Commercial Strategy: The Role of a Commercial Director in Shaping Business Success

Commercial strategy is the plan by which a business decides where it will compete, what it will sell, to whom, at what price and on what terms — and how it will turn those choices into profitable revenue. In many UK businesses the person who owns that plan is the Commercial Director. The title is used loosely, so the role can mean very different things from one company to the next: a glorified sales lead in one, the custodian of pricing, margin and contract risk in another, and the board’s main voice on growth in a third. Where results are needed quickly, an interim Sales Director can cover the gap.

This guide sets out what commercial strategy actually covers, where the Commercial Director’s remit starts and stops alongside Sales, Marketing, a Chief Revenue Officer and the COO, and the areas where the role earns its keep: pricing and margin, key accounts, contracts, bid governance and the partnership with finance. It closes with the measures a board should hold the role to, the signs that it is time to hire, the choice between permanent, interim and fractional appointments, and how to assess candidates properly.

What commercial strategy covers

A commercial strategy answers a small number of hard questions. Which customers and segments are we going after, and which are we deliberately not serving? What do we offer them, and why should they choose us over the alternatives? How do we price it, and what margin do we need to earn? Through which routes do we reach the customer — direct sales, partners, distributors, online? On what contractual terms do we trade, and what risk are we prepared to carry? And what capacity, people and investment does all of that need?

The output is not a slide deck. A working commercial strategy shows up in a target customer list, a pricing framework with clear discount authority, a pipeline the board trusts, standard contract terms the business will actually defend, and a sales and account management structure that matches the plan. If those things do not exist or contradict each other, the strategy is a document rather than a way of running the business.

Commercial strategy also sits beneath corporate strategy rather than replacing it. The board and CEO decide what business the company is in, where capital goes and what the long-term shape of the group should be — work often supported by a dedicated strategy function, which is why some businesses appoint a Head of Strategy alongside the Commercial Director. The commercial strategy turns those decisions into a plan for winning and keeping profitable customers.

Where the Commercial Director sits: remit versus Sales, Marketing, CRO and COO

Most of the confusion around the role comes from overlap with neighbouring titles. Getting the boundaries right before you recruit saves a great deal of friction later.

• Sales Director. Owns the sales team, the pipeline and the conversion of opportunities into orders. A Commercial Director typically sits above or alongside this and owns the terms on which sales are made — price, margin, payment terms, risk. In smaller businesses the two roles are combined; once the sales team is large enough to need full-time management, they usually separate. Our Sales Director recruitment practice covers that adjacent hire.
• Marketing Director or CMO. Owns brand, positioning, demand generation and market insight. The Commercial Director relies on that insight but is accountable for the commercial result rather than the volume of leads.
• Chief Revenue Officer. Common in SaaS and subscription businesses, a CRO typically owns the whole revenue engine — marketing, sales, customer success and renewals — against recurring revenue targets. Where a business has a Chief Revenue Officer, the Commercial Director role is often narrower, focused on pricing, contracts and major accounts, or it does not exist at all.
• COO. Owns delivery: operations, supply chain, service and the cost to serve. The Commercial Director and COO need to agree what the business can deliver profitably before it is sold. Much of the tension in growing businesses comes from commercial teams committing to things operations cannot supply at the price agreed.
• Chief Commercial Officer. In larger groups the CCO is the executive committee role that the Commercial Director reports into, or the board-level version of the same job. The remit is similar; the scale, the board exposure and the span of control are greater.

A practical test: if the person will be judged mainly on order intake, you are probably hiring a Sales Director. If they will be judged on profitable revenue, margin, contract quality and the health of key customer relationships, you are hiring a Commercial Director. Writing that down in the brief is the single most useful step in any Commercial Director search.

Pricing and margin

Pricing is usually the fastest lever a Commercial Director can pull, and the one most often neglected. Many businesses set prices once, add an annual uplift if they remember, and let discounting decide the real price deal by deal. A strong Commercial Director replaces that with a framework: list prices tied to the value delivered, clear rules on who can approve which level of discount, price reviews built into contracts, and regular analysis of the margin actually achieved by customer, product and salesperson.

Margin discipline matters as much as headline price. The Commercial Director should know the true cost to serve each customer — delivery, support, credit terms, bespoke work — and be prepared to reprice or exit relationships that look large but lose money. That requires reliable data from finance and the willingness to have difficult conversations with long-standing customers.

Pricing also carries legal risk that commercial leaders need to understand. Under the Competition Act 1998, agreements with competitors that fix prices, share markets or rig bids are prohibited, as is abuse of a dominant position. Sharing pricing intentions with a competitor, even informally at an industry event, can be enough to create a problem. The CMA’s short guide to competition law risk is written for directors and is worth putting in front of anyone who sets prices or talks to competitors. Directors can face disqualification for serious breaches, so this is a personal matter for the Commercial Director, not just a corporate one.

In consumer-facing businesses the rules have tightened further. The Digital Markets, Competition and Consumers Act 2024 gave the CMA power to decide for itself whether consumer law has been broken and to impose fines directly, rather than going through the courts; that regime came into force in April 2025. The CMA’s direct consumer enforcement guidance (CMA200) explains how it uses those powers. Practices such as drip pricing, misleading reference prices and fake reviews sit squarely in the Commercial Director’s territory, and candidates for consumer businesses should be able to talk about how they keep pricing and promotions on the right side of the line.

Key accounts and customer concentration

In most B2B businesses a small number of customers generate a large share of revenue and an even larger share of profit. Managing those relationships is one of the Commercial Director’s core jobs. That means a named owner for every key account, an account plan that goes beyond the next renewal, senior relationships at more than one level in the customer, and a clear view of where each account is profitable and where it is not.

It also means managing concentration risk. If one customer accounts for a large slice of turnover, the business is exposed to that customer’s procurement decisions, payment behaviour and own fortunes. A Commercial Director should be reporting concentration to the board, setting targets to reduce it where it is dangerous, and building the pipeline of new accounts that makes that possible. Lenders and investors look at this closely in due diligence, so it affects the value of the business as well as its stability.

Contracts and commercial risk

A contract is where commercial strategy becomes binding. The Commercial Director does not need to be a lawyer, but they do need to own the commercial content of the business’s contracts: pricing mechanisms, indexation, payment terms, service levels, liability caps, termination rights and change control. Weak positions on any of these can turn a profitable-looking deal into a loss over its life.

The best Commercial Directors set standard terms and a clear list of what can and cannot be negotiated, agree who has authority to depart from them, and make sure the sales team understands why the terms matter. They work closely with legal advisers on drafting and with finance on the cash and risk effects of what is being agreed. They also keep track of what has been signed: a register of key contracts, their renewal dates and the obligations they contain is basic hygiene that many growing businesses lack.

Bid governance

For businesses that win work through tenders — construction, outsourcing, professional services, public sector suppliers — bid governance is often the most valuable part of the Commercial Director’s role. Without it, the business bids for everything, wins work it should not have priced the way it did, and discovers the problems during delivery.

A sound bid process usually includes:

• A bid/no-bid decision taken early, against agreed criteria: fit with strategy, ability to deliver, competitive position, and the cost of bidding.
• Staged reviews before pricing is finalised and before submission, with operations and finance in the room, so that the price reflects what delivery will really cost.
• Clear approval limits setting who can sign off a bid by value, margin and risk profile, with the largest or riskiest bids going to the CEO or board.
• Risk and assumptions logs that record what the price depends on, so that changes after award can be identified and recovered.
• Post-bid reviews on wins and losses, so the business learns where it is competitive and where it is not.

Bid processes also touch competition law: bid rigging and cover pricing are among the most serious infringements under the Competition Act. A Commercial Director running a bid function needs to make sure nobody in the team is discussing tenders with competitors.

The commercial finance partnership

A Commercial Director who does not work closely with finance will struggle to deliver profitable growth. The partnership runs both ways. Finance provides the margin analysis, customer profitability, cash forecasting and deal modelling the commercial team needs; the Commercial Director provides the pipeline, pricing assumptions and contract terms that finance needs to forecast with confidence.

In practice this often means a commercial finance analyst or business partner working inside the commercial team, a shared view of the numbers that both functions accept, and joint sign-off on large deals. Disagreements between the CFO and the Commercial Director about what a deal is worth are healthy if they happen before signing; they are expensive if they happen afterwards. Many businesses hire the two roles in close sequence for that reason, and our CFO recruitment team often works alongside commercial searches.

Measuring the role: KPIs for a Commercial Director

The right measures depend on the business model, but a balanced set usually covers growth, quality and risk rather than revenue alone:

• Revenue growth against plan, split between new and existing customers.
• Gross margin by customer, product and channel, and the trend in average discount.
• Pipeline coverage and forecast accuracy — whether the board can rely on the numbers it is given.
• Win rate and bid margin for tender-led businesses, including how often delivered margin matches bid margin.
• Customer retention and revenue retention in key accounts.
• Customer concentration — the share of revenue from the largest accounts.
• Contract health — proportion of revenue on standard terms, overdue price reviews, and debtor days on major accounts.

Measures should be agreed at appointment and reported to the board in a consistent format. A Commercial Director who chooses a different set of numbers every quarter is usually telling you something.

When to hire a Commercial Director

There is no fixed size at which a business needs a Commercial Director, but certain signs come up again and again:

• The founder or CEO is still setting every price and approving every significant deal, and it has become a bottleneck.
• Revenue is growing but margin is falling, and nobody can say clearly why.
• Large contracts are being signed on terms that cause problems in delivery.
• The business is moving into tendering, new markets or larger customers that need more formal commercial control.
• One or two customers account for too much of the business.
• Investors or lenders are asking for better forecasting and commercial reporting ahead of a raise, refinancing or sale.

If several of these apply, the gap is usually commercial leadership rather than sales capacity. Hiring another salesperson will not fix a pricing or contract problem.

Permanent, interim or fractional?

A permanent Commercial Director makes sense where the business has a long-term need for full-time commercial leadership, a commercial team to lead, and the budget to support the role. It is the right answer for most established mid-market businesses.

An interim Commercial Director works full-time for a fixed period. Typical uses include covering a sudden departure, running a pricing reset or contract renegotiation programme, fixing a bid process after a loss-making contract, or preparing the commercial side of a business for sale. Interim leaders are used to arriving, diagnosing quickly and delivering a defined change.

A fractional Commercial Director works part-time on an ongoing basis — often one or two days a week. That suits smaller or earlier-stage businesses that need senior commercial judgement on pricing, key deals and strategy but cannot justify or fill a full-time seat yet. It is also a sensible way to build the commercial framework before handing it to a permanent hire. Our comparison of fractional and full-time Commercial Directors goes into the trade-offs, and our fractional C-suite practice covers part-time leadership more broadly.

How to assess Commercial Director candidates

Commercial Directors are usually persuasive in interview — it is part of the job — so the assessment needs to get past presentation to evidence. Useful approaches include:

• Ask for numbers they owned. Margin before and after, pricing changes they made and what happened to volume, contracts they renegotiated. Vague answers about “driving growth” are a warning sign.
• Test pricing judgement with a case. Give them a real or anonymised deal with a discount request and ask how they would handle it, what information they would want, and when they would walk away.
• Probe contract and bid experience. Ask about a contract that went wrong and what they changed afterwards. Ask how they decide not to bid.
• Check the finance relationship. Involve the CFO in the process and ask candidates how they have worked with finance teams. A candidate who sees finance as an obstacle will struggle.
• Check compliance awareness. For pricing-heavy and consumer roles, ask how they make sure their teams stay within competition and consumer law.
• Take thorough references, including from a finance or operations peer as well as a former CEO.

Our guide on how to interview a Commercial Director sets out specific questions. The Institute of Directors publishes a factsheet on directors’ duties that is useful context for candidates moving into board-level commercial roles.

Above all, assess against the remit you have defined, not against a generic idea of a strong commercial leader. A Commercial Director who thrived in a large group with a full pricing team may not suit a business where they will build that capability themselves, and the reverse is equally true. Exec Capital’s Commercial Director recruitment work starts with that brief for exactly this reason.

Frequently asked questions

What is the difference between a Commercial Director and a Sales Director?

A Sales Director owns the sales team and order intake. A Commercial Director owns the terms on which the business trades — pricing, margin, contracts and key accounts — and is judged on profitable revenue rather than volume. Smaller businesses often combine the two.

Does a Commercial Director sit on the board?

Sometimes. In many mid-sized businesses the Commercial Director is an executive committee member rather than a statutory director. If they are appointed to the board, they take on the full legal duties of a director.

Who should a Commercial Director report to?

Usually the CEO or Managing Director. In larger groups the role may report to a Chief Commercial Officer. Reporting into the CFO or COO can work but tends to narrow the remit.

Is a Commercial Director the same as a Chief Revenue Officer?

Not quite. A CRO usually owns the whole revenue engine, including marketing and customer success, and is common in subscription businesses. A Commercial Director role is typically more focused on pricing, contracts and major customers.

Can a fractional Commercial Director work for a small business?

Yes. A fractional Commercial Director working one or two days a week can set the pricing framework, standard terms and bid process and support key deals, giving a smaller business senior judgement without a full-time cost.