Why so many CROs?
Updated: Jul 16
A colleague recently related to me that his company has had six CROs in the last nine years. “It’s the C-level ejector seat,” he said. This got me thinking that maybe his company had a problem. I mean that’s an insanely high churn rate—a new CRO every 18 months.
A quick web search of “CRO tenure” returned this gem.
about 18 months. The average tenure of a Chief Revenue officer working at the same company is incredibly brief—only about 18 months, according to an annual survey from CSO Insights.
Apparently I was wrong. His company’s experience was consistent with the industry average. His company doesn’t have a problem. The industry has a problem.
The discussion reminded me of the joke about a new CRO hired to take over sales and marketing at company. The outgoing CRO who was stepping down met with the new CRO and a handed him three envelopes. “If you get into trouble, just open these envelopes,” he said.
The first quarter ends and sales fall short of the plan, so the new CRO decides he better open the first envelope. It says “Institute an account-based marketing initiative. It will give the appearance that you know what you are doing and are taking action. It will confuse people. And, most important, it will buy you time to figure out what’s really going on.”
The next quarter ends with another sales shortfall, so the CRO opens the second envelope. It says “Institute a new sales process. It will give the appearance that you know what you are doing and are taking action. It will confuse people. And, most important, it will buy you time to figure out what’s really going on.”
The next quarter ends and things are looking really dire, so the CRO opens the third envelope. It says, “Prepare three envelopes.”
The moral of the story is that while the CRO has three envelopes, the CEO has another set of envelopes—one of which is “Fire the CRO…”
Account Based Marketing and new sales process cynicisms aside, the truth is that these things may actually have some positive effect.
The question is why are CROs in the ejector seat?
CROs have a particularly difficult challenge because they are under constant pressure to sign up for increasingly higher sales goals that are often ungrounded in reality. What’s that result in? We could retell that joke with the first envelope being “over-assign quotas and hire more salespeople.” The second envelope would be “cut the bottom third of the sales team.”
But think about it… If the root cause of the shortfall is that the goal is unrealistic, how does hiring more people solve that problem? Maybe that’s why there have been so many CROs in your company. And why the CRO is in the senior management ejector seat.
What’s needed is a way to anchor the goals to reality. FUNNELCAST statistical forecasts do just that. How about instead of setting an arbitrary goal, you could say “If that’s the goal, here’s what we need in new activity to meet that goal. Do we have the knowhow and the resources to get there?” Check out Gap Analysis on our Solutions page to learn more.
Of course that's only part of the solution. You may need the Vulcan mind-meld to convince others to drop the alternate reality they have in their heads.