99% of people work for a revenue generator. There are only a small fraction of humans on this planet who can create a product and service from scratch and generate significant revenue from it. This less than 1% of the population adds credence to the ever-elusive “Rainmaker CEO”. In fact, many CEOs may come up through the CFO route, further cementing the notion that a true innovative revenue generator in the CEO seat is ever harder to find. In this article we will give you a few questions to ask, to highlight your candidate’s skill in this area.
The first step is to go into every interview with the assumption that your CEO candidate is unable to generate revenue and only when and if the candidate demonstrates evidence to the contrary will you begin to accept the fact that maybe, just maybe, they have skills in this area. They must prove, beyond a shadow of a doubt that they are strategically and tactically in control of the growth levers to increase revenue and profits.
Here are a few questions to test whether your candidate is part of the 1% money-generating population, which you can ask in under 15 minutes:
Are you a revenue generator? Are you a deal maker or a closer?
This invites the candidates to identify themselves right out of the gate. Many candidates may surprise you and say that they’re not actually revenue-generators and that they outsource that aspect of the job. Interestingly, many CEOs are actually not dealmakers and can’t close a deal to save their lives; they would be more focused on creating a great product, on wealth conservation and protection, or on cost control, rather than on value creation. If your company needs a CEO who is a revenue generator then you know that this candidate is not one that you should further consider.
To give you a quick example of this, in many real estate companies the CEO is an Engineer or Architect and has no sales or marketing training. They usually outsource their sales to real estate brokers. If you are a real estate developer and want to create an in-house sales capability, you will end up disqualifying 85% of your candidates on this first question, as they will tell you they are not revenue generators, and in fact have little interest in sales.
Have you looked at our business? What are your top 3 things that would allow us to generate more revenue?
This is an interesting question to ask because someone who is a revenue generator will be brimming with ideas. Your preferred candidate will have a natural zing for coming up with money-making ideas on the fly, and by the time they’ve mentioned their 3 ideas, they would have come up with 3 more ideas. With a real revenue generator, the job of the board is about holding them back a little bit and helping them focus on the couple of great ideas they have while putting the others on the ice. The “Rainmaker” is overflowing with ideas and possesses electric energy that is infectious.
Someone who isn’t a revenue generator would say “this is something we have to research because there are many dynamics, and I would have to perform a deeper analysis”, all of which is an attempt to buy themselves time because they don’t have any money-making and revenue-generating ideas, and they never will have any. They are simply not money-generating individuals, they are a cost centre. Save yourself the pain and let these candidates go.
Who is your customer, why do they buy from you, and what is the buying cycle?
Being customer-centric is an important criterion, and a CEO who understands their customer and the buying cycle is one who will be able to make a meaningful impact on the revenue-generation side of the business. One of the things that you also want to look at is how they answer the question, and your ideal candidate will not feel their way through the answer, they will give you a very empirical and data-driven answer. I would also add that they should describe each in less than four sentences. Defining your customer should not take more than two minutes, and the whole answer should be concise, succinct, and punchy.
Describe a time when you maximized profitability per customer.
Improving sales is a key pillar of the business case your CEO is meant to fix. Your CEO must be familiar with the success metrics of their business and will demonstrate an unusual zeal for monitoring and managing all the right data points to increase profitability and top-line revenue. To excel on this question the CEO should highlight how they identified the most profitable products and services and then created a learning and development program to teach their staff which products and services to sell to increase profitability and how to sell them. In this scenario, customers may not change their overall spending with the brand but that spending will be much more profitable for the business.
For example, I worked with a mobile client who would sell their customer an iPhone but would then offer all the accessories from a Chinese third party supplier who offered them an 80% profit margin on their products, which was significantly more than the low margin Apple offered on their accessories. In this case, the CEO was able to triple the profitability of the business while servicing the same number of clients and delivering the same top-line numbers. Most companies do not instruct their sales staff to sell the most profitable products, but companies with the highest profitability most likely do.
CEOs who do not know their metrics, simply do not know their business. This leaves their business vulnerable and impossible to optimize. If you want to optimize your sales, you need to know who your customer is, why they are buying from you, and what value they are deriving from your product or service. This is a separator question that reveals whether your candidate is looking at services that allow their company to upsell customers and maximize transactions. If your CEO is closer, they will create systems, processes, training, and build a team that is proficient in selling more products and pushing your most profitable products.
Looking for more questions to ask a CEO? Read “CEO Assessment and Selection” to learn more about the 7 universal success factors for the Chief Executive Officer and unlock over 450 fail-safe questions that allow you to recruit top performers. Get more free CEO Assessment tips at https://tpgleadership.com/ceo-assessment-selection-book/ .
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