Why CRO's Are Struggling Now.

The primary reason is that the good old days of being able to raise money at high valuations while spending for growth and disregarding losses are over.

CRO’s that come from the VC world of building sales with a very healthy war chest of cash that simply had to grow market share are having the hardest time.?

But the CRO’s of PE owned companies have their challenges as well. While ripping out expense and maintaining revenue still works if you don’t break anything; you still must grow the business to get the valuation desired.

In both cases you are usually cost cutting to preserve cash. Generally, this means headcount reduction. When your experience has been growing sales and market share with high cash burn you probably need to develop a whole lot of new skills in a hurry.? The bottom line is you must know how to cut as to not break anything, and how to optimize what you have left for growth!

There are a few things you need to consider when you are in this environment:?

1.? Your talent and most importantly the talent and skills of your first line managers. Once you have made cuts and or reorganized you must have managers that can handle more direct reports. Managing eight to ten people is much different than managing five people. The manager ideally has experience doing that and a process for it. When you decide who is going to be retained to manage the new teams you need to make that a very high criteria for who you put in charge.

The second thing that manager needs is a track record for making the people that they manage better. You need to get more out of the teams you have left. They need to have demonstrated the ability to identify the skills that need to be improved and have a self-enabled process and environment for the salesperson to improve. ??I don’t mean the typical skill assessment and evaluation followed by a plan of improvement. I mean a sales process that exposes the strengths and weaknesses of each team member and a process by which they improve by executing within it.

2.? You must look at your coverage model. How are you going to deploy less resource across more accounts to grow revenue. The customer renewals must come in with growth. This means you must ensure service levels and that each salesperson has the time to spend with them. The next thing you must look at is the investment accounts each salesperson has. These are the accounts where they have spent most of their time. These accounts need to stay with existing salespeople. These are not their favorite accounts; these are the accounts your reports tell you they spent most of their time with. Then you look at the investment accounts of the people you have asked not to continue. Spread these across your sales team. Finally look at the accounts that profile out as most likely to buy. Then assign those. The rest just give out equally.

This approach will also mean that you must define quota differently. Most of the revenue opportunity will be in the hands of you most tenured salespeople. Your job is to give all salespeople a job that takes about the same effort to be successful. You must set quotas that way which means the way you set quotas before probably must be altered. ?You should use a formula that looks something like this. ?A tenured salesperson would generally know where more of their quota is going to come from than a less tenured one. Therefore, if a salesperson of two years or more knows where 50% will come from and 1 year or more 25% and less than a year 0 percent and the full quota is 1M here is how you would do it. The fully tenured rep. gets 1M, the less tenured rep gets 750k and the new rep gets 500K . ?They all must find 500k of new business. Based on the time they must spend servicing existing clients the fully tenured salesperson has the least amount of time and the most amount of experience, the middle tenured salesperson has more time and more experience than the new salesperson but less than the most tenured. ?The new person has the least amount of experience and the most amount of time. They all have the same opportunity and the right amount of time and resource for the job at hand and this is key to getting more out of them!

3.? Finally look at how you are going to cut and how you’re going to hire. ?Almost every reduction comes with hiring freezes and no new hires. A reduction in force says that you cannot replace the position for a defined period. But no new hires drastically reduce your chances of success. Do you really think that all the people you have left possess the skills to succeed in a new organization with greater challenges? I assure you they do not. Therefore, when you reorganize do it in a way where the jobs you need to look outside the org. for are no longer defined as the same job. Though many jobs may carry similar titles they are markedly different from the jobs that existed previously.

Should you be facing any of these challenges please reach out. I am a veteran of six startups and only two were VC funded yet all were successful.? The way to accomplish what is outlined above is not hard, but you must have the processes and operational model to execute.