How Interim C-level Leaders Drive your Portfolio Company’s Revenue Growth Strategy
Too often, private equity portfolios include one or more companies that are not performing well and will likely not reach the investors’ revenue objectives. In these cases, PE leaders have three options:
- Continue struggling with the status quo.
- Fire the CRO, CSO, or CMO and start searching for a replacement.
- Promote a junior employee in the company into the vacant leadership position.
The best answer is none of the above.
In all three scenarios, the revenue number will still likely be missed, top talent could leave the organization, and a value creation plan will likely be derailed. Here’s why.
- In option one, ongoing bad leadership will continue to yield the same bad results.
- Option two means the PE firm will spend the next six months (minimum) entrenched in a C-Level hiring search, during which time revenue will still likely plummet.
- Option three will likely end up with someone who is not prepared for a leadership role, let alone a position that requires specialized skills and talents.
So, what should a PE firm do when it’s struggling with go-to-market leadership? They should hire an experienced GTM Interim C-Level Leader — either a CSO, CMO, or CRO.
An Interim C-Level Leader brings several advantages to PE companies when they are lacking the right leadership. They need leaders who can generate income rapidly and create a future-focused vision for the company. This requires a C-Level Leader who can meet these critical objectives:
- Find and fix performance gaps in the current operation
- Transform sales and marketing operations to meet evolving customer demands
- Rapidly fill critical sales and marketing positions with A-Player talent
- Extract (and act upon) critical insights from organizational data
- Open wider distribution channels and new market opportunities
- Increase operational efficiency by inspiring greater performance from the existing teams
- Transfer the new knowledge and best practices to a permanent GTM leader
How does this work in practical terms? Here is a perfect real-world example of how an Interim CRO transformed a PE company’s GTM strategy and significantly generated higher income rapidly.
SaaS Company Achieves Offers of $55M with 6:1 Multiples
A SaaS company wanted to exit in 12 to 18 months, but its revenue growth had stalled. An initial offer from a strategic buyer came in at 3:1 multiple on earnings — much lower than market rates. The company was struggling with misaligned sales and marketing teams, a poor hiring process, an SDR team performing at one-fifth the benchmark level, a low 16% win rate, no revenue-building strategy, and a lack of clear key performance indicators.
Within months, an Interim CRO created and executed a robust GTM strategy that doubled the opportunity win rate, increased the enterprise value from $28.5 million to $55 million, and fielded multiple offers at a 6:1 multiple
The Interim Leader achieved these stellar goals with these high-impact action steps:
- Restructured the marketing team with top-tier talent and rewrote job descriptions, compensation programs, and an accountability system
- Replaced the entire SDR team and developed innovative systems and tools, including a playbook, sales territories, performance standards, and compensation structure
- Rewrote the lead and opportunity management processes
- Developed a highly proficient revenue-generating process
- Trained new incoming permanent leadership to continue running the successful GTM organization
Interim C-Level Leaders Bring a “Builder” Personality to GTM Transformations
One of the leading characteristics of Interim C-Level Leaders is that they are Builders. In other words, they are change agents who bring a unique transformation-focused personality and skill set to the table. They have the ability to find the critical gaps in a sales or marketing organization and fix them. They achieve this by enabling the right people, systems, and processes to perform the right tasks, then optimizing them to achieve greater revenue generation — and they do it all rapidly.
Their Builder personality characteristics and skill set include being comfortable in chaos, solving complex problems, executing massive transformations, and meeting revenue objectives. Builders like to fix problems and move on to the next challenge. They are exactly what a PE firm can rely on to rescue failing investments or turbocharge a growth plan.
By contrast, most successful full-time CSOs, CMOs, and CROs are “Runners.” Their primary skill set is maintaining an already built, well-oiled GTM machine, while making incremental improvements as needed. While a Builder thrives on conquering challenges, Runners thrive on maintaining a predictable day-to-day environment.
“When your sales and marketing operation is broken, you need a Builder to fix it. When your sales and marketing operation is optimized, you need a Runner to keep it going,” states Dan Bernoske, CEO and Founder, Cortado Group. “Without a C-Level Leader who is a Builder, there is a lot at stake, including the opportunity costs of missing out on more robust sales, better deals, and higher revenue.”
The Four Phases of an Interim C-Leader Engagement
Hiring an Interim C-Level Leader to transform a GTM operation is typically a three-to-four-month engagement. This is the minimum amount of time required to make meaningful changes within a GTM organization.
Over the course of their term, Interim C-Leaders drive two parallel paths: building a best-in-class GTM engine and managing the team to deliver results. These objectives are executed through a four-sprint process that includes multiple deliverables.
Sprint 1 — Discover and Design. This phase includes executive, field, customer, and competitive assessments of how the company can improve. Tasks deployed include a gap analysis of the talent, processes, and tools needed to maximize outcomes.
Sprint 2 — Build. In this phase, the Interim C-Leader establishes the proper governance for all team functions and assigns roles and responsibilities to optimize the new strategy. Then they deliver quick wins around pipeline lead generation.
Sprint 3 — Operate. This phase involves the execution of the agreed-upon strategy and process elements that are critical to the company’s short- and long-term success. This includes 1:1 coaching calls, pipeline and forecast management, execution of campaigns, and several additional tactical initiatives.
Sprint 4 — Transfer. The Interim C-Leader develops a forward-looking plan to mentor and advise a permanent C-Leader on the new GTM strategy and processes. A newly hired C-Leader will be rapidly onboarded and oriented to the GTM engine that the Interim Leader has built.