When to Hire your First Chief Revenue Officer
Post 1 of 4 in the Startup Series for CRO’s.
In most startups, the founder is the first salesperson and while it may be difficult to let that go you’ll eventually scale, add sales reps, or maybe some form of a Sales Manager once there are more than a couple of reps. In Startup CXO our Return Path CRO, Anita Absey, wrote about the journey of startup sales, from “selling on whiteboard” to “selling with Powerpoint” to “selling with PDF.” I encourage you to read that section if you’re wondering about hiring a CRO, but all of the hiring of sales reps and (possibly) a sales manager happens during what Anita calls the “White Board” stage as you’re beginning to transition to “Selling with Powerpoint.”
Selling from a White Board means that you are essentially working with an interested potential customer on a custom and conceptual sale; selling from PowerPoint means that you are selling tailored solutions—you’re no longer at the discovery stage. Selling from either the White Board or Powerpoint stage is fine for an early-stage company, but eventually you’ll want to scale and hire your first CRO. Here are some of the telltale signs that will help you figure out if you should bring in a CRO.
First, you’ll know it’s time to hire a CRO when you’re nervous about HOW you’re going to make this quarter’s number – not just that WHETHER or not you’ll make it (since you should know that as much as anyone). Another sign that it’s time to hire a CRO is when you aren’t clear what the levers are, or what the pipeline/forecast details are, to hit those quarterly numbers.
If you are spending too much of your own time managing individual deals and pricing, or teaching individual reps how to get jobs done, that’s a clear indicator that a CRO is needed. If your board asks you if you’re ready to step on the gas and scale your revenue engine (e.g., move from Powerpoint to PDF), and you don’t have a great answer and aren’t sure how to get to one then you need to hire a CRO.
A fractional CRO can add a lot of value, especially at a small volume where a full-time CRO would be overkill. Or, if your sale is very complex or to a very senior buyer, and a more junior sales team needs a fair amount of deal support from above, a fractional CRO makes a lot of sense. Sometimes a fractional CRO can help you enter a new adjacent segment (e.g., mid-market going to enterprise), and then you’ll need a seasoned professional to help translate sales processes from one segment to the other while keeping the initial segment running smoothly.
If you’re not sure what kind of sales leader you’ll need long-term and full time because you’re not at enough scale yet, a fractional CRO can help you “try before you buy.” You can try out a specific type of revenue leader to see if that type works, for example, sales only, sales + customer success, manager of hunters, or builder of a high velocity sales engine, to name a few different options.
Hiring a CRO will definitely free up time for founders and allow them to work on other things that drive the business, without worrying about sales.
-Matt Blumberg, April 29, 2022.