The Evolution of the CRO & Revenue Efficiency Metrics with Christopher Semain and Sean Ryan

Hi, I'm Warren Zenna, founder and CEO of the CRO Collective, and welcome to the CRO Spotlight Podcast. This show is focused exclusively on the success of chief revenue officers. Each week we have an open, frank, and free-form conversation with top experts in the revenue space about the CRO role and its critical impact on B2B businesses. This podcast is the place to be for CROs, sales and marketing leaders who aspire to become CROs, and founders who are looking to appoint a CRO or want to support their CRO to succeed. Thanks for listening. Now let's go mix it up. Welcome to this episode of the CRO Spotlight Podcast. I'm Warren Zenna, I'm a founder of the CRO Collective Today, I'm really excited to have two really smart gentlemen from the Alexander Group. As some of you may know, back when I first started my company, when I did my original course programs, David Tocelli was a guest speaker on my programs for, I don't know, 5 or 6 cohorts. And I got very familiar with that organization's work and it's brilliant. And I read David's book and Chris and Sean reached out and wanted to have a conversation about their own perspective on the Chief Revenue Officer role. And it's great to have you both here. So thanks so much.

Thank you.

Our pleasure to be here, Warren.

Yeah, great.

Great. Well, if you don't mind, why don't you both introduce yourselves? You know, a little bit background and a little bit for those who maybe not know who The Alexander Group is, a little bit more about that.

Go ahead, Sean.

Yeah, sure. So maybe just start off with the Alexander Group bit. We are a management consulting firm. We're focused entirely on revenue growth. We've been around for about 40 years with that focus. Got our start, as you mentioned, one of our founders, David Cicchelli. Those three founders were really focused on sales comp. And the whole idea was it was sufficiently different from other types of comp to merit its own practice. And we've since evolved that over the years to become a full-scale revenue growth and management shop. So I am a partner with the Alexander Group. I've been with the company about 17 years and my current builder responsibility along with Chris is we co-lead our technology industry vertical. And we really focus in that regard on helping companies use go-to-market as a lever to help drive valuation in the modern market, whether it's publicly traded or privately held, a PE-owned. We're looking to drive things like ARR, NRR, GRR. We're looking to help them really focus on profitability and ultimately ensure the stability of that revenue model into the future to grow with them. And that's really where we're focused. So let me hand it to Chris.

Maybe one other thing I would add, and one of the reasons why we're excited to be here with you, Warren, is our primary customer is the CRO function, right? So we have, I think, a unique perspective in terms of the challenges they have, the outputs that they need to drive towards, and ultimately our role as an expert market consultancy is to help them deliver the results, right, which typically revolve around profitable, profitable growth. In terms of my background, very similar to Sean, 17 or 18 years at the Alexander Group. The key difference between he and myself is he operates on the East Coast, I operate on the West Coast, but collectively we lead our technology practice at serving a variety of different technology clients.

Got it. Well, great. Yeah. So obviously, you know, Chris and I, we had a brief brief conversation prior to this, so we are well aligned on a lot of things. Let's talk about that a bit. So your primary customer, or let's say, if I might say recipient of the work you do as the chief revenue officer, right? So let's first like get the base tax because this is an interesting conversation. How do you guys define one? Like, what do you know? Like, what you're telling your clients, what does a CRO do? How do you hire one? What are they supposed to, what's the scope of that role? And what are your thoughts on that in terms of how it's being actually implemented today?

Yeah, I'll take a crack at that and Chris, feel free to add. So I think this role really started popping up for us in tech probably around 8, 10 years ago, I want to say it's almost a decade. And the original thought was that as we started to move to subscription SaaS, we're going to need to unite those revenue motions, marketing, sales, service, success under one executive. And that's really the way we thought it would go. But it didn't. Interestingly enough, the CRO was really kind of a sales executive. They were looking to sort of drive growth in the business. And what was valued in the market at that time was growth at all costs. So your CRO generally ended up being a very sales-oriented individual and often alongside maybe a chief customer officer on the success side and chief marketing officer on the marketing side. So since, I think the role has evolved a bit and is evolving increasingly toward more of the original vision, which is someone who owns all of the aspects of go-to-market and are ultimately responsible for delivering revenue in a profitable way by arranging resources across those various functions in the customer lifecycle. So I think if anything, we had some misconceptions when the role first came out and it started to come to fruition for what we always thought it was going to be, which is this more encompassing function across the go-to-market motion.

I think that's particularly true on the customer success side. Given some of the macroeconomic trends we're seeing, as well as some of the challenges that are most common with our technology clients, NRR and GRR, which are two critical metrics. And in some cases, at least in the former world, the CRO did not control all the resources that were integral to GRR and NRR. So specifically renewal functions and customer success functions. So I think one thing that we've seen change with the CRO role over the last couple of years, and it's starting to accelerate, is the ownership of those renewal and CS functions. Because along with the rep, those three sort of core jobs are instrumental in driving renewal and growing, capturing upsell as well as cross-sell. So the CRO function by default almost has to own those, right? Or owns them with more frequency than what we once saw.

Yeah, we're all totally in alignment on that. And I think the way you articulated the history of it, I agree. It's the whole reason I started this whole business is the same reason because when I first started doing this 6 years ago, they all ran sales. There wasn't any CRO that didn't. It was pretty much a sales role. And the effects of that were apparent in the marketplace. I mean, it was a mess and I think it still is. We can get into that in a second. But it's essentially kind of I'd like to be interested in your own, just a point of view on why it is you think, I think you hinted at it a bit, that that CRO role sort of fell into this sales motion and why it's still sort of stuck there. Like we're pulling it out into something larger scope, but it's because it's stuck somewhere else. It's not like naturally landing there. It takes effort for companies to do that. I'm curious what your thoughts are on A, why it got entrenched there. I think you hinted at it. I have some thoughts. And then what you think it is specifically that's pulling it more into something that's a bit more of a, like you said, and we agree, strategically oriented role.

Maybe one immediate thought, Warren. Maybe it had something to do with path of least resistance. So, there was the concept of the CRO function, but concept in and of itself doesn't mean much. It's the person that you put into that function. And I think a lot of people probably found the path of least resistance, which is, okay, who do we populate with the CRO job? Well, it's pretty easy to find a competent sales leader, right? Someone who spent their career, maybe started carrying a bag and then grew up through the chain, through the chain of command to oversee a sales organization. But, you know, for a long time, I think it was very difficult to source people who had the requisite skills to succeed in a broader, more strategic role, right? Someone who's probably carried other executive positions or maybe spent some time, a portion of their career outside of sales. That talent profile was fairly uncommon when the concept of the CRO first came to fruition, right? But now with the role being in the marketplace for an extended period of time, you're starting to see more people have the experiences and the broader skill sets that are required for the function to make it a little bit easier to fill.

Yeah, I think you also have to show me things. Yeah, I think you also have to remember where we started with SaaS, right? You know, particularly when we started to see pure-play SaaS companies come into the market, that was a pure acquisition motion, right? It was all about acquiring new logos. It was land grab. It was securing the beachhead. And that mission uniquely requires somebody that is relentlessly focused on driving sales. So I think it's probably a self-fulfilling prophecy that we ended up with a lot of dyed-in-the-wool sales execs in those roles. Now, the reality is we, you know, move the clock forward and we started to get— we had to walk and chew gum at the same time, right? We had to get new logos, but we had to not only maintain the customers that we had, we had to make sure that they were actually using what we were selling them. Otherwise, they were just going to wash out when we had the next renewal cycle. So it became evident that in order for the economics of the subscription model to work, we had to have somebody focused full-time on those existing customers, which I think was difficult for a lot of CROs to really internalize. And not to mention the fact that once it became harder to get customers on board, we really had to think about being strategic on the marketing side. So I think it's a maturity of the market thing as much as it is evolving thinking on what the role should be.

Yeah, I would agree on both. My observation is that I would say maybe Sean more succinctly was mostly economics. You know, I mean, the SaaS model gave people riches beyond people's understanding in the business world. I mean, there were billionaires popping up and the unicorn terminology, which is sort of like an old adage, was this thing being floated around. Everybody wanted that accolade. They wanted to be on that list. And we still talk a lot about funding rounds as a success story as opposed to customers that are happy as a success story. I still don't get it. But I think that this sort of culture created, like you said, a very incentivized acquisition culture that was really designed around just get as many customers as possible. That's how companies were being evaluated. A lot of companies were making a lot of money even before they were profitable. In fact, companies were not profitable and making a lot of money because they were being measured on how many customers they could acquire. And I think it had a lot to do with the fact that there was no interest rates on any money, so it was easy to do and it worked. And there's a lot of people making a lot of money. And I think if the PE model where I'm managing 30 companies and only 4 or 5 of them hit, it's still profitable for me, then it's easy for me to throw like 25 companies overboard and still make a lot of money. It just seemed like a very, very, very strange, and that made sense that the kind of people that I'd want to run things are someone who's shown an ability to acquire a lot of customers and build a machine that can do that. And I would say the second thing that happened was technology, aside from building SaaS products, then an industry cropped up around the ability to be able to sell SaaS products, which was all this automation tools and outbound tools and stuff that made it so easy to do. It just became a machine that was created. And there was a lot of energy and investment being focused on it that for probably 5 to maybe even 10 years, these organizations became entrenched in identifying a specific profile of person that they give this title to. And that trained a certain group of people to aspire to be in this role. That were never given the opportunity to develop any larger competencies to make that shift. So, now what we're seeing is it's a different kind of person that's becoming a chief revenue officer. And I'm curious to know now your thoughts on, because I gotta be honest, in my world, I'm definitely seeing a shift, definitely seeing like companies are talking more about this person being more of a, right? But I still think, my view, and maybe you have a different perspective, it's probably like 30% I still see still the majority of companies still really looking at sales leaders for this job that maybe have different competencies, but they still have muscle memory from that side as opposed to looking at maybe revenue operations people who have a really great brain for this sort of thing. Maybe even some marketing people, frankly, who are looking at portfolio management and stuff. So I'm just curious, like, where do you see that shift? And was it nothing more than just interest rates got screwed up and money cost too much and it became more important? Because I think a lot of these things are reactive. I don't think they're necessarily strategic, but I'm curious what your thoughts are on all that. Hey everyone, I want to thank you again for listening. Get great comments across LinkedIn and other channels about the show, and it's really gratifying to see that we're having an impact on you. Another thing I wanted to let everybody know is that we also produce events. About 2 and a half years ago, we started these CRO roundtables. Predicated on the idea that, well, two premises. One is CROs are looking for other CROs to talk to, which is really true. It's a very lonely job. How do we get a bunch of CROs in a room where they're not being, let's say, disintermediated by panel discussions and sponsorship events and demos and stuff, and really give them a chance to talk to each other? So, we created a roundtable event that is essentially that. It's a 3.5, 4-hour discussion between 20 and 30 Chief Revenue Officers. And these are amazing events. The format took off, people love them. And I get requests all the time as to when is your next CRO event. So to that end, I just want to let you all know that we have a number of roundtables coming up over the next year, over the next like 2026. I want to share them with you so you can if they're in your market, you can come. So the next one we're having is gonna be in London, actually, in February, February 24th in London. So if you happen to be a chief revenue officer in the UK or even in Europe and you wanna come by, you'll be hearing about it more on my website and LinkedIn, but put it on your calendar. And then following that, we're probably gonna be doing an event in San Francisco in March. There's going to be one in New York in March. I'm going to do another one in Chicago probably in April. And then I'm going to do an event in Boston. I'll do an event in Atlanta. I'm going to do an event in Salt Lake City. I'm going to do an event in Austin, and I'm going to do an event in Los Angeles or the Southern California area. So those dates are to be determined, but they'll be going across all, all next year. And These events are taking on huge momentum. They're the place to be if you're a chief revenue officer and you want to be in a room with no interruptions and have an opportunity to really share with each other in a sort of a private and confidential open discussion about everything that you want to talk about as a chief revenue officer and collaborate with great people. So thank you and thanks for supporting the show and I look forward to seeing you at the events.

One thing I might add, going back to the comment you made around economics, Warren, That has something to do with metrics. And I think one of the reasons why the CR role is changing and why it has to be, have a different skill set is that for a long time, to Sean's earlier point around SaaS, let's just look at ACV growth, ARR growth, right? That's the metric that matters most. I would argue that that metric, at least for maybe non-startups or companies that are starting to mature, that might be the third or fourth most important metric. And now other metrics are coming to the forefront, which could be things like CAC, customer acquisition costs, or CAC to LTV ratios. And why that matters so much is it's not just a growth element. It is a cost and efficient— has cost and efficiency elements to it. And I think I would argue that sales leaders that your average sales leader is not good at cost and efficiency. They're good at growth, right?

I would agree. They're not. Not by design. I think maybe they might be developing that. But I agree with you, Charissa. I mean, 100%. Salespeople are not thinking about that. In fact, I think sales organizations historically have benefited from just the lion's share of budget being devoted to their organizations. And they're used to getting all that, like, and now they're not. And that kind of leads to my next question is like, how do you now view, if you were to sort of create a, let's say, a DNA profile of the optimal chief revenue officer, what's the skills and qualities and competencies that you think make successful ones as opposed to the, let's call it for the sake of this conversation, the more traditional one that people are looking for?

Yeah. So, I mean, the first, word that comes to mind is multiple disciplines. Have they worked in multiple disciplines within organizations? Do they understand marketing and how it works? Do they understand the success motion and adoption in particular? You know, the second would be operational in their thinking. And I mean operational. And one of the pitfalls that we run into, Warren, because I sense you're trying to get into not only the finance element, but maybe a little bit of the pop psychology and the zeitgeist around this. I think one of the issues we've run into is that there's been a very pejorative view of operations in tech companies, right? It's overhead, it's a necessary evil, it's non-mission critical, it's not tied in to what our number one goal here, which is to grow, grow, grow, grow, grow. And I think, you know, that was appropriate for a period of time that we were in, you know, before COVID then through COVID, certainly when it was growth at all costs. But we're in an environment where we've gone industry-wide from 92% GRR on average to about 86%, 87%. And where best-in-class NRR was about 115%, it's about 109% now. So we're talking about a 12 to 15 point hit in the revenue profile of a given business in SaaS, right? Now all of a sudden it becomes very important how I portfolio manage a set of assets across a go-to-market engine rather than just focused on, you know, how do I grow, grow, grow? And I think that's shifting the focus on who is the type of individual we need to populate those roles. To your point, It's probably the market reality is probably lagging the necessity to make that change, but it is absolutely changing.

Yeah.

You know, one thing, Warren, if I tie this back to, I think, your last podcast, I was listening to it with Susan Rothwell, and I think it connects to what Sean was just describing, which would be experience in multiple domains or multiple functional groups. Now, Can you bank on a CRO having experience across a variety of other functional groups beyond sales? Perhaps not in all cases. But what she said to me that really struck me was she got to know all the aspects of the business as well as almost anyone in the company, right? So how does product operate? How does ops operate? What's going on in finance? What's going on in service? And so by becoming an expert in all facets of the business, I think it gives that CRO a much different view and a much different lens with which to look at the business. And as a matter of fact, you know, one of the most critical aspects of a CRO is actually engaging well with other functional leaders, whether it be the CFO, the COO, et cetera. And for you to actually partner well with those other functional groups, you better understand and appreciate those other parts of the business. So, again, I think really endorsing and reiterating, I think, a key point that Susan made in the last podcast.

Yeah, I would agree with that completely. I think that it's an innate sort of almost personality profile. There are just certain people who think more about systems than functions by nature, right? They're, when they're doing something, they're more inclined to not only be good at the thing they're doing, but take into account as an operational function how what they're doing is being impacted by whatever comes before them or comes after them. And they recognize the dynamics associated with their impact on those things, and they change their behaviors to accommodate those things. And they do so by getting to learn about those things, and it makes them better. And there are some people just have a different, like, bigger picture thinking. They're more like business people as opposed to function people. And I think some sales leaders are really good at this. I've met, like, hundreds of really amazing sales leaders who just have an incredible understanding of how the marketing system feeds them, you know, the opportunities and what needs to be done about that and how a customer is managed after post-sale and the financial components of it and how much it costs to do things and, you know, unit economics and stuff. And that's just the way their brains work. And you sort of have to look at people and understand that they're displaying that quality, and that makes them likely someone whom over time is gonna develop multidisciplinary competency across the thing. And I think that's hard to find. You just got to kind of speak to some of this. We have ways, I'm sure you do too, of diagnosing people like that. That's one. But I'd be curious to know also, like, let's talk about like the CRO of 2027. Like, what is the profile of that person in your world that needs to be thinking about not just the person who will get that job, But from a PE perspective or a hiring perspective, what's the, like, in the wild, if I'm out there with a gun, like, what kind of animal am I looking for? And I know that I only have 4 bullets and I have to make sure that that's the person that I target because I know they're probably going to be likely to succeed then, than the 80 other ones who maybe look like that thing but isn't really going to fit.

You know, one thing that immediately comes to mind is someone with a very strong appreciation of RevOps and ideally some experience on that side. You know, some CROs who may be sort of, sort of maybe grew up singularly within sales, you know, if they recognize their deficits, they will put an extreme emphasis on getting a very, very capable RevOps function in place that can maybe sort of help overcome some of the experience or skill deficits that that CRO has. So someone who, I kind of answer your question directly, is ideally someone who has obviously sales experience, but someone who may have either spent time in RevOps during a portion of their career or has actually overseen a very capable RevOps function because RevOps in many ways connects the back marketing, sales, and service from a back office perspective, as you, if you will, that would be one thing. And of course, we haven't even brought up AI yet and the changes that's having with respect to go-to-market models. So I think there needs to be at least a key skill is forward-thinking understanding about the different AI tools and capabilities that are really going to augment go-to-market models going forward, whether it's specific to an SDR function, an SCS function, or reps in terms of improving their productivity. So they have to have a lens towards much of the changes that are taking place with the AI explosion.

Yeah, I concur. I think that the rev ops— I'm sorry, Sean, go ahead.

It's okay. I was just going to say I totally agree with Chris and you stole my point about AI. I think the most valuable CROs in 2027 are going to be ones that have experienced some level of transformation of a sales and marketing environment utilizing AI, maybe not fully realized, maybe not fully baked. But people with that experience set are going to be critical, I think. And the other trait that I'd point to is strategic thinker, mature leader. And I know we're stereotyping a little bit, but, you know, I have a very vivid client example from a couple of years ago where CRO, CFO were in loggerheads meeting about headcount. And, you know, it's kind of a classic, almost to the point of being comical, the CFO brain versus the CRO brain. I think that distinction's got to go away. You've got to be a collaborator with the CFO in particular in order to be successful in this job moving forward. It's just it's table stakes and we can no longer kind of afford that creative tension that maybe was an asset 5 years ago.

You know, Sean, it almost kind of begs the question, like, if you're interviewing a CRO candidate, it could be interesting to try to unpack what relationship that CRO or sales leader, what relationship did they have with the CFO and how harmonious was it in their last, you know, their last company or the last couple of companies? Companies, because I agree with you, that partnership is critical just because we all know that there's historical friction between sales and finance, right? Um, checks and— for checks and balances reasons, and just the fact that sometimes their objectives are different. But in order for a CRO to succeed, they have to be able to speak the language of finance and actually develop a productive partnership with finance, right? And so if a If a CRO doesn't have a good track record or a candidate for a CRO doesn't have that kind of track record in their resume, it's probably a red flag.

Agreed. In fact, I think the P&L competency, P&L fluency is vitally important and that's a function of a CFO. And in many cases that needs to be— I've seen some really great situations. In fact, you might listen, there's a podcast episode I did, I think it was last year with SIB, Eric Steele, and his CFO were on the show with me. And we talked about their collaborative relationship and how they made it work. And it's a really great example of this, like, understanding of how these two roles work together. And I think it's a model or example of any, anyway, of a model, I agree, of how that collaboration works. So, the other thing I get, let's stay on the CRO side for a second because I just want to move over to the company side in a bit. But So, if I'm, if I'm a CRO and I'm looking for this role, what's your view on when is the right time for a company to hire one? Like, what's the stage at which a CRO is needed? And, and even as importantly, when is it too soon and when is it too late? And how do you determine that? Yeah, I'm—

well, I mean, I have some thoughts in terms of— yeah, I mean, I have some thoughts around in terms of, um, size. Um, I, I think, you know, you have to have a sufficient number of, uh, a sufficient amount of onboard ARR in order for CRO to make sense, because that's when you need to kind of bring the disciplines together. So Usually in my experience, that happens somewhere between $100 million and $250 million. If you're trying to bring CRO on later than that, then you kind of miss the boat on integrating the functions and you've really got to sort of start over. I think the ideal time is early in that life cycle when, you know, your onboard ARR becomes a critical asset. That the organization can monetize. Once you realize that your future performance is tied to monetizing that ARR, that's the time to bring the CRO in, in my view.

Okay. Chris, what do you think? Size company is certainly, I think, like a reference point and agree with Sean. You know, part of it might be based on what the growth priorities are and where the expectations are in terms of where the business, what the business needs to prioritize. For example, you know, for a startup, if just you're doing a land grab and trying to get new logos, right? And you don't necessarily need or have a regimented post-sales set of resources and motions, you probably don't need a CR just quite then. But at some point, right, you start to tip where expansion with the install base is going to be the bigger growth priority or where most of the opportunity resides. And also with that being said, customer preservation is a prerequisite in terms of actually having a set of clients that on which you can expand. So I think there's this probably some inflection point where growth needs to come. Well, one, GRR, when GRR needs to stay afloat, as well as when expansion becomes the bigger growth priority for the business rather than simply new logos, then I think maybe there might be some, might be a couple additional factors to evaluate when bringing in a CRO.

I think there's also, just to add more to that, I do think we are starting to see a little divergence too in, you know, the really big mature companies. We all know the logo names and what those CROs are doing. So if you look at some of the biggest companies we've got in SaaS, a lot of the incremental ARR those companies are getting are from price increases. It's not from expand. It's not from new logo. It's about monetizing that install base through price increase. And in order to pull that off in a way with customers where they remain customers and don't go away angry, you've got to have somebody with some skill and some nuance that's really helping to drive those messages into the sales force and the success teams. In order to get that mission done. So I think that's an important thing to watch is how long can we run that play as mature companies and still meet our growth objectives? And, you know, how does that fundamentally change the CRO that we're putting in seat?

Thanks again for listening to the CRO Spotlight podcast. We're excited about all the great guests we have, and more importantly, we're excited mostly about you. For being avid listeners and supporting the work that we do here. Feel free, please, to share the CRO Spotlight podcast with any of your colleagues. We just think there's a great wealth of information here and want to get the word out to as many people as possible. And your, your support of the show is really appreciated. I wanted to share information about a program that we offer called the CRO Masters Council. The CRO Masters Council is a bimonthly group of 6 seasoned chief revenue officers who are looking for a chief revenue officer board of directors, so to speak, that they could share what's going on with them, collaborate with ideas, get some feedback on what's going on in their current role. And these are great conversations. I facilitate them. The CRO Masters Councils, again, they're twice a month and they last for at least 6 months to a year. So if you're interested in having your own CRO suite, your own board of directors of chief revenue officers, it's a private confidential conversation that we have. Uh, it's infinitely useful. Imagine having a room full of other chief revenue officers you can talk to and say, hey, I'm working on this, or have you guys figured that out? Or I'm having this issue right now with my business or my results. These are just invaluable conversations with chief revenue officers. Chief revenue officers have a very, very unique role. It's a very lonely job and only other CROs understand what you're going through. So that's why we created this program. So if you're interested in being a member of the next CRO Masters Council, which we have a number of them being put together right now, just go to my LinkedIn and DM me Masters or Masters Council, and I'll follow up with you and set up a call or send you some more information about it. Looking forward to seeing you there, and thank you. Gotcha.

Yeah.

So in your view then, this is a really interesting topic, is does every company need one? Do you think that every company eventually will need a chief revenue officer?

Certainly for recurring revenue businesses, whether it be SaaS or consumption, we really haven't talked about that today. My suspicion is, as more and more companies move to usage-based or consumption-based models, you know, the function of the CRO might continue to evolve and tweak a little bit. But I would venture to say that for a majority of subscription and consumption and just overall recurring revenue businesses, the answer would be yes. Outside of our industry, tech, which is tech, I suspect the necessity of a CRO isn't as high just because the customer journey and the revenue journey, the stages that they go through aren't as tightly or don't need to be as tightly linked. Would be my initial response. I could be wrong with that, but I guess tech, yes, probably 90% of the time. Outside of tech, probably much less than that. I don't know, Sean, maybe you agree or disagree.

Sean, what do you think?

Yeah, I mean, I think it's really interesting because, you know, depending on, you know, how dire a projection you want to read, there are a lot of people who are saying the per-seat model of SaaS is is dead or dying, right? So that would almost kind of lead us in a different direction from the need to combine those functions across the sales cycle, right? If we're moving to more of a consumption or token or usage-based model across the board, those motions, those initial motions, that initial land motion is fundamentally different than the motion to get them to consume. And in that model, I can almost make the argument that you need sort of like you need distinct hunters and farmers in that model for sure. You might need distinct people on those distinct revenue motions. So maybe that the idea of that, you know, kind of comprehensive CRO that we've been talking about is a little less relevant. But, you know, if we're going to continue to sell subscriptions as, and we're going to need that, I think front to back role on the full customer lifecycle. And then, like I said, Chris and I are maybe not the best people to talk about it outside of tech, but certainly that's our perspective in tech.

No, I understand. It's an interesting conversation because, you know, when I first started doing this, like half, I mean, almost all my clients, as you're probably going to appreciate, were tech companies because there's a strong hunger in the tech space, right, to develop a chief revenue officer competency and all the things that you just said are fairly self-evident, right? And I agree that there's a change afoot, but We can get into that in a second. But what I'm seeing now is more than half of our customers are not from SaaS at all. They're services companies. We even have commercial construction organizations with chief revenue officers now. We have all sorts of ways. And I'd say the distinction there is, which I agree with you both in the recurring revenue commercialized model, that the complexity of those motions requires someone to coordinate those things. And I can see where the tight-knit relationship between the marketing, sales, customer success is so, the handoff is so tight that you can see that that needs to be repetitive. However, the other issues still remain, and that is that within an organization where you still have the trifurcation of a CRO, a CMO, a CSO, et cetera, in any form, you're going to have complexity that's unnecessary. You're going to have signal noise, which is not good. You can have more than one story, which is not good. Which story wins? And it's usually the person who makes the most money for the company that wins, not the one that's actually correct. And so with that complexity, the chief revenue officer acts as a ballast to build more clarity and direct competency from signal noise from customer up to the end of the chain, which is the CEO of the board, regardless of the motion, because I still feel that the CRO role as a business owner or system builder is gonna build a much better mousetrap in any business model, even if the sales cycle is long. It may look different or land different. It's just not gonna, you know, maybe effectuate the same outcomes that a SaaS business will, but it's gonna solve the same problems that exist. I still see very much so. And so this is very interesting because SaaS is like a, always has been a, let's call it like a pioneering model that informs other businesses. All businesses sort of want to be like SaaS in the way that they see how much money they make and they want to figure out ways to kind of repeat SaaS-based principles in their businesses, even if they're not SaaS businesses. And I think that's a good thing and a bad thing because, you know, you sort of can't try and transmorph your business into a different type just to make as much money as somebody. But there are crossover principles. And I do think this is one where I'm seeing a lot of my clients say, that makes sense for us. And we think that while it may not be as repetitive, it still creates an incredible amount of efficiency for us if we have somebody leading this. So that, that's where we're seeing. But then that goes to the other thing I wanted to ask you, which is let's talk now about the company side of the business, right? So we just talked about the CRO for almost a full 20 minutes here. So now, okay, you find the unicorn we just talked about, you know, they got this business sense and all this stuff that we like and they get into the company. And now what does the company need to be like for their CRO to succeed? There's an environment that this organization has to be like in order for this animal to live in. You know, I use this example of a panda in the wild. You know, you put pandas in the zoo and they don't eat, they don't produce, they don't reproduce, they don't act like complete— I mean, they're almost like incompetent. But if you put a panda in the wild, they're really very— they propagate. It's the environment. Mostly that impacts them. And I think we have a tendency to evaluate chief revenue officers in a superficial way. We say they failed, they didn't do a good job without looking at the company that they were at and the environment they are in. And I'd be curious to know what your thoughts are on what that needs to happen. If I'm a founder or if I'm a CEO or a board, what's the right way for me to construct my organization so that this role can fully realize itself?

A couple of thoughts immediately come to mind. We've all encountered a variety of different CEOs in our careers, some of whom are brilliant people, but may not create an environment that is conducive to a CRO. So what I mean by that is where I think a CRO, maybe some prerequisites for a CRO to be successful is what's the mindset of the CEO? In some cases, the CEO might have been a former sales leader and they understand the importance of the CRO function. They understand what sales needs and so therefore are very supportive of the CRO because they've in many regards sat in their shoes in a former life. Even in cases where that may not be the case, because in tech, so many founders, CEOs are product people, engineering background types, who in some cases might have an antagonistic view of sales. Like, oh, you create the best product in the world. You don't need sales. It'll sell itself. I think we've all encountered that profile of CEO. What I find to be helpful is when a CEO with that product and engineering background, you know, at a minimum, they need to be empathetic to the plight of sales and kind of understand that even the best products require a strong revenue engine behind it. And so therefore, I think the mindset and the amount of support that the CEO has towards the CRO function is critical. The other thing I think that would, that requires or kind of a prerequisite, if you will, or something you'd like to see in an organization is the different functional groups. Think about, yes, end users are our customers, But also think about the revenue engine or the resources within the revenue engine, primarily sales. They also view those individuals within the company as their customer. So product, think about sales resources as your customer when you start to create collateral, right? And work with sales so that whatever collateral, you know, that you're creating or any sort of situations or things that that product is designed to solve actually has efficacy in the marketplace. And who's going to have answers to that? It's going to be sales, right? And customer-facing resources, right? So that's just one example, but one of the CRO's first jobs is when they come in that organization is being an advocate for the customer-facing resources underneath them and making sure other functional groups view them as an additional customer. Because at the end of the day, right, revenue growth is going to struggle if you don't have everyone marching towards sales and customer-facing resources as the individuals that are instrumental to growth and profitable growth at that.

You know, the thing we're seeing on our end of the spectrum here is the topic we're talking about right now is the environment that a CRO enters into is a critical part of the whole equation, right? I mean, you can get somebody geared up and get them all the equipment they need and get them sharpshooting skills and everything they want, and they walk into the wrong environment, it won't work. And there is a responsibility on the part of the organization to understand the nature of the beast that they're going to be hiring and how it needs to be implemented in the organization and the impact and the scope and the authorities that they need and the resources that they need. So, how do you work to kind of do that? Because we're solving that problem, but I'm curious, you know, Alexander Group, you guys work with larger organizations than we do. How do you manage that complexity? You know, how do you deal with the environment in which the CRO succeeds and how do you evaluate a CRO's success based on their own competencies or is it an outcome of the system that they've inherited?

When you say outcome of the system they inherited, maybe—

Yeah. Because if I get hired into an organization at $100 million, which is, you made the case that's the time when you feel it should be. That's a pretty mature system, right? That's a $100 million system that they're being brought into. So that, that system is now one that they now, they're being handed a system, right, to operate. And there might be problems with that system. It comes with leadership and, you know, processes and technologies and all sorts of things that frankly, in most cases aren't optimal. They wouldn't have hired a CRO in the first place. So how do you measure now how much of this was the CRO's competencies as maybe opportunities to view success or failure, or was it on the organizational system that didn't allow the CRO to be able to be successful. Like, I'm just curious how you look at that side of the equation. Thank you so much again for listening to the CRO Spotlight podcast. This podcast is an important plank in the CRO Collective communication strategy, and we're really thrilled to have such great guests on here. So listening and sharing the podcast with other people is really vital because we want to get as many people listening to this great stuff as possible. Couple things to note, uh, if you're an aspiring CRO or a recently hired CRO, or even an old salty CRO, and you're looking to either become a chief revenue officer or improve your chops and gain some more insights and improve your competencies as a chief revenue officer, we offer the CRO Accelerator course. It's 5 years now. It's the first CRO-focused course that was out there. Uh, it's a 15-week course that is populated by aspiring chief revenue officers and CROs. We're pretty selective in terms of who can be a member of the CRO Accelerator course. It's people who are probably like more like ready to be a CRO right now. They have a number of years under their belt as a revenue leader, whether it be a sales leader or a marketing leader or even a RevOps leader, and they either want to move into the C-suite or they're CROs that want to just make sure that they win in the role. So if you are interested in being a member of the next cohort, please just write me a note on LinkedIn, just DM me, CRO Accelerator, and we'll set up a time to talk and I can send you more information to give you a brochure of the course. So again, CRO Accelerator course, 15-week program for aspiring and newly hired CROs. Take advantage of it. It's been great. And you'll see some more information about it on the website. Thanks.

So remember earlier, I'll tie it back to a comment I made earlier where it was an economic reference where at some point in a company's maturation, ARR, ACV growth, while important, may not be the most important metric in terms of how the board is viewing the business and how the market might value the company. And the metrics might shift a little bit towards things like revenue efficiency, right? Metrics like CAC to LTV and so forth. So I think many times, at least in my experience, when a CRO is brought on board, the justification or the rationale behind it is because the revenue acquisition and growth and retention mechanisms have become bloated and costly, right? You can measure it simply through, you know, sales and marketing expense as a percent of revenue or bookings or whatever. I mean, there's multiple ways to measure it, but it's at that point where I think the CRO becomes instrumental. And that might be, or that would be an example of how the CRO would get evaluated, right, in terms of measuring revenue efficiency, whether it be through CAC metrics or something else. So that ultimately for every dollar spent on sales and marketing, the ROI, right, has a different profile than it once did. Now, the problem with that, Warren, I think you mentioned the term systems. One thing that becomes problematic is, yeah, maybe that's the metric on which we want to measure a CRO, but the fidelity of the data, the tech stack, the infrastructure makes it very difficult to measure those things, whether— and measure those things not just at the company level, but at like the segment level, the geo level, the team level, because ultimately at the end of the day, I think the success of a CRO is oftentimes going to be based on not just the overall revenue efficiency of the business, but actually going down that segmentation stack, saying whether it be enterprise, mid-market, SMB, is actually driving to a specific efficiency metric by each segment, right? And so if that's the outcome you're trying to drive towards and how CROs are going to be successful, then there needs to be a commitment for the business to be able to invest in the, in the in the data and the tech stack that can measure. And that sounds simple, but more often than not, I find that organizations really struggle to measure those, those types of outcomes.

No, no question they do. In fact, most of the time we bring our clients into a new organization, it's a mess. It's rarely good, you know, rarely. And in fact, most of our clients don't really know exactly why they're winning and why they're losing. They just know they are, you know. And they're running a series of motions, some of them which win and fail, and they do it with enough complexity over time that the percentages work out in their favor, but they don't really have clear understanding of exactly why. And then the CRO is expected to come in and repeat something that they don't even really understand without the ability to investigate it and alter it and maybe even modify it or rebuild it. So I agree. So I'm just curious from your perspective, as you work with these organizations, how much of that part of the way that you operate? Is it like a systemic view or is it more like a functional, like what does the CRO need and how can we make the CRO successful? How does the range of the engagements look like for you guys?

I think the clearest way we can help a CRO, particularly now that we've got much better tools, capability, data, in front of us is to help that CRO define where they have the right to win and what the ideal customer profile looks like, both for prospects and within existing accounts. How do we quantify that potential? And ultimately, how do we go after it? How do we arrange the resources in the best way to go after it? And the great news is you know, if you look at machine learning, you look at AI, you look at the, just the availability of demographic and firmographic information, we can get a lot more precise on that even than we could 3 years ago. And I think that really helps give the CRO the keys to the kingdom in terms of setting up a team to win, really understanding foundationally where can I expect to be successful? And how do I point as many of my resources as I can to those areas where I'm far more likely to win? That's going to result in not only better revenue growth, but ultimately much more profitable growth. But that's just one in a long line of capabilities that we bring to bear to help CROs. But more often than not, that's the one I find myself gravitating toward because so many companies do not have a good notion of what the potential is within the accounts they cover at the account level.

You know, Sean, you know, that what you just said kind of ties back to the ideal profile of a CRO or like what kind of skill set organizations should be looking for in terms of a CRO. The two things you mentioned, one is ICP, right? And oftentimes what I, in my experience, I found a CRO does not have enough depth on the marketing side of the equation. Right. But ICP is oftentimes driven by the marketing function because there's a customer and market research valence to it. Right. So a CRO who understands what a good ICP looks like and help can drive towards a good ICP. That's a key attribute. The second one I think you mentioned, which is like account targeting and opportunity modeling at the account level, that takes data science rigor. Right. And like you said, there are a heck of a lot more capabilities in terms of quantifying spend potential within accounts today than it was, than there were even a couple of years ago. So a CRO who appreciates and has a certain knowledge depth around the quantification of certain elements of the revenue engine, such as spend potential and opportunity modeling, is a critical skill. And those are usually two of the most important things out of the gates that we see management and/or the board ask of the CRO to go get done.

That's great. Great. So, you know, we are kind of running on time. I just wanna make sure I get opportunity for you two to talk a bit about what you're up to and the initiatives that you're working on and some things that are like right in front of you right now that you wanted to make sure that the audience hears about.

You want to take that, Sean?

Yeah. Yeah, sure. Well, I mean, we talked about AI earlier and I think like every company out there, we're trying to—

That's a critically important thing. Yep.

Yeah, we're trying to figure out how do we use it internally? How do we use it with clients? How do we give it to clients as a leave behind on some of our deliverables? So Chris and I are on a partner committee that is fast-tracking those solutions. With customers in terms of how we're working with CROs in this space. It literally runs the gamut from the go-to-market perspective. Every conversation, it seems like, starts with this whole thing about, is it harder to get ARR, GRR? Is that a me thing or is that really industry-wide? So there's a little kind of group therapy to say, no, it's not.

What is your perspective on that? What do you think the answer is to that question?

I think it's 100% happening across the industry. It might not be happening to every single company, but the vast majority it's happening to. So it's a little bit kind of alleviating some of that fear that maybe it's only us. And then it's really getting down to what are the set of prioritized activities we can go about to help you incrementally tackle this, right? Whether it's the potential modeling I was talking about earlier, or churn and warning systems. We're doing a lot with churn and warning systems to improve that, to get a much better view of when those customers might churn or at risk. We're doing a lot of deliberate expansion planning. So beyond NextLogical product to how do we start to group customers and predict what they're going to buy from us a month from now, a quarter from now, a year from now. So that we can start to program some of those expansion activities. What do we need to do as an organization to really double down on mitigating that NRR/GRR problem? Because if we don't do that, it's probably going to be tough for the organization to meet its objectives. And again, whether that's privately traded, publicly, or privately held or publicly traded, it's the same issue.

Yeah. Agreed. Yeah. AI is, comes up in every single conversation I have with somebody, and I understand why. Right? I mean, I'm, I'm, I'm using it all day long. And I see a huge opportunity for CROs who are competent with these platforms to just have a huge opportunity. And I, I, in fact, I'm hearing now that companies are actually asking CRO candidates to code right there in front of them, like build stuff that would be relevant to their role, whether it be reporting platforms or, you know, apps that can help with, you know, maybe like a customer success, all sorts of things. So, you start to walk in the door knowing how to use these things. And the second part too, it's not just a competency with them, but it's also how do you operationalize them? How do you get them across your organization and make them become useful? And what's your platform or testing strategy or what's the way in which you build, you know, usage and adoption and acceptance of these new things? And so, I do think like that is a new thing because we talked earlier about, you know, the internet, you know, and how you're doing all sorts of stuff. And now I think this is just faster. I just think it's just happening so much faster with a lot more impact that it's not the same. It's— there's a lot more urgency around it. I think there's going to be a bit more nerdy CROs than before, you know, and I think that's really important. Those are happening. And so in any event, I think it's really fascinating times we're living in right now. And I think that the entire revenue industry, let's call it, is going through this crazy shift. And I don't have any ability to predict it, but it's certainly— I hold on tight, right?

You know, the nerdy comment you made as it pertains to AI and how AI is changing things, The first sort of phase was how does AI improve the productivity of someone? Like how can I do customized messaging at scale for our BDR function, right? Or how can a rep research a company quickly and get a whole snapshot of that organization right ahead of a sales call? But now you're talking about agents basically replacing the tasks that humans once did. Now, let's keep in mind just human nature. We love, we are a social animal, right? So I don't see sales or revenue resources getting displaced by AI. However, what you are going to find, I'm hearing with our clients, and this is where there's still some friction between the CFO and the CRO. The CFO might ask the CRO, I know you want to ask for 10 more heads. Actually, why don't we say, you know, before we do that, Well, how, what can AI do to replace the functionality of what those heads might otherwise do? Right. So it becomes a different discussion on not necessarily headcount, but how to, how to potentially use AI that would minimize the need to add heads. Right. I think that's a whole different discussion that a lot of CROs aren't prepared for or don't necessarily have the experience in having that type of conversation.

Agreed.

Yep. Yeah, maybe just one point to, to jump on Warren and, and, um, kind of wind it back to our CRO crowd that, that is probably listening. Um, you said, I think this maybe leads to the rise of the nerdier CRO, and I think maybe that's, maybe that's true, but it underlines what I think we've been saying throughout this conversation. Um, the, the AI and the results are only as good as the person building the agent or the person prompting the tool. So you still need someone that is asking the right questions about the business. And to me, that's the most important aspect of an engaged, successful CRO. Are they able to look across the business and no matter what the function or what the geo or what the product set, can they ask the right questions about the business to make it more successful? And whether they're using AI or they're just kind of in their own heads intuitively, that to me is a huge criteria for success of the CRO of the future.

Great. Well, I expected this to be a great conversation and it was. So it was really good having both of you. Thank you for being here. And this is a really important conversation and excited about what's happening in the next, let's say, you know, probably a year. Probably have another conversation a year, it'll be like a different planet we're living on. It'd be fascinating. And I don't think I— even when the internet was launched, I kind of felt that way, but it was slower. It was more like a boil. This is like a burn, and it's a really interesting dynamic. And I think for old fuddy-duddies like us, it's like we have to sort of keep pace with something that maybe we're used to being able to plot along a little bit, and you really can't. So, but look, great having you both and really appreciate what you're doing and looking forward to any future collaborations where they're appropriate.

Yeah. Thanks for the invitation, Warren. This was a lot of fun and hopefully we can do it again. Thanks.

We will.

Yeah. Really appreciate it.

Sean. Thank you. Thank you both so much. Thank you for listening to the CRO Spotlight. Life podcast. The CRO Collective's mission is to help CROs succeed and help founders and CEOs build CRO-ready organizations. You can find out more information about our services at thecrocollective.com. That's thecrocollective.com. And we look forward to having you join us next time.