It was commonplace over the past few years for companies to raise money, hire aggressively, and spend heavily on sales and marketing. As investors and public market have shifted priorities over the past 2 years, companies are now switching gears and adapting to their new realities. This impact go-to-market teams more than any other department, as they switch from being told to grow at all costs, to being told to grow conservatively with a focus on unit economics. CROs are put in the challenging position of maintaining high growth rates while cutting spend aggressively; a seemingly impossible situation. They can navigate this new reality by improving productivity while setting new expectations with stakeholders, including investors, markets, the rest of their executive team, and their company as a whole.
1. Cost Optimization and Efficiency
- There are likely areas where costs can be cut with minimal impact to teams across many revenue-related functions. Evaluate existing processes and identify areas where resources are being over-allocated or misallocated. The past few years saw many companies buying software without stringent criteria; re-evaluate these purchases, being sure to calculate the cost of new workflows or resources that might be required to get the job done.
- Develop a revenue strategy that emphasizes cost-effective customer acquisition, such as focusing on high-value customer segments and efficient marketing channels. Set clear expectations with the executive team that growth will not be as quick as it may have been before. Work with the team to determine the right tradeoff between cost cutting and slower growth.
2. Cross-Functional Collaboration for Cost Reduction:
- While collaboration remains important, the emphasis should shift toward cost reduction efforts. Encourage cross-functional teams to work together to identify cost-saving opportunities and streamline operations.
- Explore partnerships and alliances that can help reduce customer acquisition costs or increase the lifetime value of existing customers.
3. **Customer Retention and Expansion:
- Prioritize customer retention as a means of reducing churn and minimizing the need for expensive new customer acquisition. Develop strategies for enhancing customer satisfaction and preventing customer attrition.
- Invest in showing customers the value they are getting from the product or service. Asking customers about ROI, time to value, and other quantifiable metrics can help them realize how indispensible your product has become.
4. **Lean Sales Enablement and Training:**
- Implement lean sales enablement programs that focus on essential tools and training, avoiding unnecessary expenses.
- Assess the sales team and consider restructuring if necessary, aligning the team with a more cost-effective sales approach, such as targeting high-potential accounts.
5. **Innovation in Cost Control:**
- Foster a culture of innovation in cost control. Encourage teams to find creative ways to reduce costs without compromising on product quality or customer satisfaction.
- Explore automation and technology solutions that can streamline operations and reduce manual efforts.
In this scenario, the CRO's role becomes a delicate balancing act between cost reduction and revenue growth. The CRO should work closely with the executive team to align all revenue-related functions with the company's new cost-conscious goals, while also setting expectations about what type of growth is realistic in this new market. Industry stats, such as this one from SaaStr, and conversations with leaders at other companies can be helpful in demonstrating how widespread these challenges are.