Fractional Chief Marketing Officers (CMOs) have been gaining popularity in recent years as more and more businesses recognize the benefits they offer. If you're not familiar with what a fractional CMO is, it's simply a marketing professional who works with multiple clients on a part-time basis, providing them with high-level marketing strategy, support, and in many cases, execution. It’s essentially what I’ve been doing for the last two years. In this article, I’ll explain the advantages, and yes - disadvantages - of using a fractional CMO and whether it's right for you.
The Basics
Before I explain what a Fractional CMO does, let’s spend some time going over the basic responsibilities of a CMO.
A Chief Marketing Officer (CMO) is a senior executive responsible for overseeing an organization's marketing efforts. A member of the “C-suite”, the CMO is responsible for developing and executing marketing strategies and plans to promote the company's products or services and achieve business objectives. The CMO plays a key role in shaping the company's brand, reputation, and customer experience. Some specific responsibilities of a CMO include:
Developing and executing marketing plans and strategies to increase brand awareness and generate revenue.
Conducting market research and analysis to gain insights into customer needs and preferences.
Overseeing the development of marketing materials, such as advertisements, brochures, and content.
Working with other departments, such as sales, product development, and customer service, to ensure a consistent customer experience.
Developing and managing the marketing budget and ensuring that resources are used effectively.
Monitoring and analyzing marketing metrics to measure the success of marketing campaigns and adjust strategies as needed.
Staying current with industry trends and technology to ensure that the company is competitive and relevant.
Building and maintaining strong relationships with key stakeholders, including the board of directors, customers, partners, and the media.
In short, the CMO is responsible for driving the success of an organization's marketing efforts and for building and maintaining a positive image for the company. The role of the CMO is critical for the success of a business and requires a combination of strategic thinking, marketing expertise, and leadership skills.
Those are some big responsibilities. How do you know when your company is ready to bring on a CMO?
The Right Time to Bring on a CMO
A company may be ready to hire a CMO when it's reached a point where the marketing needs have become too complex or extensive for its current staff to handle. This could be marked by reaching a milestone such as revenue, number of customers, increased competition, or the entrance into a new market or product launch.
Hiring a CMO is a sign that the company is committed to investing in its marketing efforts and recognizes the importance of having a dedicated leader to drive the strategy and lead the team to achieve a higher level of success. A company may also be ready to hire a CMO when they have reached a certain level of maturity and have established a solid foundation for their business, including a clear vision and mission, well-defined goals, and a strong reputation in the market. In such a case, a CMO can help take the company to the next level by bringing in fresh perspectives and insights and helping to shape the company's direction for future growth. This could include bringing on more staff and/or agencies.
What a CMO Will Cost You
As with any position, there are a variety of factors that determine the compensation level of a CMO including the size of your company and team, geographic location, industry, maturity of your business, the marketing budget, experience level desired, and many others.
According to industry resource, Comparably, the average salary of a CMO in the tech industry ranges from $48,000 to $700,000, with a median salary of $245,000 . The middle 57% of CMOs make between $245,000 and $392,000, with the top 86% making $700,000.
In addition to salary, there are benefits such as health insurance, retirement plans, and bonuses, which can add to the overall cost of hiring a CMO full time. According to a recent study by the U.S. Bureau of Labor Statistics, employers in the private sector pay on average 29.5% of total compensation on benefits.
When you do the math, a full-time CMO could cost your company upwards of $351,800 including benefits - which could be cost-prohibitive for many organizations, especially smaller companies. For smaller companies, a fractional CMO may be a more cost-effective option, as they typically charge lower rates for their services on a part-time basis.
Fractional CMOs May be a Good Option
Looking for, onboarding, and training a full-time CMO is a big commitment in time and money. Hiring a fractional CMO may be a good solution before committing to a full-time CMO or may be a good stop-gap while you’re looking for your full-time executive.
A fractional CMO provides the same, if not a higher level of expertise and support for a fraction of the cost. You only pay for the time you need, making it more affordable for businesses with limited budgets. While fractional CMOs have different cost structures, whether it’s hourly, project-based, or retainer-based, you are only charged for the hours you need. Like full-time CMOs that have a wide range of salaries, fractional CMO hourly rates vary by geography, level of expertise, scope of work, and other factors. In general, you can expect to pay $150 for a newer, less experienced CMO to $500 or more for someone with 15+ years of experience that has worked with large brands. This may sound like a lot, but remember you're not paying bonuses or benefits. I am a proponent of a retainer arrangement because it gives both the client and the CMO a more consistent and predictable fee structure that can help with planning. Furthermore, the hourly equivalent on a retainer structure is often more reasonable than an hourly rate arrangement. With a fractional CMO, you get:
Access to expertise: Fractional CMOs bring a wealth of experience and knowledge from their work with multiple clients. They have a broader understanding of the marketing landscape and can offer valuable insights and best practices that may not be available to in-house marketing teams.
Flexibility: A fractional CMO can be a flexible solution for businesses that have fluctuating marketing needs. You can increase or decrease the amount of support you receive based on your business needs, without having to make any long-term commitments.
Fresh perspective: Fractional CMOs bring a fresh perspective to your marketing efforts. They can help you identify new opportunities, challenge your assumptions, and provide unbiased recommendations. This outside perspective can help your business grow and stay ahead of the competition. Plus you get the benefit of the fractional CMO’s broad industry knowledge gained from working with clients across many industries.
Focus on strategy: A fractional CMO's primary focus is on high-level strategy, rather than day-to-day execution, although many fractional CMOs handle execution as well. This allows your in-house marketing team to focus on the tactics that drive results, while the fractional CMO provides the overall direction and vision for your marketing efforts.
The Downside of Using a Fractional CMO
While using a fractional CMO offers a cost-effective alternative to hiring a full-time CMO, there are some potential downsides to consider:
Limited Availability: One of the major downsides of using a fractional CMO is that they are typically only available for a limited number of hours each week or month. This can be a challenge for companies that need more continuous support and guidance on their marketing efforts, or need their CMO to be “on call”. My personal philosophy is that I'm an extension of my client’s leadership team, so regardless of the number of hours that I’m contracted for, I am always accessible to every one of my clients as though I'm a full-time member of their team.
Lack of Integration: A fractional CMO may not be as well-integrated into the company as a full-time CMO, which can lead to a lack of cohesion in the marketing strategies and plans. For example, depending on the company, there may be certain systems such as the CRM that the fractional CMO will not have access to. This means that the fractional CMO may be limited in the data they are privy to which could affect the ability of the CMO to develop in-depth insights and analysis that could yield better and faster results. I’ve been fortunate that my clients (with signed NDAs in place) have been comfortable granting me access to their platforms and databases which has allowed me to be more effective in delivering faster and more positive results for them.
Lack of Dedication: Since a fractional CMO is not employed full-time, the CMO may have other commitments and may not be able to devote the same level of time and attention to your company as a full-time CMO would.
Incomplete Understanding of the Business: Since a fractional CMO is not with the company full-time, they may not have the same depth of understanding of the company's operations, culture, and customers as a full-time CMO. However, good fractional CMOs should be willing to immerse themselves in their client’s business and culture so that they can be more effective in their role. And as long as the company is willing to share data, this really shouldn't be an issue.
Conclusion
In conclusion, a fractional CMO can be a valuable asset for businesses of all sizes. They provide cost-effective, expert support, flexibility, a fresh perspective, and a focus on strategy. Whether you're looking to elevate your marketing efforts or simply need some support to take your business to the next level, a fractional CMO may be just what you need. However, it's important to weigh the downsides and consider whether it's the right choice for your business. If you need a more comprehensive and dedicated marketing strategy, a full-time CMO may be the better option.
If you have any questions, please reach out.
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