Channel Mechanics

The Rise of the Chief Revenue Officer…and the Implications for the Channel

The Chief Revenue Officer

I’ve recently noticed a trend whereby vendors, both large and small, are appointing a chief revenue officer (CRO). At first blush, this may seem like yet another exercise in title inflation to go along with chief data officers, chief content officers, and chief digital officers. But as it turns out, the rise in CROs appears to be occurring most frequently within organizations that are trying to unify their direct and indirect sales motions once and for all.

 

In some cases, the naming of a Chief Revenue Officer has led to the elimination of a formal channel chief position. Whereas in other cases, the channel chief simply becomes the CRO or finds themselves reporting into the CRO. In either case, the importance of the channel is not diminished. Rather, IT vendors are finally recognizing that divided approaches, based on direct and indirect selling motions that often conflict with one another, simply no longer work well for anybody concerned.

 

The Alignment of Direct and Indirect Sales Teams

The naming of a Chief Revenue Officer is essentially a tacit admission that an IT vendor needs to align their direct and indirect sales teams. The first order of business for almost any CRO is to rework the models around which the direct sales force is compensated. Getting direct sales teams to close deals in collaboration with channel partners has historically meant paying them a higher commission as an incentive. As well intentioned as such initiatives may be, it doesn’t always guarantee the optimal outcome. More than a few direct sales people would still rather close a deal themselves to make sure they get paid this quarter. Even if that means getting paid less. They, just like everybody else, have mortgages and car payments to make!

 

But like it or not, many IT vendors are becoming less inclined to pay what amounts to extra compensation to drive a deal through a channel partner. They are now moving to make the channel their only route to market by appointing a CRO that is responsible for both direct and indirect sales. This can obviously be a disruptive transition. But from the perspective of channel partners, it’s a change that has been a very long time coming. Arguing over who owns the customer is a waste of time for all concerned. Most of those arguments simply result in increased costs for the vendor; disgruntled channel partners; and a sub optimal experience for the customer. There are no winners when a vendor’s cost of sale starts to spin out of control.

 

The Chief Revenue Office and the Channel

Of course, not every Chief Revenue Officer will be as channel savvy as they’d like to think. Many will have stronger backgrounds in direct sales than they do the channel. But with a little on-the-job training and forbearance on the part of the existing channel team, the CRO should be a positive addition to the team. Hopefully, channel teams will soon be spending a lot less time explaining to colleagues how the company once again did wrong by one of its channel partners because of the actions of a direct sales representative.

 

In the meantime, the leadership of IT vendors yet to appoint a CRO might just want to ask themselves; “why not?“. A lot of the answers to that question may be more painful than anyone wants to admit. But as they always say down in my local gym, there can be no gain without pain.

 

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