Fractional CMO - What is a Fractional CMO? All You Need To Know
You’ve already heard of the Fractional CMO concept. Whether you saw it on a job board, or perhaps a consultant suggested hiring a fractional CMO to grow your business in a fast and sustainable way.
In this article we’ll talk about what a fractional CMO actually is, how it became a thing and why over the next decade you will be seeing more and more successful companies looking for one.
The value of the C-Suite and the Chief Marketing Officer (CMO) role
The internet has drastically changed how businesses operate. Once traditional ways to do business have significantly evolved into more accelerated and lean approaches. Even the contemporary ways which gained popularity with the tech revolution in the startup world have further evolved.
The best example of this phenomenon is the rise of the fractional C-Suite. A C-Suite in a company is a group of top executives who run and manage the most important aspects of the business.
In serious companies, especially those seeking an eventual exit, the C-Suite typically consists of a Chief Executive Officer (CEO), a Chief Financial Officer (CFO), a Chief Technology Officer (CTO), a Chief Marketing Officer (CMO) and a Chief Operating Officer (COO).
Many companies will also have a Chief Revenue Officer (CRO), and some will also have a Chief People Officer (CPO) and a Chief Information Officer (CIO).
The role of the Chief Marketing Officer is particularly important since the CMO leads revenue-increasing efforts and helps the company stay on the trajectory of sustainable growth.
In other words, the CMO helps the company fund new hires, create new products, explore new markets and keeps the company from falling into traps that come with doing marketing and advertising.
Over the past 20 years, the startup world has recognized the importance of a team when it comes to building a company. One of the first things founders will do is look at their potential for putting together a C-Suite dream team for their business.
The importance of C-Suite has only gained additional credibility over the past few years, with companies typically offering valuable equity in exchange for expertise.
The role of a Chief Marketing Officer (CMO) to this day continues to be one of the most important pieces of a startup-to-unicorn journey. Especially in fields where the original founders are very technical and excel primarily in product development.
How the concept of a Fractional CMO came to existence
As we stated in the previous section, the ways businesses operate continued to evolve to go in a more lean direction which allows for more flexibility and not breaking the bank.
This has resulted in more and more startups looking for part-time CMOs. With the understanding that the role of a CMO is a strategic one and that typically the hands-on work and execution is done by the team that the CMO manages.
Very often, however, these companies don’t have a marketing department to start with. Which is another reason why they consider hiring a part-time CMO, to help them build that team.
There’s a lot of nuance in marketing and founders who aren’t marketing experts can easily end up in a situation where they hire professionals who can’t effectively contribute to their team, basing their hiring decisions mostly on company values and traits of the applicant, while looking at the applicant’s professional capacity in a purely superficial fashion.
Business owners are not to blame for these scenarios since it’s notoriously difficult to hire people for a role you yourself aren’t deeply familiar with. So this outcome is expected.
Hiring a part-time (a fractional) CMO, allows the CEO to delegate the vetting, hiring and training process of new hires to a marketing expert who knows how to create a powerful marketing team.
Furthermore, it’s not just that the role of a CMO does not need to be full-time, there’s also the fact that businesses appreciate investing in high-yielding opportunities. And hiring a fractional CMO, as opposed to a full-time CMO, can offer the best return on investment a company can make.
Since the Chief Marketing Officer is a strategy, management and system-creation type of position, hiring someone for 5-15 works per week typically works the best for most companies. However, there are various setups when it comes to the fractional CMO role, we discuss them later in this article so keep reading.
What exactly does a Fractional CMO do?
Similar to a full-time CMO, a fractional CMO will look at the current situation of the company, discuss future plans with the founder and craft several ways to proceed in getting to that desired outcome.
At Protimera, we specialize in working with SaaS businesses through a Fractional CMO deal, so we’ll provide an example of how this typically works with SaaS businesses.
Regardless of the stage in which the business is at, there’s always a need for a purposeful marketing strategy. Unfortunately, successful founders usually have a specialty in their product’s industry. Being a top expert in building software or creating an EdTech product in an IT (or another) field, doesn’t leave much room for becoming a full-on marketing expert.
For this reason, founders will look for a fractional CMO, usually working 10-20 hours per week and helping them create a custom marketing strategy that will make their competition irrelevant.
As the Founder of Protimera, I work directly with our SaaS clients as their fractional CMO. I don’t outsource the CMO service, since it cannot be outsourced. Most marketing agencies will get on a call with you with their top marketing and sales person, you will be impressed with their knowledge, you will hire the agency, and then when you do hire them, the work will be outsourced to someone less knowledgeable.
All of our clients have had this experience before working with us, and no matter how many times the agency claims to have trained their staff to be as good as them, the actual working relationship almost always deteriorates with the account owners usually disappearing or managing way too many client contracts to be fully present to help the client.
Now, if it’s so difficult to outsource marketing execution to a team of employees or freelancers, how difficult would it be to outsource the Chief Marketing Officer role, a purely strategic role which requires years of experience seeing various products perform differently in multiple markets?
This is why it’s important to speak to the person who will be acting as your fractional CMO, and not a salesperson who will connect you to a fractional CMO. The experience of the actual CMO needs to be vetted and scrutinized. After all, this is the person that will impact the future of your revenue, ultimately influencing where your company will be in 5 or 10 years. Make sure they will impact your business positively.
As a fractional CMO, I will first look at the following aspects of the business:
1. Customer prototype (buyer personas)
2. Customer acquisition system (funnels, value ladders, how is the revenue currently made?)
3. ARR or Annual Run Rate / Annual Recurring Revenue. This number is exceptionally important for SaaS businesses who want to eventually sell their business. I’ll also look at other key metrics such as the churn rates, growth over time, user activity in the back-end, as well as the front-end.
4. Future plans of the company compared to previous performance and current position of the company in the marketplace.
5. Is the Founder planning an exit? If so, it’s crucial to start planning for it at least 36 months before the planned date of selling the company. Many founders will want to exit, but their business strategy will not allow them to get the valuation they’re looking for. Planning an exit is of utmost importance.
6. The offers. What are the company’s core offers, where is the money being made, what are the Unique Selling Propositions of the business?
7. Bridging the data with customer-facing materials. This step allows us to not just look at how the marketing materials are performing, but also why. Instead of showing up to a company and evaluating their sales copy for example, we also want to see how each piece of copy is performing and then hypothesize why that’s happening. This helps us incrementally improve the performance over time.
Depending on the answers we find when we ask these questions, we will work together to determine the next steps. Sometimes, there are several bottlenecks that make a negative impact on the business’ revenue and the Founder is under the impression that it must be the product being subpar. So they work hard to make the product even better.
But then we find that there are key marketing best-practices missing which creates issues that are not product-related. I’ll provide a quick example of this down below.
User retention is the most important aspect of any SaaS business. The truth is, you’re offering the product at lower prices exactly because it’s a subscription. So you’re counting on the customer sticking around for long enough to have a satisfactory customer lifetime-value.
What happens? Well, you build a great product and you assume that because the product is great, users will keep using it. This is one of the biggest pitfalls for SaaS founders.
No matter how good the product is, it’s always important to understand that the user’s attention span is rapidly diminishing and that users need help to use the product. It’s also important to understand that users might be impulsive and decide to cancel the subscription because of a quick emotional trigger which doesn’t allow them to sleep on it. This results in users canceling in the heat of the moment and then simply not coming back, because coming back is work.
This is why the cancellation path is one of our most important tools for 1. Understanding the customer better over time, 2. Reducing churn and 3. Producing onboarding materials which increase the likelihood of customer’s success with the product.
Yes, that means that we use the cancellation path to improve the customer experience from the moment they sign up.
As a fractional CMO, I don’t spend all of my time looking at the front end, I also have to evaluate user activity and understand why the customers are doing what they’re doing.
A quick example for this situation as well. If we collect user activity in real-time and we find that users cancel on Day 6 (relative to the date of signup), we have to look into the materials they are or not getting. Sometimes it means that we have to motivate the customer to check out a specific feature, and sometimes we have to modify the onboarding process to make sure the customer knows exactly when is the best time to use the product, for how long and which outcomes should be expected.
I’ll stop myself from fully digressing and sum up this section. What does a fractional CMO do? A fractional CMO does whatever a full-time CMO would do, just in a leaner way. Fractional CMOs will hire and train professionals, manage the team, set KPIs, work directly with the CEO to ensure sustainable growth over time, handle PR, branding, and often work with the product team.
Working with the product team isn’t solely for marketing purposes (promoting features and products), but also for interpreting collected data to help the product team improve the final offer the company wants to promote.
Depending on what the company needs, the fractional CMO will have different tasks and projects to manage, but there should be a large set of skills that the CMO possesses.
Which skills should the fractional CMO know?
There are different ways to become a fractional CMO, but one thing’s for sure - you have to be a marketing expert. Not a self-proclaimed marketing expert, but someone who can pull up a portfolio of companies you’ve worked with and discuss how you helped them get to the next level.
In marketing agencies, there is a well-known role of the Creative Director. To become a Creative Director, one should be a master designer, or a master copywriter. But.. with one or two additional skills: team management, as well as selling.
Since the Creative Director is also a client-facing role in marketing agencies, selling is crucial for taking that next step and going from a designer or a copywriter to a Creative Director position.
Well, the path to a Chief Marketing Role is similar. You should have extensive knowledge and experience in a specific marketing skill, but also have the experience of at least managing a team of people who handle other skills.
In my personal experience, I started off as a copywriter. I wrote sales copy for websites, sales pages and emails. But I also worked as the Head of Sales and Marketing and a Marketing Director where I was able to manage a team of people who would be in charge of SEO, paid ads, design, branding, etc. In my case, I also have hands-on experience with all of the marketing skills that I also manage.
So I always manage the SEO team, but I also worked on SEO previously. But this isn’t mandatory, you should know enough to understand if the work being done is taking you in the right direction and also be able to understand if your team members are actually performing or just selling you the results.
Having hands-on experience in different marketing skills makes things easier for me, but besides having one core marketing skill, you should also be a top strategist.
Creating a custom strategy from scratch, collecting, analyzing and interpreting data, and making sure the revenue of a company is growing, while pinpointing what to improve along the way, takes time to master.
That’s exactly why so many business owners and CEOs hire fractional CMOs, because they understand that being a fractional CMO requires not just being able to execute marketing tasks or being proficient at one skill, it requires a deep passion for the field of marketing and an obsession to constantly learn new skills, read case studies, research and test tactics, etc.
To sum up this section, I recommend starting off with learning copywriting and then branching out to learn SEO, paid advertising and data analytics, while also getting the experience in marketing team management. Not just because it’s my personal path, but also because it will allow you to have the most career opportunities as a marketing professional.
How much should you pay for a fractional CMO?
The answer to this question depends entirely on your budget, preferences and what stage your business is in. I’ll provide a general range here as a guideline.
It’s possible to hire a fractional CMO for as little ast $50/hr, however it’s unlikely that a marketing expert working with several companies will take on a retainer at only $50/hr. The hourly rates that fractional CMO demand can go up to $1000/hr in many cases. Especially if the rate is for less hours per month (10-15 hours per month).
The sweet spot for most tech companies will be in the $100-$300 if we’re talking about a part-time CMO with 10-20 hours per week.
But the real answer is that it really depends on how much you need a fractional CMO and what results you believe an expert CMO will bring to your business.
I’ve declined retainers because the math did not add up for the business. As a fractional CMO, I’ll get paid. But the business is in such a position where their funds should be allocated differently and invested into other departments. The moment I recognized this during discovery calls, it became clear to me that they should not hire a CMO at this stage at all.
But in another example, if the company has an Annual Run Rate (ARR) of $1.5M and it goes to $3.5M in less than a year from the date they hired me, then it’s clear that this company made the right decision to look for a fractional CMO.
This isn’t a fictional example, but exactly what happened with one of my fractional CMO clients. The reasoning is simple: the founder had a great team and they built a great product, but they didn’t market their product properly.
The example I provided is what companies are looking for. Whether the company will invest $5,000, $10,000 or $20,000 per month in a CMO becomes less relevant if the revenue increase easily offsets that investment. Of course, that doesn’t mean you should just hire the most expensive person.
Hire the fractional CMO that can look at your marketing processes and show you strategies and tactics that you didn’t know before and that are bound to work. An aha moment is important when hiring a CMO because you don’t want to hire someone who knows as much as you. In some cases, this is acceptable if you’re already a marketing expert and all you’re doing is delegating away marketing tasks because you don’t want to be bothered with marketing, but in that case you already know what to look for in a CMO.
What is the best setup for a fractional CMO?
How many hours do you need per week or per month? You might not have the answer to your question, and you might even be under the impression that you need someone full-time.
That’s why it’s important to consult with a fractional CMO and see what they say. They must be able to tell you how many hours are necessary for your company to get from point A to point B. They should also be mindful of your budget to ensure that you can pay for additional marketing resources (marketing execution: media buying, design, outreach).
What I do when I start working with a new SaaS client is assess their budget and see what they will need from a marketing standpoint. Most CEOs aren’t aware of all the pitfalls and tasks that need to be done. So an audit is the best way to proceed. Usually a 4-week audit period which includes analyzing all the marketing materials, funnels, customer data and the offer, with the audit conclusion offering a recommendation for the retainer: how many hours per month the company needs.
Some companies want to get started yesterday and the best way to proceed in that case is to go for a 10 hour-per-week retainer and then modify the retainer as needed.
Make sure you’re not locked into any contracts as some companies will tell you it’s “cancel anytime” but the contract stipulates large penalties or mandatory retainer periods. Always read the contract before you sign it. When I work with my clients, we often hire agencies for specific marketing tasks, and we often have to go back to the agency to change the contract before we sign it.
Don’t worry, it’s not that they’re malicious and trying to just take your money, it’s just that many of them will hire a lawyer to write a contract template. They get what they pay for since the contracts end up being extremely favorable for the agency, but terrible for their clients. If they have their contract written by a lawyer, you should be reading it with your lawyer.
What is Protimera and why am I talking about fractional CMO services?
My name is Dan Kerchum and I’m the founder of Protimera, a marketing training platform. But I don’t just create content, I’m also a fractional CMO for 5 different tech companies, having worked with over 30 companies over the past 9 years.
I’ve decided to build Protimera to make my knowledge more accessible for those business owners and aspiring marketing professionals who otherwise wouldn’t be able to afford it. However, I’m still in the industry and I continue offering CMO services to tech companies and I also continue crafting copy for companies.
I wrote this post both for business owners who are looking to learn more about fractional CMO services, and for marketing professionals who want to know what it takes to become a fractional CMO.
If you’re a business owner and you’d like to get in touch to see how I can help you as a fractional CMO, click here and book a consultation with me. As I said, I don’t outsource your contract, I will work with you directly.
In case you’re an aspiring Chief Marketing Officer who wants to start and advance their career, click here and get started with our free guide.
I hope you’ve found this post helpful. Stay aggressively patient.
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