The Chief Sales Officer (CSO): A “Nice to Have” or a True “Must Have”?
For a long time, the C-suite of many companies was confined to the chief executive officer (CEO), chief operating officer (COO), and chief financial officer (CFO)—or, in other words, to the representatives of functions that have been considered core to businesses since the middle of the 19th century. Over the last several decades, though, as the world has changed and the global business environment grown ever more complex, the composition of the C-suite has similarly evolved, giving rise to new C-level positions such as chief technology officer (CTO), chief information officer (CIO), chief human resource officer (CHRO), chief legal officer (CLO), and, most recently, even chief marketing officer (CMO). However, possibly no business function has received a later invitation to the C-suite than has sales, which for some companies is an opportunity missed.
Does My Company Need a CSO or Will a Vice President of Sales Do?
Perhaps because the title and the position are relatively new, some companies question if the role could truly make a difference to their success and whether a vice president of sales might instead suffice. As with so much in business, the short answer is it depends. This is because the nature and focus of the two jobs vary: the CSO position is geared more toward long-range, 3-to 5-year planning and the development of broad organization-wide sales strategies, whereas the vice president of sales role is more squarely focused on developing and meeting quarterly and annual sales goals. It is a no brainer that most companies need someone in the latter position, but many could also benefit from having someone dedicated to the former. Whether one or the other—or both—are necessary is determined by the character of a company’s business and the complexity or comparative simplicity of its sales model, structure, and channels.
Simple but Effective—Depending on the Circumstances
As a rule, the smaller the company (i.e., the less diverse its product set, the more uniform its customers, and the more limited its target markets and regions), the more likely it is to need only a director or vice president of sales—someone who is capable of leading a single-channel sales organization, developing realistic sales forecasts, and ensuring that the forecasts are met. Good examples of such organizations include custom machine builders; small plastics or industrial components manufacturers; medium-sized consumer products wholesalers; and “one-shot” software developers, such as makers of a single smartphone app. In such companies, the sales director’s or vice-president’s responsibilities are usually limited to the development of the one sales channel’s strategy and aimed at enhancing its short-term performance, i.e., increasing current fiscal year sales. He or she is often seen as being at the very top of senior-level middle management—on the border of the executive realm but not quite in it or of it. Accordingly, sales VPs and directors are not often involved in developing high-level corporate strategy, but, rather, are only tasked with ensuring that the sales organization is in alignment with it.
Varied yet Robust—Especially When Size is a Factor
By contrast, CSOs are full-fledged members of the company’s executive team and, as their titles imply, often corporate officers, with the full fiduciary duties and leadership responsibilities that this status bestows. As such, they are most likely to be found in companies with complex, multi-channel selling structures that serve multiple customer segments with widely varying needs and requirements. The CSO’s responsibilities are broad and invariably include contributing to the development of the company’s overarching strategy as well as determining how the sales function can best enable it. Whereas the VP of sales is largely focused on making sure that the sales organization meets monthly, quarterly, and annual sales targets, the CSO, though ultimately responsible for the same, is also expected to work with other functional areas—such as marketing, product development, and business development—to develop and verify long-term revenue projections and to ensure that the company’s sales structure and its planned evolution support the overall business strategy. As such, he or she is often charged with identifying, evaluating, and addressing factors that could enable the company’s long-term growth, such as sales processes, key account management, commercial initiatives, and key performance indicators (KPIs).
Perhaps even more importantly, however, the CSO is typically tasked with determining the channel mix—deciding whether a single sales channel, different elements of the same channel, or multiple channels are required to optimally serve each customer segment—a factor that is vital to the company’s success, particularly in times of rapid social and technological change. Channel mix is both market- and industry-driven and can encompass complex organizational and customer-facing structures. For example, in banking, a single channel—face-to-face sales—predominates but varies somewhat according to target customer segment, e.g., tellers serve retail checking-account holders, mortgage-loan specialists serve home buyers, commercial bankers and loan officers work with businesses, and personal-wealth managers deal with wealthy investors. By contrast, in the retail and consumer-products sectors, a multi-sales channel model prevails, with many merchants offering their different customer segments the opportunity to purchase merchandise from brick-and-mortar stores, online storefronts, and direct mail catalogs, according to their preference. Yet another example of a diverse and complicated channel mix can be found among B2B industrial components manufacturers whose customers usually fall into three categories: original equipment manufacturers (OEMs) that purchase high volumes of components to integrate them into their own products and are thus assigned account executives; design engineers who buy small quantities for prototype- and beta-product builds that will lead to larger orders and consequently warrant the attention of field salespeople; and maintenance, repair, and operations (MRO) technicians, who make multiple but periodic single-item purchases and are therefore best served by low-cost channels such as distributors and on-line storefronts.
Not least because of its potential effect on revenue growth and profitability, the determination, implementation, and oversight of a company’s channel mix is an enormous and vitally important responsibility. However, it is far from being the CSO’s only mission-critical responsibility. The CSO must also keep abreast of changing industry customer preferences and expectations, not merely in terms of preferred products and services but also in respect to customer purchase patterns and post-purchase preferences, both factors that are key to customer acquisition and retention, which are among the sales organization’s foremost deliverables. These days, this means that the CSO must be cognizant of the latest trends in e-commerce, salesforce enablement, and customer relationship management (CRM) platforms, and that he or she must also be able to work with the marketing and information technology (IT) functions to determine which are best suited to the company’s various sales channels as well as to the business as a whole.
Finding a Multi-Talented Leader for a Crucial, Multi-Faceted Job
Leading a sales organization is never easy. For a vice president or a director of sales, there are sales programs to deploy, a sales team to motivate, sales managers’ egos to manage, and the relentless monthly, quarterly, and annual numbers to make. For a CSO, the challenges are even greater and more disparate, for not only is the CSO responsible for sales meeting its tactical goals, but also for helping shape the company’s vision, contributing to its long-term strategic plan, and working collaboratively with fellow C-suite team members to ensure that they are providing the support necessary for sales to meet its objectives and that sales is returning the favor in kind.
Finding individuals who are up to this task is challenging. Promotion from within, which can sometimes be effective in terms of filling other C-suite positions that require a deep knowledge of the company—such as the COO—can be less effective with respect to CSOs since the position is often added when the company’s products are increasing in number and variety, its customer base is moving from relatively homogenous to distinctly heterogenous, and, as noted above, its sales models and channels are becoming more diversified. All of this means that the CSO position often entails a larger and more complex set of responsibilities than is likely to have been held by an internal candidate, such as an incumbent sales VP or director, who rose through the ranks when the company, its target markets, and customer base were markedly simpler.
Many companies with newly created CSO positions often turn to external candidates to fit the bill, sometimes finding them through the C-suites’ professional contacts, via industry and professional associations, or through an exceptionally well-connected internal HR department. Frequently, however, companies turn to retained executive search firms, particularly those with established practices in sales, marketing, and business development. Because of their typically long and deep experience filling comparable positions, such firms usually have extensive databases of passive candidates and also often attract interest from highly experienced and qualified candidates who might be available as a result of a merger, reorganization, or some other legitimate reason for displacement. Additionally, a search firm that has placed CSOs and comparable high-ranking sales executives in the past is likely to have in place candidate evaluation procedures that far exceed an elementary industry or skills match. Such well-rounded assessment processes are integral to finding the perfect fit for an executive sales position, since a company’s executive management must be in step with company culture to adequately understand it, effectively manage it, and, if necessary, evolve and ultimately change it.
Finding leaders possessed of these abilities can be a daunting task but it is not impossible, particularly if one turns to an executive search firm with related expertise to help identify and vet candidates. Even if it proves challenging at times, the search will likely be worth the effort because the sales function and the revenue that it generates are the engine of a company’s continued existence and growth, and, in the last analysis, nothing could be more worthy of effort than that.
This is the fourth in a series of articles that examines the characteristics and experience that employers should expect to find in candidates for executive and senior leadership positions in mission-critical functions such as marketing communications, business development, digital marketing, product marketing, loyalty marketing, direct marketing, and public relations, as well as sales and other types of channel management.
For comments or for more information, please contact:
Customer and prospect contact: Ronald S. Torch, Founder, Chief Executive Officer, and President, the Torch Group, rontorch@torchgroup.com, www.torchgroup.com, 440.519.1822 x101.
Media contact: Ronald-Stéphane Gilbért, Senior Consultant & Global Managing Director, Gilbért, Flossmann & Zhang Worldwide, rgilbert@globalmarcomm.com, www.globalmarcomm.com, 216.816.4947.