1CMO

Growth strategy | Advisory | Force multiplier

Fractional CMO

Should You Consider a Fractional CMO?

by

“The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese proverb.

Many leaders struggle when making marketing decisions for their organization.

The challenges are not only around marketing program spend, but also marketing leadership. The reality is marketing spend historically has a well-deserved bad reputation for lack of measurable ROI, and successfully leading marketing is…in a word…difficult for many CMOs.

Yet, the value of an experienced Chief Marketing Officer (CMO) in defining and executing the growth plan for an organization can be significant. When the right CMO role archetype is hired, and given the budget and permission to do what is necessary, they can help propel a company to new heights of growth and profitability.

A proven bridge strategy to get from having no marketing leader to a full-time member of the leadership team is the concept of a fractional CMO. However, it is not always easy to know the optimal time to bring on a fractional CMO.

The Value of a Fractional CMO

A fractional CMO, essentially, is a part-time executive engaged by the organization, on some type of fixed or on-going contract basis, to lead the marketing effort.

A fractional CMO can provide all of the benefits of a full-time CMO. For those organizations with large growth aspirations but constrained budgets, a fractional CMO can deliver results at a lower cost and reduced risk. The value proposition for a fractional CMO can be very compelling.

Here are a few of the more common situations, or use cases, where a fractional CMO can make a lot of sense for your organization:

  • Emerging Growth Company – If you are a smaller organization but have big growth plans (annual revenue between $5-50M) you likely cannot afford or justify a full-time CMO. By engaging a fractional CMO you will free up cash allowing you to invest in marketing programs and to bring on experienced implementers.
  • Distracted Founder/CEO – In many startups or emerging growth companies it is not unusual for the founder/CEO to wear many hats. In addition to the proverbial “chief bottle washer” title, they may also be functioning as the head of marketing and sales. Obviously, as a company scales this becomes untenable, and relief must be found. Bringing on a fractional CMO enables the CEO to delegate their marketing leadership duties.
  • Leadership Vacuum – Perhaps because of an executive departure, or by virtue of rapid growth, the marketing group is suffering from a lack of vision or leadership. In many organizations, marketing is an after-thought behind sales and thus largely ignored, delegated to a well-intentioned but inexperienced staffer, or handed off to outside agencies who have their own agenda. In either case, the marketing function and potential for growth go sideways without a capable leader. An experienced fractional CMO can create or rebuild a marketing organization, and provide mentorship and growth opportunities to the team.
  • No Growth Strategy – The senior leadership team and board of directors want growth, but are not sure how to develop a strategy or plan to achieve it. This is a common situation where an experienced fractional CMO can come in, quickly assess the situation, and take the lead on developing and executing a growth strategy.
  • Marketing / Sales Divide – This is another common ailment found in many organizations who desire growth. When marketing and sales are misaligned, or entirely dysfunctional, an experienced fractional CMO can quickly get things back on track. It is a truism that in the best run go-to-market organizations, marketing enables sales.
  • Missed Market Opportunities – The organization consistently lags industry growth. New products or services have failed to launch effectively, and languish as a result. Aggressive competitors are consistently winning deals that the company used to win. These are all signs of a failed strategy (or the lack of a strategy at all!) A seasoned CMO is the answer.
  • Lack of ROMI Clarity – The company invests in marketing tactics like tradeshows and search engine ads, but can’t track marketing attribution and has no idea what drives new business. This lack of insight and metrics means the company has no clarity on marketing ROI (ROMI). An experienced CMO will ensure this gets fixed.
  • Transformation Required – There are cases where a CEO, board, or private equity company want to get an honest assessment so that they can affect change on the go-to-market organization. This change management process is a perfect use case for a fractional CMO to parachute in, triage, and rebuild the marketing (and sometimes sales) function.

Before making a decision on whether a fractional CMO is right for your organization there are some basic questions to answer first.

Do You Even Need a Head of Marketing?

Say what?!

I know, it is an odd question to ask in an article focused on CMO’s. However, it has to be asked.

The truth is, many organizations simply do not need a senior level head of marketing, nor can they afford the cost.

Here is a quick assessment you can use to help answer the question of whether your organization needs, and can justify having a CMO. Rate each of the following criteria for your organization, on a low-to-high (or, small-to-large) scale:

  • Size of company
  • Company growth ambitions
  • Product/service value to customers
  • Market size
  • Geographic scope
  • Market ecosystem complexity
  • Lead sources
  • Complexity of buyer’s journey
  • Customer lifetime value
  • Length of sales cycle
  • Sales channels
  • Size of go-to-market (marketing and sales) team
  • Marketing budget allocation
  • Industry competitiveness

Scoring: In general, the higher you rank your organization on most or all of the above criteria, the more you can justify and should consider having a CMO on your leadership team.

Once you have made the decision that you do need a CMO, the next task is to think about your business situation.

What Type of CMO Do You Need?

Perhaps the most important, yet often neglected, question is what type of CMO do you need? Much like every organization is different, so are marketing leaders.

CMOs are defined by their experience, temperament, and leadership style. There are a number of well-known archetypes for the CMO role, ranging from Growth Driver to Innovator to Renaissance Marketer. Which archetype you need in the CMO role will entirely depend on a number of factors unique to your organization. Carefully thinking about factors like your business model, competitive position, and company maturity, will help to point you in the right direction.

If you get this wrong, your new CMO will be severely handicapped from the start because they will not match what your organization needs. Get it right and you will enjoy a huge running start towards success. This requires an honest self-assessment by the CEO, the senior leadership team, and often the board of directions of an organization.

Unfortunately, very few organizations give the CMO archetype question the consideration it deserves.

Full-time or Fractional CMO?

After determining the need for a CMO, and thinking about the ideal archetype for the role, leaders have one final question to answer: Is this a full-time role, or should they consider a fractional CMO?

To be clear, there is no right answer, only the answer that is right for your company and your unique situation. While it is often driven by economics, that is not always the case. For every large organization that loves the flexibility and cost control of a fractional CMO, there is a small organization where a full-time CMO drives outsize value and is more than worth the investment.

Here are some additional considerations for strategic leaders to think about when making the decision about engaging a fractional CMO versus a full-time CMO:

  • How frustrated are you with your current go-to-market (marketing and sales) program? If you are spending money and not seeing results, could your current leadership and strategy be the problem? A fractional CMO can join your firm on a consulting basis to assess the current as-is situation, triage, and strategize a new approach.
  • How important is growth? Can you afford to wait? Or, do you need a comprehensive growth strategy quickly? A fractional CMO, can join your organization immediately, and add value from day one.
  • Can you comfortably afford a full-time CMO; along with an appropriate amount of marketing program spend? If not, a fractional CMO will free up budget that can be devoted to marketing programs.
  • Can you successfully recruit and retain the caliber of CMO you need, with the right experience, skillset, and leadership presence? Oftentimes you will be able to find more seasoned executives who want to work as fractional CMOs.
  • Has marketing, and/or sales oversight, become a distraction for the CEO? Is it time for a professional go-to-market leader to step in and relieve the company leader to focus on other priorities or areas of the business where they are stronger?
  • Is your organization, and company ownership, risk taking? Or, more risk averse? Engaging a fractional CMO can provide a high degree of flexibility and control, versus taking on the burden of a highly compensated executive.
  • How important is operating leverage and flexibility? If you are committed to running a lean organization, then a fractional CMO is a good option.

The final decision usually comes from a careful consideration of cost, potential impact, flexibility, and required expertise.

In balance, if there is any doubt it is always safe to go down the fractional CMO route. The CMO role is just too strategically important to leave vacant. You can always revisit the decision down the road, and you will find that many fractional CMOs would consider full-time roles if the opportunity is compelling enough.

Next Steps…

A fractional CMO is a part-time professional who can deliver incredibly strategic marketing results for your organization. As an experienced marketing leader, they will develop growth strategy and own execution of the plan, while building a robust go-to-market organization.

So, to answer the question posed in the title of this blog: when is the right time to engage a fractional CMO? The correct answer for most organizations who want to grow is “sooner rather than later.”

What are you waiting for?

If you are uncertain about next steps, or want to have a deeper discussion about your organization, give me a call.

-Onward

The Value of a Fractional CMO

by

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”   —Sun Tzu

The responsibility for developing go-to-market strategy and ensuring sales alignment belongs to the Chief Marketing Officer (CMO).

High performing companies know that marketing enables sales, and that this strategic partnership is a proven ingredient to driving sustained growth. So, clearly, having a CMO on the leadership team is important for any organization that wants to grow. However, it is not an easy job to fill or perform. There are a number of common traps making it difficult for CMOs to be successful.

Adding to the challenge, there are also many different archetypes of the CMO role. This can make it hard for organizations who want a CMO to find the right one – the marketing professional whose background and experience match what the organization needs to thrive.

Despite all these challenges, progressive leaders of organizations often decide they need the expertise of a Chief Marketing Officer but then discover they cannot justify, or afford, to hire for a full-time role. Are they simply out of luck?

Fortunately, there is an emerging solution. Organizations can engage the services of a fractional CMO.

What is a Fractional CMO?

The concept of a fractional executive is not new. For years, companies have been bringing in seasoned experts to fill interim roles or do projects on a flexible basis. This type of role is becoming more common across all the traditional C-suite and senior leadership positions, including the CFO, VP Finance, CHRO, CIO, and increasingly the Chief Marketing Officer (CMO).

A fractional executive is a functional leader contracted to take a part-time or fixed-term position with a client organization. They are often very experienced former executives who want more flexibility in their working life, enjoy consulting, and like having a variety of clients.  

A fractional CMO, as the name implies, provides all the strategic value that a full-time Chief Marketing Officer brings to the table. They perform the executive function of a CMO without forcing the client company to commit to the full-time salary and burden of a person in that role.

Perhaps the best way to think of it is as a flexible, part-time CMO. To borrow a technology term, you might call it CMO as a service. 

Is a Fractional CMO Different From a Marketing Consultant or Agency?

The short answer is “Yes” – a fractional CMO is different from a marketing consultant or agency.

How? Well, it comes down to the difference between strategy and execution. A fractional CMO will develop a comprehensive strategy and execute, whereas consultants or agencies have their own business model bias:

  • Marketing Consultants – Consultants are the experts you engage, typically on an hourly or project basis, to develop a strategy or perform a specific tactic. Once the solution is developed, either you are on your own to execute the plan, or the service is narrow and not a comprehensive marketing solution.
  • Marketing Agencies – Agencies, on the other hand, typically give away the strategy so that they can sell you their services. The more services they provide, the more money they make. This creates a conflict of interest that is difficult to sort out if you do not have an experienced marketing leader on the team.

A fractional CMO is that experienced 360-degree marketing leader who you want on your leadership team!

They will work directly with the CEO and other functional leaders to develop a growth strategy, and a plan to execute it. The fractional CMO then takes ownership of the growth plan to manage the marketing program and team. Since the fractional CMO is not in the business of selling services, there is no bias in their recommendations – there is no risk that they will recommend marketing tactics that are not suited for the business.

What Does a Fractional CMO Do?

In short, a fractional CMO does everything a full-time chief marketing officer would do. They are the senior executive responsible for growth strategy, marketing execution, and for ensuring alignment with sales.

Great fractional CMOs will also get their hands dirty. In collaboration with the CEO and the Sales leader, they will take the lead on developing a growth strategy and plan. Depending on the needs and capabilities of the marketing team, an experienced fractional CMO will roll up their sleeves and dive into those areas or activities where they can add the most value. Powered by a strong bias to action, a fractional CMO always leads the implementation and achievement of the growth strategy.

The Value Proposition for a Fractional CMO

There are many benefits to having a Chief Marketing Officer helping define the future and drive the growth of your organization. However, not every organization can afford or justify having a full-time salaried executive like a CMO on the executive team. These organizations can benefit from a fractional CMO who will deliver much of the same value proposition with lower risk and less cost.

Significant benefits from engaging a fractional CMO include:

  • Results – A fractional CMO will deliver measurable results. The statement of work (SOW) that the CMO and CEO define together will define the deliverables and KPIs that marketing owns. The fractional CMO will ensure that marketing delivers the results you need.
  • Experience – A fractional CMO brings a depth and breadth of experience that typically spans across many roles and industries. This is often much greater than what your organization could recruit on your own.
  • Cost Effectiveness – Because you are not paying the salary and benefits of a full-time high-caliber executive, there is reduced overhead cost to have a CMO on your leadership team.
  • Expertise – An experienced fractional CMO will have expertise across a number of marketing strategies and tactics. They will bring with them an extensive toolset of best practices.
  • Flexibility – Fractional CMO engagements are structured to provide the organization with the flexibility to quickly ramp up or down depending on what the business needs and can afford. This just-in-time approach to staffing an executive position is very attractive to many organizations in times of uncertainty.
  • Strategic Impact – A fractional CMO will hit the ground running. With a clear SOW and a mandate to transform marketing, they will cut through political red tape and internal hurdles, in order to drive growth. This accelerated time to productivity helps to deliver results quickly.
  • Marketing Leadership – Providing marketing leadership, oversight, and mentoring for the go-to-market team is a big part of what a fractional CMO can deliver.
  • Strategic Advisor – A fractional CMO will also provide the CEO and other leaders with unbiased strategic counsel by leveraging their experience and “outsider” perspective. This is a valuable point of view which internal teams often do not have access to.
  • Improved CEO Focus – Many CEOs get distracted by managing the marketing function, and managing marketing/sales friction. An experienced fractional CMO is a self-managing executive that will lighten the CEO workload by managing all aspects of the marketing department. This frees the CEO up to focus on other important aspects of the business.
  • Accountability – A properly structured fractional CMO engagement ensures that the CMO develops the growth strategy and implements the marketing plan. There is a built-in accountability for performance and results.

Common Use Cases for a Fractional CMO

As you can see, there is a significant value proposition for engaging a fractional CMO. What might be less clear are the common situations, or use cases, where a fractional CMO makes the most sense. Here are a few:

  • Emerging Growth Company – For smaller organization that have big growth plans (yearly revenue between $5-50M) engaging a fractional CMO will free up capital to bring on experienced implementers and accelerate growth.
  • Leadership Vacuum – Perhaps because of an executive departure, or by virtue of rapid growth, the marketing group is suffering from a lack of vision or leadership. In many organizations, marketing is an after-thought behind sales and thus largely ignored, delegated to a well-intentioned but inexperienced staffer, or handed off to outside agencies who have their own agenda. In either case, the marketing function and potential for growth go sideways without a capable leader. An experienced fractional CMO can create or rebuild a marketing organization, and provide mentorship and growth opportunities to the team.
  • No Growth Strategy – The senior leadership team and board of directors want growth, but are not sure how to develop a strategy or plan to achieve it. This is a common situation for an experienced fractional CMO to come in and take the lead.
  • Missed Market Opportunities – The organization consistently lags industry growth. New products or services have failed to launch effectively, and languish as a result. Aggressive competitors are consistently winning deals that the company used to win. These are all signs of a failing strategy (or lack of one!) A seasoned CMO is the answer.
  • Lack of ROMI Clarity – The company invests in marketing tactics like tradeshows and search engine ads, but has no idea what drives new business. This lack of insight and metrics means the company has no idea of its marketing ROI (ROMI). An experienced CMO will ensure this gets fixed.
  • Marketing / Sales Divide – Another common ailment in many organizations. In cases where marketing and sales are misaligned, or entirely dysfunctional, an experienced fractional CMO can quickly get things back on track. In the best run go-to-market organizations, marketing enables sales.
  • Change Management – There are cases where a CEO, board, or private equity company want to get an honest assessment so that they can affect change on the go-to-market organization. This is a perfect use case for a fractional CMO to parachute in, triage, and rebuild the marketing function.

Three Possible Actions…

When confronted with the strategic imperative to grow the organization, leaders can take three possible actions:

  1. Do nothing – Sadly, this is the most common path. Instead of investing in marketing leadership, the decision is to continue down the same path, expecting a different result. The poor results are entirely predictable, and preventable.
  2. Go sideways – Due to fear, uncertainty, and a lack of conviction, some leaders hand off marketing to a junior member of the marketing team. This well-intentioned and convenient solution generally does not yield much growth by way of results. After kicking the can down the road for a while, thoughtful leaders revisit the decision and bring in a seasoned marketer to define strategy, tactics, and execute.
  3. Go forward – Strategic leaders recognize the value of delegating the creation and execution of a growth plan to an experienced CMO. If they cannot justify a full-time CMO, they will engage a fractional one.

Getting Started with a Fractional CMO

A fractional CMO is a part-time CMO who delivers full-time strategic results. As an experienced CMO, they will not only develop growth strategy, but also own execution of the plan.

Regardless of the use case that causes an organization to consider engaging a fractional CMO, they will deliver significant value – from developing strategy, to aligning marketing and sales, to mentoring a marketing team, to market positioning and messaging.

Every growth organization needs a CMO…and with the fractional CMO option, there is no excuse for not having one.

-Onward