While hiring a fractional Chief Revenue Officer (CRO) typically costs about 75% less than hiring an in-house CRO, it still requires a significant investment of time and money. However, the best fractional CROs have the skills, experience, and acumen needed to act as shrewd revenue advisors, helping their clients to achieve profitable revenue growth that is sustainable over the long-term, justifying their cost many times over. In fact, when the relationship is managed correctly, fractional CRO services can effectively align sales and marketing functions to generate significant revenue growth over both short-term and long-term planning horizons.
Of course, that begs the question, “How do I manage a fractional CRO partnership well?”
Partnering for Success
What do you need to make a fractional CRO engagement successful?
In my 20+ year career I have helped countless organizations develop and execute strategic plans to grow their revenue. In this time, I have found that there are eight key criteria that determine how successful an engagement will be:
Solid Leadership
In the same way that an in-house COO, CFO, CTO, or any other C-suite executive needs a strong CEO to succeed in their role, a fractional CRO needs strong leadership within the organization as well. These two roles will work hand-in-hand, which means both must be equipped to do their jobs well!
Solid leadership provides the foundation for a part-time CRO’s success by providing actionable insight into the organization’s core competencies and challenges, as well as access to the data needed for good decision-making. A strong business owner or CEO will also work collaboratively with the outsourced CRO to ensure effective execution of the strategic plans being developed.
Self-Awareness
When an outsourced CRO is hired the first thing they will do is take stock of what the organization does well and where it needs to improve. To have a successful working relationship the internal leadership team must have either an honest understanding of the organization’s strengths and weaknesses or a willingness to hear them.
A company that tends to ignore problems and/or is resistant to change will not get the most out of a partnership where an external advisor is being tasked with coming in to make improvements because the pushback that results will inevitably strain the relationship, thwarting the fractional CRO’s effectiveness and stymying the organization’s long-term potential.
Core Focus
To get the most out of engaging a fractional CRO, a company must be able to identify their core focus - what they are the best at doing. They need to have a product/service that is best in class, provide a user experience that is cutting edge, offer extensive customizations, hit a price point that no one else can match, be committed to something more aspirational than turning a profit, be a leader of innovation, employ the industry’s top talent, tell a compelling story, or have a brand that people can’t help but love. Whatever it is that they do, they need to do something well so that the CRO coming in can leverage it to better drive strategic revenue growth.
Articulated Goals
While many organizations have a strong sense of their identity in terms of what they do and how they do it, not all have clear organizational goals and objectives to guide them. As I explain in my guide to strategic business planning,
“Every business should have a longer-term vision... something to point to so you can understand if the business is heading in the right direction. Some business leaders will call this their ‘north star’ or ‘guiding path.’ But regardless of what you call it, the idea is the same – an overarching idea of which direction to go and a sense of what the path there will look like in terms of milestones and metrics.”
Clear organizational goals and objectives give an idea of where you want to go so that a fractional CRO can better identify the path to get you there strategically and make changes, when needed, to keep you on track.
Clearly Defined Scope
A well-defined scope is crucial when outsourcing executive leadership roles because an informal agreement about what should be included can get very messy very quickly. Clearly defining the scope within the statement of work protects both the organization and the fractional provider simultaneously. The organization is protected by ensuring that they will get the full extent of the services they have contracted for, and the fractional CRO is protected from costly scope creep. Then, if the organization’s needs change over time, the contract can be amended to reflect those differences.
True Perception of Value
Of course, no amount of self-awareness, vision, or planning will mean much to the partnership with your fractional CRO if you can’t recognize the value that they bring to the table. Understanding what goes into the kind of work they do and what the impact of that work looks like is crucial to appreciating their value as a change agent. Because, while all service providers expect to earn a paycheck for the work they put in, what really fuels their satisfaction to keep them around for the long haul is a healthy working relationship where they feel valued and respected for their contribution to the company’s success.
There are two sides to this appreciation coin – conveying value and recognizing value. On one side, a fractional CRO is responsible for demonstrating their value by providing things like growth metrics so that the organization’s internal leadership team can evaluate the extent of their contributions. On the other side, the CEO will need to analyze that contribution fairly to grasp the full extent of what their outsourced CRO is doing and how it is being reflected in the company’s revenue figures.
Strong Collaboration
Of course, every business relationship requires strong collaboration to thrive, but an organization will also need to be on the same page with their fractional CRO when it comes to execution for the partnership to work. Any executive can tell you that there is nothing more frustrating than doing the work to put together a strategic plan only to let it collect dust because no one wants to take the initiative to execute it. Collaboration with an outsourced CRO means being willing to make the changes needed to drive success together, instead of just talking about it. Open communication is certainly important as well, but nothing can substitute for the kind of collaborative execution needed to get results.
Measurable Outcomes
With a plan in place and execution underway, you need a means of evaluating the outcome of those efforts. Focus on a few critical KPIs (Key Performance Indicators) that will allow you to quickly gauge how well the business is doing. Make sure that the KPIs you select are actionable, meaning that you can make changes to respond to them if they show that over time the organization is moving away from its target goals. Focusing on measurable outcomes allows your organization to assess how your current efforts are doing relative to your strategic plan so you can adapt, when necessary.
Bonus: The Key to Doing Everything Better!
You may have noticed a pattern as you read through each of the criteria that set companies up for success with a fractional CRO. These relationship components are key for any type of business partnership! Furthermore, they are all hallmarks for top-performing organizations as well!
Simply put, they are the “secret sauce” to business success!
Starting from the top with strong executive leadership and clear organizational goals all the way down to measurable performance indicators and collaboration at all levels, these are the characteristics that allow the best companies to rise to the top. So, even if you aren’t planning on using a fractional executive anytime soon, you can still work on development in each of these areas so that you are well poised for when you are ready to do so. And in the meantime, you can reap the benefits of this kind of competitive advantage in your other business relationships and across the broader business landscape as well.
When you are considering hiring a fractional CRO, please reach out to me. Every day I work with organizations just like yours that have a lot of core strengths but need some help pulling them all together. Our team will work with you to develop a strategic revenue plan to build profitable, sustainable revenue. We focus on improving your strategic marketing framework, integrated marketing plan, sales and distribution strategy, and client development program to get results. Reach out to me for more information today!
