Last year, I interviewed Jim Compton about his work as Chief Revenue Officer at United Airlines. He described a role that seemed critical in the C-suite: someone with a laser focus on revenue generation.
I wrote a previous blog on this topic, and at the time Compton’s job remained a rarity in Corporate America, which is a shame because of the important role a CRO can play in driving organic revenue growth.
This line of thought was subsequently reinforced in late July when Yahoo released a disappointing sales forecast for the third quarter and, just days later, announced the appointment of Lisa Utzschneider as Chief Revenue Officer. Yet while Yahoo gets it, and despite successes at companies such as United and Hertz and recent interest by media firms and Silicon Valley, the CRO role has yet to catch fire.
Certainly enough time has passed since the first Chief Revenue Officers began popping up in the early 2000s for the trend to take off. Yet those at the vanguard, such as Compton and former Coca-Cola Enterprises CRO Terry Marks (now the CEO at Hooters), remain in sparse company.
Compton describes his job at United as “anywhere revenue has touched.” His direct reports include the heads of global sales, Revenue Management, marketing, and customer loyalty programs, who work through him to reach a unified agreement on recommendations before presenting them to the CEO. This helps drive an accord on revenue generating issues – and avoids mistakes and miscommunication.
Jeff Foland, who became Hertz’s first CRO in January 2015, says the job is all about “scalability and synchronization.” He oversees the rental car company’s sales, marketing, customer care, strategy and franchise functions, and believes companies who don’t have these revenue functions “appropriately stitched together” risk missing out on “a synchronized and concerted effort to really move the needle on how you’re going to generate incremental revenue.”
The scarcity of CROs is due in part to the politics of creating the position. In most C-suites, the roles of the CFO, COO and CEO have been defined and done the same way for years – and absent a CRO. Also, many boards of directors don’t understand the CRO role enough to advocate for it.
In essence, the job requirement for a CRO is to drive organic revenue growth for their organization by leveraging the many departments that report up to the position, including marketing, sales, customer support, pricing and Revenue Management. The successful CRO oversees all revenue-generating activities, maintains an excellent communication framework across various organizational functions, and shares best practices among revenue stream managers in order to maximize revenue.
The CRO also provides the perfect counterpoint to the CFO. Where CFOs are clearly and singularly responsible for expenditures, CROs are clearly and singularly responsible for revenue.
The CRO role brings a fundamental change in the organizational chart, which may scare some companies. But it also provides precision and a consistent lens on revenue generation, while serving as an invaluable advisor to the CEO.
The absence of a CRO leaves a gap in the executive suite which inhibits organic revenue growth. It’s time for a productive restructuring of the C-level.
A version of this article first appeared in Chief Executive magazine.