A fractional chief revenue officer (fractional CRO) is a C-suite position that has a role in small- to enterprise-level companies worldwide. CROs align the sales and marketing departments to improve revenue streams, implement monetization strategies, define revenue models and much more.
We’re going to explore the key role of a fractional CRO and why startups should consider hiring a CRO on a part-time or fractional basis.
What is a Fractional CRO
A fractional CRO is a chief revenue officer, or senior exec, who is hired on either a:
- Part-time basis, OR
- Project basis
CEOs rely on the CRO to make revenue operations, marketing, sales and customer service a top priority within the organization. These departments report to the CRO, who will align goals among departments, identify new revenue streams and optimize those that exist already.
CROs work closely with the following:
- Team leaders
- Sales Management
- Top executives
- The Marketing Team
If a team leader can assist the CRO in reaching their key performance indicators (KPIs), you can be confident that the fractional CRO will reach out to them.
When Should Companies Consider a Fractional CRO?
Hiring a chief revenue officer is an important internal decision that helps companies break through revenue plateaus. In the 10 years prior to the COVID-19 pandemic, average companies grew revenue by 2.8% annually.
Here’s when companies should consider hiring a fractional CRO:
|CEO||If a CEO lacks the experience, time or resources to focus on sales or marketing, a CRO can be beneficial.|
|Revenue||When revenue growth is slow, contracting or has hit a plateau, it’s time to consider a fractional CRO.|
|Conversions||If conversion rate improvements are needed, such as an increase in sales or sign-ups, a Chief Revenue Officer can help.|
Full-time CROs may not fit into the company’s current plans due to a lack of revenue or size. Fractional CROs are often hired to “bridge the gap,” allowing the business to benefit from their expertise without a long-term commitment.
If an organization wants expert advice and guidance on an as-need basis, working alongside a fractional Chief Revenue Officer often fits into the existing framework.
Founders and CEOs that lack the experience to choose market strategies, pick customer segments and maintain revenue growth often hire a CRO to step in and take the reins of these tasks. Fractional sales management vs full time sales management is a serious decision.
What Can a Fractional CRO Do?
Fractional CROs have a lot of responsibilities, including:
- Improve or create revenue streams: A CRO will focus on your business’s revenue. These executives have built careers as revenue-focused executives, and they’ll work to increase revenue in multiple ways. The CRO may revise pricing to capture higher per-sale profits, or they may capitalize on untapped revenue streams.
- Create or refine monetization strategies: The executive may review, design and implement new monetization strategies for the business. Execution of the strategy will fall on the teams they oversee, all of which are brought together and reported back to the CRO.
- Team alignment and coordination: Aligning and coordinating teams to reach monetization and revenue goals will also be a key role of the executive. Expect the CRO to meet with teams, brainstorm together, integrate team functions together and create a higher level of transparency among teams to ensure everyone is on the same page.
- Revenue cycle optimization: Teams are brought together to improve the revenue cycle. Alignment of department goals across the organization is a key responsibility of the fractional CRO. A unified revenue cycle should allow the company to be more profitable and make revenue management easier.
- Innovate monetization strategies: Old or failing monetization strategies can be brought back to former glories, or new monetization strategies may be employed. For example, cross-selling or implementing subscription or user-based pricing models all fall under the guidance of the CRO.
- Customer experience optimization: Over 66% of customers expect businesses to know and understand their needs. CROs will work on better understanding these needs and creating an experience that better caters to them.
- Risk mitigation: Changes in revenue streams or customer experience come with their own level of risk. The CRO will work to project potential success and monitor results over time to make rapid changes to mitigate risks along the way.
- Hiring: CROs know how to hire salespeople and how to conduct interviews, they know the sales interview questions to ask sales managers.
Fractional CROs do a lot for their employers. They’ll meet with internal teams and report back to the CEO and founders. It’s the responsibility of the CRO to report the results of their efforts to the company’s leadership.
We’ll discuss the impact of a Chief Revenue Officer in greater detail in the coming sections.
Top Fractional Chief Revenue Officer Benefits
Bringing a fractional CRO into the fold is a strategic decision by the founders and/or CEO of a company that pays dividends in the long term.
Pros of Hiring a Fractional CRO
- Cost savings: First and foremost, hiring a full-time CFO may not be in the company’s budget. Fractional CFOs offer their guidance on a part-time or project basis, relieving the company from long-term commitments and also saving them money.
- Guidance: CEOs who need additional guidance can rely on the expertise of these C-suite execs to guide them on new revenue-generating strategies, team development, and even pricing. The expertise provided will allow for invaluable decisions that will guide the future of the business.
- Scalability: Revenue plateaus happen, and they can remain if key changes are not implemented within the organization. CROs will work with the company’s sales and marketing teams to find ways to grow revenue and scale growth more effectively. The team alignment responsibilities will set the company up for an easier time scaling revenue in the future.
- Revenue: Every CRO is brought on to a company to improve revenue. If the CRO does well, the company can expect an increase in revenue and even more income stream creation that can bolster growth.
Hiring a fractional CRO is a smart business decision for many companies that are struggling to grow revenue further with just the guidance of the CEO. If a CEO doesn’t have the time, resources or expertise to grow revenue further, the CRO will be an invaluable asset.
Before hiring a fractional CRO, it’s imperative to consider the “cons,” although they’re grossly outweighed by the pros of hiring a CRO.
Cons of Hiring a Fractional CRO
While there are many advantages to hiring a fractional CRO, there are some drawbacks that also need to be considered. These include:
Limited Time Commitment
Fractional CROs aren’t full-time employees, which means they can only dedicate a limited number of hours to your organization.
Depending on which stage of growth and development you’re in, you may need more from your CRO and should consider hiring full-time.
CEO Loses Some Control
A fractional CRO will recommend and implement strategies for improving revenue, and their work will have a great impact on many processes within the organization.
In order for them to carry out their work, the CEO will lose some control over these processes. Some CEOs may not want to give up this control or may have difficulty working with a CRO on a fractional basis.
What to Look for in a Fractional CRO Hire
Successful fractional CROs share similar traits and have track records of success that helped them develop a positive reputation in the industry. There are several things to consider if you want to hire a reputable and experienced fractional CRO, including:
- Sales, Technology and Marketing Success
A successful fractional CRO knows that sales, marketing, technology and customer success go hand-in-hand when it comes to improving revenue. Look for a professional who is an expert in all of these fields.
They should have the skill and experience to develop and implement:
- Effective sales processes
- Inbound and outbound marketing initiatives
- Processes for ensuring customer satisfaction
Taking a holistic approach to revenue growth allows an organization to achieve sustainable results.
- Data-Driven Approach
An experienced fractional CRO will take a data-driven approach to helping organizations improve their ROI and scale their revenue.
Fractional CROs will look at digital data, like lead conversion rates, bounce rates and more, to develop strategies that help improve the customer experience and conversion rates. They’ll take similar approaches to non-digital channels.
Make sure that the fractional CRO you hire takes a data-driven approach to their work.
- Excellent Communicator
Fractional CROs will work with various departments in the organization and will need to bring teams together, like sales and marketing, to implement their strategies. To succeed with this, fractional CROs must be excellent communicators.
They’ll also be working with the CEO, VP, IT directors and other leaders in the company, so they must also know how to communicate with them.
- Expert Strategists
CROs are natural strategists – it’s a core part of their job. But a good fractional CRO will also implement and execute their strategies. They work on a part-time or short-term basis, so fractional CROs map out plans and play a role in executing them.
- Level of Experience and Expertise
Of course, it’s also important to ensure the fractional CRO you hire is:
- Knowledgeable in your industry
The ideal candidate will have years of experience and a history of success. They will have worked with other businesses just like yours, so they know what challenges you face and how to overcome them.
These are some of the most important things to consider when hiring a fractional CRO. Don’t discount the professional’s personality and ability to work with your team. If their values and techniques are not aligned with the organization’s, they may not be a good fit for the company.
Fractional Chief Revenue Officer Impact
A fractional CRO can have a significant impact on a startup or SMB. Their expertise can help:
|Increase revenue streams||Develop strategies to convert leads into customers as quickly as possible to improve revenue streams.|
|Align departments||Bring organizational departments together to develop a unified revenue cycle that is profitable and more manageable.|
|Create and implement sustainable revenue growth strategies||Design and implement strategies to achieve sustainable revenue growth.|
|Define revenue models||Define which revenue model the organization should follow, which discount thresholds to implement and which promotions to use.|
|Develop effective lead and demand generation strategies||Evaluate, develop and identify potential revenue streams that are financially viable.|
The strategies and recommendations that a fractional CRO offers can help organizations reach their revenue and growth goals. Their impact can be transformational in some cases, steering companies back in the right direction toward profitability.
Why Startups and SMBs Should Consider a Fractional CRO
Startups and SMBs can benefit from hiring a fractional CRO in a number of ways. Fractional CROs allow these organizations to access their expertise at a fraction of the cost of hiring a sales manager or full-time CRO.
A fractional CRO offers:
A fractional role like a Fractional CRO brings expertise and industry experience to the table. These professionals have helped other organizations improve their revenue streams and achieve their goals. Their proven track record of success makes their service invaluable to the organization.
Ideally, you’ll want to work with a fractional CRO who has experience in your industry. Having industry knowledge and experience means that your fractional CRO can help your team stay ahead of the competition and provide recommendations based on first-hand knowledge.
A fractional CRO can provide an organization with a level of flexibility that a full-time CRO cannot provide. SMBs and startups are on tighter budgets. Hiring a full-time CRO will tie up valuable resources that can be used to help the company grow.
Fractional CROs give these organizations access to the same services their full-time counterparts offer without the commitment. These professionals can be engaged on a project-by-project basis or for a certain period of time.
The flexibility that fractional CROs offer makes it easier to manage resources and incorporate their services into the budget.
One of the primary reasons startups and SMBs should consider fractional CROs is that they offer cost savings. Hiring a full-time employee comes at a significant cost, particularly when hiring executive-level roles like a CRO.
Fractional CROs can provide the same services and benefits as an in-house CRO, but at a lower cost.
The Ability to Scale
Another reason to consider hiring a fractional CRO is that they can help an organization scale its revenue growth more effectively. They also help organizations:
- Identify growth opportunities
- Create strategies to reach their long-term goals
Their services can help organizations scale in a sustainable way and achieve revenue growth over time.
Fractional CROs also serve as mentors and coaches. They help teams develop essential skills that help drive revenue growth. And they can help salespeople hit their OTE. But they can help organizations identify areas that can be improved and provide guidance on how to achieve their revenue goals.
Quick Integration and Results
A fractional CRO can step right into an organization and immediately start providing guidance and implementing processes to help achieve revenue growth.
Compared to their full-time counterparts, fractional CROs offer a much quicker time-to-value and easily integrate into organizations. Their ability to deliver results right away is a primary reason why startups and SMBs should consider fractional CROs.
Final Thoughts on Hiring A Fractional Chief Revenue Officer
Fractional CROs can help organizations achieve their growth and revenue goals in a sustainable way. Because they work on a part-time or fractional basis, startups and SMBs can access their services without having to commit to hiring a full-time employee. Weighing the pros and cons of hiring these professionals can help organizations determine whether it’s the right move for them.
If a fractional CRO is not a fit. You may want to consider other fractional roles like a Fractional Sales Manager, B2B sales consultants, Fractional CMO, Fractional VP of Sales, outsourced BDR, or Fractional COO.