Building and Revving Your Revenue Engine
By Matt Troy, Director, Strategy
If you were to do a Google search on ‘the rise of the revenue officer,’ you’d find a host of very interesting articles about the evolving role in many organizations of something called a revenue officer – a role that increasingly more companies are turning to in order to help drive growth within their companies.
If your organization doesn’t yet have a revenue officer and you’re not exactly sure what it refers to, essentially, the role is that of an executive whose responsibility it is to ensure that the organization generates enough revenue to fuel the growth demanded by its shareholders.
At first blush, a Chief Revenue Officer may just seem like a bloated title for a head of Sales. But there’s a little more to it than that…
Where does revenue actually come from?
Sales, of course…
But what happens if Sales doesn’t have anything good to sell?
In that case, attention shifts to the Product team to bring products to market that buyers need and want.
But what happens if Sales still can’t sell those products effectively?
In that case, attention shifts to the marketing to find the right message, and the right audience to sell the right products.
Reading through that again, sales teams, product teams, and marketing teams have to work together to make sure revenue targets hit their mark.
And, as you may have guessed, a revenue officer is usually situated to be able to coordinate the efforts of Sales, Marketing, and Product to maximize the efficiency with which the organization generates top-line revenue.
Over time, companies have seen the pitfalls of having disjointed efforts between these three key departments. If you’ve been around the block a few times yourself, chances are you’ve seen it too…
The sales dominant culture, who claims to know exactly what products they need, but are never happy with what Sales delivers.
Or, the genius product team who can make any product under the sun, but either it’s not what customers actually want to buy, or the sales team can’t figure out how to actually sell it.
Or, the marketing-led team who can spin just about anything to make it seem like a necessity, but after a while has tried just about everything to move the needle and tactics that used to work are starting to show diminishing returns.
Often times, organizations can experience all three of these scenarios in an effort to find the right balance.
And increasingly, that balance comes in the form of a revenue officer who aligns the efforts of all three departments
Why is that important? Because when it does happen and Product, Sales, and Marketing align, companies are 15% more profitable and they grow 19% faster than when these functions are not aligned.
Stepping back a bit to think about that, it makes a lot of sense. How much time and wasted energy could you save if your product team was making the exact products that Sales thought they could sell, and Marketing knew exactly how to position in the market?
Why does a separate executive make this state of alignment more attainable?
Because individual Sales, Product or Marketing leaders are often compensated based on department-specific goals.
If a Sales leader is compensated on top-line revenue and has to blow some products out at the end of the quarter at promo prices to make their number, margin usually takes a hit and next-quarter Sales are at risk of being soft.
If a Marketing leader is compensated on organizational growth, but the product team falls behind in new product commercialization and growth is flat, everyone loses.
If the Product team is compensated on gross margin, they’re likely to emphasize new product development – sometimes to the point where it’s not in line with what the market is actually demanding.
Whatever the case, the remedy is giving responsibility to an individual who isn’t beholden to a specific department, or a single part of the equation.
Revving the Engine
If the revenue ‘engine’ is the combination of Product, Sales and Marketing working together to drive revenue growth, revving the engine starts with the customer.
Gathering meaningful voice-of-customer insight provides answers to the key questions of what your organization should be selling to whom, and how those products need to be positioned in order to outmaneuver your competition.
In order to best ‘rev’ your engine, make sure your Product, Sales and Marketing teams have access to the same insights from the field. Even if you’re not able to carve out a separate role for someone to specifically lead a revenue team, getting the three revenue-generating leaders together on the same page can have a similar effect.