposed.
Is measuring pipeline even the best metric?
How does marketing really get a deeper appreciation of what it means in terms of revenue generation and the impact of programmes?
It’s hard. It’s hard for the CMO to come to grips with the ever-changing environment. It really is a mindset shift and different mentality (or something the best marketers have held all along).
CEO’s now are believing in the importance of building a connected organisation — especially when it comes to how marketing affects sales.
Hence, CEOs are turning to Chief Revenue Officers (CROs) to create the synchronicity between sales and marketing teams that are needed to scale quickly and sustainably.
This is a good thing for CMO’s who embrace the future direction and expectations of the business to align themselves as the CRO. It’s a bad thing if you feel this is an existential threat to you and the functional department.
In short, marketers need to adapt.
What is a CRO?
A CRO is responsible for all revenue-generating activities and processes across teams. This can include traditional marketing programs, as well as oversight of sales pipeline and customer success initiatives.
CROs have a broader wingspan across the organisation by design. If their primary goal is to drive and manage revenue streams, they need visibility into every corner of the organisation that has an impact on closed business and customer retention.
One of the most critical tasks of a CRO is to select and oversee the use of an organisation’s systems and platforms used to prospect, sell and retain business (often called a revenue stack).
In many organisations, marketing owns part of the technology while sales owns another layer of the onion, creating silos within the organisation that prohibit a holistic view of current and projected revenue.
Each department has a vested interest in achieving its own objectives. As the overseer of the entire revenue stream, the CRO evaluates each piece of the revenue stack without objective bias. This is also true with sales and marketing teams in the field — bringing the two disciplines together is critical for alignment across the board.
How is a CRO different than a CMO?
While a CMO typically oversees activities that live within the marketing organisation, like demand generation, product positioning, etc., a CRO has a uniquely expanded view. It’s certainly true that a CMO can own revenue targets and carry a quota for the marketing department.
However, sales and customer success teams traditionally report up through separate leadership, creating potential barriers for data visibility, budgeting, and strategic planning.
Some organisations choose to hire for both roles, electing to keep marketing functions separate from sales and customer retention. While this approach can accomplish the same goals as hiring a CRO to manage all revenue touch-points, both roles must work in total lockstep to avoid conflicting interests and to ensure transparency. If you get the right pairing between the CMO and CRO your results can be exponential. However, if you are not clear on the value that each role brings to the table; you will cause greater mis-alignment.
Some are unclear. Am I looking to run all operations through the CRO? Should they replace the CMO. We do see organisational structures following that trend. But it’s not about “replacement”; as you will miss critical skills that strategic marketers bring to your revenue generation stack.
Does a CRO create organisational alignment?
The role of the CMO is becoming more challenging. It’s no secret that sales and marketing teams have a reputation for being misaligned. In some cases, it feels as if sales and marketing are competitive entities, fighting against each other, instead of working toward the same goal of revenue growth and profitability.
A skilled CRO can take the strengths of both sales / marketing and blend them create a more unified organisation. Think back to the last time you worked for an organisation with heavily-divided sales and marketing teams.
The marketing team felt as if the sales team demanded too much and was too reactive, right? And conversely, the sales team felt as if the marketing team didn’t provide the right support and enablement to support more closed deals.
The irony is that both teams had the same objective of revenue growth. For organisations to scale effectively, marketers must put on their sales hats and vice versa.
By managing the entire revenue stack, the CRO has a finger on the pulse of what’s happening out in the field, with lead generation, and with customer success. Companies can’t afford trial and error when it comes to market positioning and sales enablement. Without silos between teams, effective enablement starts to become the norm instead of feeling like dumb luck, as it often does with misaligned teams.
The CRO is often seen as the new CMO for B2B software companies. In a heavily saturated market, sales and marketing alignment is a powerful competitive weapon.
My take is. Executives are seeing CMO replacement as a way to create sales & marketing alignment. However, the CRO typically is not a marketer; unless coming from a marketing background.
Therefore, both skills are required to scale the vast range of strategies and tactics required for success. It’s down to the CMO to adapt and deliver value from a revenue lens — great marketer’s naturally focus on those outcomes.
And the different thinking patterns of each role means both are critical to an organisation. There are numerous CEO’s looking at do they need a CRO and CMO (or CRO and less senior marketer).
But think hard whether that is the right question/ structure?
Many in the market are making that call right now; looking at it as a replacement exercise (the fad right now). I think you should think of it more as an alignment exercise to leverage both skill-sets and types of thinking.
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