Chief Revenue Officers: More Dot-Com Hype, or Sensible Solution to the Marketing and Sales Divide?

Just as were beginning to figure out the proper role for chief marketing officers (CMOs), along comes an even newer C-level title. Set another place at the boardroom table, the "Chief Revenue Officer" is joining the party.

So what’s a Chief Revenue Officer (CRO), you’re wondering? A CRO is the person accountable for all revenue-generating functions, including marketing, sales, customer support, and business development. The new position is how some companies are responding to the current economic slowdown. It also reflects the backlash to the "who cares about revenue, give me eyeballs" dot-com debacle. We’re all obsessed with revenue now. Without more revenue, all the cost cutting in the world means little.

Like many of the new-vintage C-titles (chief technology officer, chief knowledge officer, chief people officer, etc.), the CRO appears most prevalent in the dot-com world. Firms like Weather.com, AdOutlet.com, Athenahealth.com, and ebuild all employ CROs.

First reactions to the new title are often negative. It’s just more title inflation. It’s just another name for head of sales. If people worried more about generating business and less about stroking their egos, they might actually find the revenue they so desperately need. CNBC recently derided CROs as just a "glorified name for VP of sales."

Viewed from another perspective, however, it’s easy to see that firms recognizing the true spirit of the position could reap great rewards.

ITSMA has long documented the chasm between sales and marketing. Despite the fact that both teams share the same goal (generating revenue), the relationship is too often fraught with contention and program conflict.

A CRO responsible for both functions is a good potential solution to bridging the gap. A single C-level executive focused largely on these two functions (i.e., not a thinly spread CEO) could enforce more effective alignment of marketing and sales goals and tactics. Incorporating the customer service function as well could ensure that marketing and sales are truly driven by the need to build customer loyalty, and not just to maximize transactions.

Specifically, the CRO could address the following typical problems:

• Offerings and pricing developed by marketing without sales force input
• Market and competitive intelligence collected by marketing that is not used by the sales force or top management
• Customer service operations that fail to reinforce the brand, gain customer and market intelligence, and/or promote additional sales
• Fingerpointing among the various groups when services and solutions fail to sell or when market share is lost

A CRO could also contend with the frequent misalignment between product and services organizations within the same company. The classic example is the services marketing organization that is held accountable for revenue while the product sales organization has carte blanche to discount or even give away the services. A fully empowered CRO could rationalize and optimize product and services sales. Product-driven companies now trying to make the shift toward services or solutions might well consider the value of a CRO.

Yet another conflict a CRO could resolve is that between the direct sales force and indirect channels and partners. CROs responsible for all channels have tremendous incentive to minimize channel discord. Which channel generates what percent of revenue becomes secondary as long as the CRO hits his or her numbers.

The best way to get something done is usually to assign a process owner. Shared responsibility for results often diminishes the likelihood of achieving those results. In theory, then, giving someone the revenue hat and making him or her fully accountable is the best way to maximize revenue. It is all about optimizing the whole, rather than the parts.

But it’s a long way from theory to practice, as many of the dot-com dreamers reluctantly now realize. The key question, as always, is execution. What sorts of people become CROs, with what backgrounds, skill sets, and marching orders? If CROs are indeed glorified VPs of sales, the place setting in the boardroom may disappear quickly. But if companies develop a more strategic position that truly brings together the marketing, sales, and customer service functions, they can be well served indeed. And if they appoint executives with a broad range of sales, marketing, and services experience, and give the new executives the necessary clout to pull competing organizations into line, then the sky’s the limit.

Hmm, so what happens to all those new CMOs?

What do you think, ITSMAers? Does the CRO make sense? Have you seen one in action? Drop us a line with your thoughts on the latest and potentially greatest of the fancy new titles.

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ITSMA specializes in helping companies market and sell services and solutions more effectively. We work with the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA annual program clients include business leaders such as Avaya, BT, Cisco, Deloitte, Hewlett-Packard, IBM, Microsoft, and Tata Consultancy Services, among others. Our comprehensive research, consulting, and training on topics including ITSMA Account-Based Marketing℠, Brand Positioning, and Solutions Development provide the insight and experience companies need to improve business results. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.