In 2021, marketing has become one of the most complicated and fraught business functions of any organization. Do it right and you will find new cus...
Fractional CMO, also known as “CMO-for-hire” is a part-time marketing executive brought in by a (usually) mid-sized business when a company decides to quickly scale its marketing efforts. A fractional CMO is best for companies with $2+ million in annual revenue who need help with branding, PPC, marketing automation, and hiring new talent.
Bottomline on top. If you read this article, you will be able to get the answers to all the questions below - and many more.
What does a fractional CMO do?
Who needs a fractional CMO?
What are the benefits of a fractional CMO?
When should you hire a fractional CMO?
What a fractional CMO is NOT.
How do you measure the performance of a fractional CMO?
How much does a fractional CMO cost?
But before we delve in, two quick points...
Why should you believe what I have to say about fractional CMOs?
Before we proceed, let me tell you a bit about myself. I’m not bragging. However, I do want to get some background out of the way so you know that everything you read below is accurate and relevant.
I have worked as a fractional CMO for over ten years. That statement does not provide enough information for you to trust that what I say comes from a well-seasoned person, however. The length of time I’ve been doing this is not necessarily of any importance. Some people stumble into a profession and then just vegetate without ever becoming experts in their field. What really matters is the knowledge I have gained and how I’ve helped other companies turn around their marketing departments and spending over the last decade.
Picture being in my seat and having to make sense of the following real scenarios and carving a path forward for each company:
- Can you imagine a company spending $150k a month on SEO marketing with no ROI? In this case, the company was spending $150k and getting fewer than 1,000 organic visitors a month after 9 months of investment.
- How about a company spending $500k a month on B2B marketing initiatives (whitepapers, video, case studies, events, conferences) without any tangible way to track the ROI?
- Can you picture an e-commerce company with 200+ employees wasting 10 million in influencer marketing per year and asking why “marketing doesn’t work for us”?
- How does one deal with a $500m private jet company that’s been penalized 3 times by Google for engaging in black-hat SEO tactics?
These aren’t hypotheticals.
This stuff happens.
I’ve worked with companies to fix these and many other issues. Full disclosure: 99% of the time the marketing departments I worked in presented far less “dramatic” CMO challenges. Each of these clients went from losing money on marketing to a 4-8x return on ad spending, from underwhelming search returns to humongous organic search growth and large marketing departments that now know to do the right thing when it comes to marketing.
These are some of the reasons why I believe you should trust everything I say below about fractional marketing/ CMO-for-hire/fractional CMO. Chances are I’ve dealt with harder scenarios, seen more mind-blowing marketing challenges, and helped executives with significantly more unfortunate business and marketing issues than what you are currently facing.
By the way - in this article, I will use the terms “fractional CMO” and “CMO-for-hire” interchangeably because they mean the same thing. And, well, I’m hoping Google will rank this article high in search results.
One last point.
Companies often waste their marketing dollars for at least one of the following reasons (Is this you?):
- Executives ask the wrong questions and set up the wrong Key Performance Indicators for their Marketing Teams.
- Companies have the wrong talent in-house and miss key resources needed to make them successful.
- CEOs have unreasonable expectations about how marketing works and do not invest in the right channels.
- Mid-sized businesses often have the right in-house resources but the wrong marketing leadership.
- Businesses have no idea who their target customers are. They think they know, but really they don’t.
- CEOs are too scattered when it comes to marketing initiatives.
Guess what? If you are experiencing one or more of these six issues you need to seriously consider bringing in a CMO-for-hire/ fractional CMO into the fold.
Now let’s move on to the stuff that matters.
What does a fractional CMO/ CMO-for-Hire do?
Short answer? It depends on your company needs.
But you’re not here for the short answer.
In general, fractional CMOs are brought in to analyze a company’s current marketing activities, budget, resources, branding guidelines, sales objectives, competitors, and growth objectives and to create a marketing roadmap for a company based on all these parameters.
It’s a quick way of saying: a fractional CMO is an outsider who comes in and figures out:
- a) What the heck is going on, from a marketing point of view, within your company?
- b) Are you doing the right things, investing in the right channels and people?
- c) What should your company really invest in, based on your current market positioning, client target list, and list of competitors?
- d) Do you have the right marketing budget to meet your business objectives?
- e) Do you have the right resources to achieve your business goals?
In many ways, the job description of a fractional CMO sounds fairly boring.
Imagine a guy or gal who comes to interview your executive and marketing teams to get a good grasp of what is happening within the company from a business and marketing point of view.
Then picture the same person doing competitive advantage analysis to understand the delta between what you’re currently doing and what you should be doing.
Next, the fractional CMO gives you a report that outlines the roadmap for your organization’s marketing. For this part of the process, the only factor that really matters is the quality of the insights you get from your fractional CMO.
When I begin analyzing a company, depending on its size, history, and leadership team, I sometimes find 200+ things wrong with the marketing department/ strategy. I do my best to maintain focus on fixing the most important issues. Telling a CEO he’s got a longer list of issues to fix than the Wall Street Journal Sunday Edition never bodes well. Getting a clear path for success with a well-defined budget and a list of the resources required to achieve that objective is the ultimate goal of any competent CMO-for-hire/ fractional CMO.
Once this part of the engagement is complete, a fractional CMO will focus on oversight of the plan execution. We will talk more about that below.
At a high level, a fractional CMO is also responsible for leading the marketing team, managing your marketing budget, developing short and long terms marketing goals, reporting on the overall performance of your marketing department, and leading the communication efforts between the CEO and the team responsible for execution (which could be internal resources or external vendors).
Fractional CMOs are brought in to analyze a company’s current marketing activities, budget, resources, branding guidelines, sales objectives, competitors, and growth objectives and to create a marketing roadmap for a company based on… Click To Tweet
Who needs a Fractional CMO?
Let’s start with the process of elimination. Startups usually do NOT necessarily need a Fractional CMO. Neither do enterprises. Here’s why.
Startups: if you’re a startup, your objectives are to build a product, test it, launch it, then go get more funding for the next round. In this context, a CMO-for-hire is NOT usually a resource you will add to your roster. Why? Because the goal of a fractional CMO is to define a marketing plan and oversee the ramping up of resources around a specific budget. In my own practice, I have rarely been assigned to an account and ended up on the other side of a CMO analysis with a budget of less than $500k to $1 million. A Fractional CMO is only as successful as the marketing budget approved across all marketing channels to reach a specific business objective.
Enterprises: if you’re an enterprise, you will almost never need a fractional CMO. You need an actual CMO. The difference is quite simple. A fractional CMO will usually come in and work for 10-30 hours a week for the first 1-2 months of an engagement. Then hours often go down to 5-10 a week, and then to 5-10 a month. If you’re a large enterprise - you need the opposite: you need CMOs working 60+ hours a week on a constant basis to draft complex marketing plans your team should execute against. The only exception here is when you hire a fractional CMO to assess, evaluate and report on the performance of your current CMO and marketing team.
So who does need a fractional CMO?
If you’re a company netting $2+ million in revenue who does not have a full-time CMO, you should consider hiring a fractional CMO. If your annual gross revenue is somewhere between $2-30 million a year, you need a fractional CMO. Anything less - you run into having a diminished return of investment because you cannot afford to implement the recommendations made by a fractional CMO. If your revenue is more than $30 million/ year, you should examine the pros and cons of hiring a full-time CMO.
I know this sounds quite restrictive. What if my business earned $1.7m in revenue last year? Does this disqualify me? Not necessarily.
But one of the early questions I will ask you is: what is your projected revenue for this year and what is your budget for your marketing department? If your budget is less than $250-300k (not for the fractional CMO role, but for all the marketing), the ROI of your overall marketing activities may be difficult to justify.
In short, fractional CMOs are best for well-funded and established companies that need marketing leadership in order to grow the business to the next level.
What are the benefits of a fractional CMO?
Working with a fractional CMO has many benefits. Let’s focus on the biggest issues a fractional CMO usually works on.
Get Immediate Insights
A great fractional CMO/ CMO-for-hire will provide you with almost immediate insights into what you are doing well and where you need to improve.
Because experienced fractional CMOs have seen it all in their career.
I’ve personally worked with over 80 companies over the last ten years.
For an experienced fractional CMO this process is as simple as learning a language and then paying close attention to everyone around you who speaks that language, spotting their grammar mistakes, and correcting them.
To sum up, a great fractional CMO will quickly understand what’s working and what’s not and then work hard to understand your business. The next step will be to devise a marketing plan that will put you on track to increase your bottom line over time.
You Don’t Have Marketing Actionable Insights
“What’s the average order value on a deal or sale?”
“What’s the average lifetime value of a customer?”
Which of your current marketing tactics is most effective?”
If you don’t have the answers to these questions, you don’t have an effective way of collecting actionable insights.
Which is bad, because you need this data if you want to execute marketing campaigns that provide a clear Return On Investment (ROI).
MarTech is the term used to describe the tools and processes usually employed to make sense of your current business in such a way that you can turn those insights into actionable marketing initiatives.
That means putting a system and the right tools in place to fully understand how you can attract, engage, convert and manage customers.
Properly collecting the right data is a foundational element of any mid-sized business that wants to grow over time. If you do not currently have the tools to understand the customer journey, then you need a CMO-for-hire to come in and sort that out.
Experience without the Overhead
According to GlassDoor, the average full-time CMO in America makes around $172,000 / year as a base salary. Add bonuses, recruitment costs, taxes, benefits and you can expect to pay at least $250,000 if not significantly more per year.
Depending on your company size, this investment may be worth making. But for many companies, it simply isn’t necessary. At least not right now!
With a CMO-for-hire, you can get the same expertise that requires a $250k-$300k investment per year for less than a third of this cost (more on that when we talk about CMO rates in the last section of this article.)
In addition, when you hire a full-time CMO, that resource becomes a fixed cost alongside all the other marketing resources you have in-house.
If you currently have 1-10 full-time marketing people on your team, you don’t need a full-time CMO. You just don’t. What you need is someone to come in and create a blueprint for marketing success that can be implemented by either your current staff or other agencies you have contracts with on the marketing side of the house.
Finally, you should absolutely get a fractional CMO if you do NOT have any full-time marketing staff and you are currently outsourcing your marketing functions to third-party agencies. You want someone who genuinely cares about your bottom line to analyze, monitor, and sometimes question what other external vendors are doing to market your business.
To sum up, fractional CMOs bring years and decades of experience, for a fraction of the cost of a full-time resource to help you set up the right blueprint for your marketing efforts.
Establish a Marketing Process
Ideas are a dime-a-dozen; the execution is what makes or breaks a company. The same rule applies to marketing a company.
You may not realize it, but having a successful marketing department is all about creating and following a process that actually delivers results.
When you build a marketing department, setting up a proper process is the single most important - and oftentimes overlooked - part of the job.
Everything from creating a strong MarTech foundation, to choosing the right talent to join your team, to setting up clear priorities for your staff, to outlining the marketing strategies you need to invest in - and the execution of those strategies - all these critical components must have a clearly defined process. And most companies, require a fractional CMO/ CMO-for-hire in order to do it well.
The process is all about rules - what, where, why, how and for how long you should invest in a marketing tactic. How success is defined and measured objectively depends on the process you put in place. Whether you choose to invest in SEO, PPC, conferences, and events, or on optimizing your current marketing website - how you tackle each marketing project relies on a clear process. The process should define what is done and itemize the success metrics by which you should measure your marketing investment.
In short, the process does not only define what your team should do. It also makes sure the set of rules you define are actually followed. A fractional CMO/ CMO-for-hire is critical to making sure you do the right tasks, invest in the right people and initiatives, and that everyone is aligned and executes according to plan.
Fractional CMOs/ CMOs-for-hire will often provide you with a fresh perspective on your company. Great CMOs provide well-defined marketing practices and a good roadmap on how to execute various strategies. They will often be able to articulate current issues and identify actionable ways to tackle them with significant ease. The more fractional CMOs learn about your business, the better they are able to fix the underlying issues causing your marketing team to underperform.
This is the real job of a fractional CMO.
Fractional CMOs are able to guide you through your marketing transformation and provide you with insights that inform your direction as a company based on their perspective as experienced outsiders.
Oversee Day-To-Day Marketing Projects
Another important role of a fractional CMO/ CMO-for-hire is to actually oversee the day-to-day marketing projects of a company. That means making sure everyone is actually doing their job.
Oftentimes, CEOs will undertake this job themselves. They shouldn’t. CEO’s should focus on the future of the company, bringing in new clients, growing their teams, securing funding, and other related tasks.
Marketing, when done right, runs like a factory. Fractional CMOs often come in to oversee that factory.
Train Your Team
Last but not least, a fractional CMO will train your team. I cannot stress this enough. If you hire a great CMO, that person will make sure your team learns how to do its job better. That means providing insights on how to get better at individual tasks, what questions to ask, what tasks to prioritize, and making sense of other important elements to your team.
The opposite is also true. If your current fractional CMO is not able to actually help your team grow needed skills, then that CMO is not great at their job.
After six months of working with a CMO-for-hire, ask yourself this question: is my current team better at their job than they were before? If the answer is yes, then you have a great fractional CMO on your team.
When should you hire a fractional CMO?
The right time to hire a fractional CMO depends on a few factors.
For one, you are lacking marketing leadership inside your company when you have other full-time marketing employees on staff.
Second, you've been growing steadily for the last two years and have at least twenty full-time employees.
Third, you’ve been investing in marketing but the results have been lackluster.
The exact timeline deciding when you should get a fractional CMO is always difficult to pinpoint. Generally, CEOs and other executives often know exactly when they lack the marketing leadership they need to grow their business. They may not know the term CMO-for-hire, but they definitely understand they have a gap in the marketing department of their organization.
Put it this way: if you’re not happy with your current marketing efforts even if you’re doing well from an overall business point of view, you need a fractional CMO.
What a fractional CMO is NOT
If you’ve been reading this article carefully, by this time you already know and understand what a fractional CMO is. To summarize, a CMO-for-hire provides the executive marketing leadership needed to put the right processes, resources, and tactics in place at your company in order to grow your business.
But we also need to address the elephant in the room. That elephant is what a fractional CMO is NOT.
Towards the beginning of this article, I said a company should have an annual revenue of about $2 million before engaging a fractional CMO.
Maybe at the time, that qualification surprised you. Let me tell you why it matters.
Simply put, a fractional CMO can only be successful if he or she has a dedicated internal or external team to manage.
That’s why I said it’s usually companies with $2+ million in revenue who should seriously consider getting a CMO-for-hire.
You need the internal teams - or a series of external partners (think SEO, SEM, Paid Social, marketing agencies) already working on various marketing deliverables before you add a fractional CMO on staff.
Because ultimately, a fractional CMO is not an employee who works 9-5 on specific tasks. That’s not their job. If you have a fractional CMO do SEO work for you, or paid ads or posts on social media, you’re simply paying too much money for the wrong resource.
The role of a fractional CMO is to evaluate your current vendors or internal employees, their day-to-day work, and deliverables, and then determine what optimizations need to be put in place to improve your overall marketing spending.
You should almost never hire a fractional CMO if you’re not already investing in marketing. The only exception to this rule is when you actually want to hire a fractional CMO first in order to evaluate and hire other external agencies or fill open marketing jobs at your company.
A fractional CMO only makes sense when you want to improve your current marketing initiatives and get a better ROI from your current marketing spending. That means you have some internal or external resources ready and available to execute on all the recommendations set forth by the fractional CMO.
How do you measure the performance of a fractional CMO?
Getting a good fractional CMO for your company starts with the interview. You read that correctly. There’s a simple way to quickly weed out fractional CMOs; it’s the same strategy for weeding out marketing agencies as a vendor.
Pay close attention to the questions your potential fractional CMO focuses on. If the candidate is asking questions about your overall business, product, market fit - you know you’re off to a good start. In contrast, if they ask questions about marketing strategies currently in place, and go straight into execution by bragging about what type of strategies they will implement, that’s not a fractional CMO. It is a marketing manager disguised as a CMO-for-hire.
The core capability of a fractional CMO is to understand the business, the team and then and only then talk about specific marketing strategies and tactics.
Every decent marketing manager can execute specific marketing tactics. But that’s not only what you’re looking for in a fractional CMO / CMO for hire. You’re also looking for the leadership needed to build and grow a marketing program. You’re looking for an architect for your marketing castle.
As such, how you actually evaluate the performance of a good fractional CMO depends on this basic concept: hiring a leader of marketing.
So what are the specific metrics you can use if you want to measure the effectiveness of a fractional CMO?
Marketing Strategy and Implementation
If you hired a great fractional CMO, within 3-6 months your company will have defined a clear marketing strategy and begun implementing it. A clear roadmap is defined and approved and the team should be delivering against that roadmap on a monthly basis. Ideally, this roadmap will be designed for at least one year out.
In addition to a clear roadmap, your fractional CMO should have facilitated the creation of a strong brand. What does that mean? Everyone within and outside the company understands your elevator pitch, value proposition, and why you’re the best at delivering one outcome or set of outcomes within your industry.
Fractional CMOs provide Marketing spend leadership
Virtually every fractional CMO should take on the responsibility of managing the advertising dollars spent on paid ads, paid media, and paid social and SEO management. This doesn’t mean they need to actually be responsible for these tactics. But they do need to be responsible for reporting on the performance of these initiatives, monitoring the campaigns and results, and constantly improve and optimize marketing spend. Fractional CMOs manage the internal team or external vendors and are responsible for the final outcome of these teams.
The performance of a great fractional CMO is contingent on them being able to manage the marketing channels, resources, and strategy that will generate additional incremental revenue for your company. Click To Tweet
Fractional CMOs Lead the Commercialization and Marketing Communications Efforts of Your Company
Another well-established method by which you should judge your fractional CMO’s performance is the commercialization of your products and services. A good fractional CMO will focus much of their time on efforts to create revenue for the company. This will be done by evaluating the current pricing strategy, getting customer insights into why they chose your company/product over your competitors, and how to better position your brand in order to generate more revenue for your business.
In short, the performance of a great fractional CMO is contingent on them being able to manage the marketing channels, resources, and strategy that will generate additional incremental revenue for your company.
How Much Does a Fractional CMO cost?
Finally, how much do fractional CMOs cost? This, of course, is a loaded question.
A fractional CMO for a bio-pharma company will carry a different price tag than a fractional CMO for a fintech company.
Fractional CMO companies or independent consultants often charge an hourly rate ranging from $200 to $500 per hour. Some of the big consulting companies charge significantly more. At least 3 of the big 5 consulting companies in America charge around $1,000 to $1,500 dollars an hour. Overall, the hourly rate will be closer to $250-$400 depending on the industry you are in.
The other factor to take into account when hiring a fractional CMO is the amount of time needed by that person to learn the relevant aspects of your company. Since this is an executive role, the CMO-for-hire will need to become very familiar with your company, which doesn’t happen overnight.
For a fractional CMO, you should budget for at least 20-25 hours a week for the first month after they join your team. Among the fractional CMOs I know, the average fractional CMO devotes about 300-500 hours a year on a client, with hours going down starting with the second year. Taking that into consideration, a fractional CMO costs, on average, somewhere between $90,000 and $150,000 per year. This is still half or less than half of the total cost of a full-time CMO.
In a nutshell, fractional CMOs are outside consultants. This means, by definition, they have thicker skins than most full-time employees. This matters because, depending on your CEO’s personality, budget, internal politics, and more, fractional CMOs are significantly more likely to stay with your company and whether the storms than full-time staff would be. It’s a very different mentality from being an employee. And it comes at a fraction of the cost of a full-time resource.
If you made it all the way to this section, congratulations. We covered a lot today. It also means you’re seriously considering hiring a fractional CMO.
As discussed in this article, there are a few key points you need to know about fractional CMOs.
What Fractional CMOs do: they are outside experts brought in to understand, refine and manage your marketing initiatives, spending, and resources in order to improve your overall sales.
Who Needs A Fractional CMO: usually, companies with $2+ million in revenue who lack the marketing leadership required to grow their business to the next level.
What are the benefits of fractional CMOs: we covered the need to get immediate insights about your current marketing initiatives, setting up the tools required to understand how your company is performing from a marketing point of view, getting the necessary marketing leadership without the burden of adding such an expensive resource to your team full-time, getting a talented marketer who can establish a strong marketing process, gaining new perspectives on what marketing channels you should employ, training your team and overseeing day-to-day marketing projects.
When should you hire a fractional CMO: Usually, the best time to do this is when you can afford one and also when you’re not satisfied with the current marketing results while also having the team (or external vendors) in place to execute a comprehensive marketing strategy.
What a fractional CMO is not: In this section, we talked about the fact that your fractional CMO is not a 9-5 employee who gets their hands dirty and executes specific marketing campaigns. That’s because you’re hiring a resource designed to oversee the entire marketing department / outside vendors and to lead the overall marketing strategy of your company. For specific marketing deliverables, you can get much more affordable labor through other means, including full-time resources
How to measure the performance of a fractional CMO? There are quite a few methods that can be used to measure the performance of a CMO-for-hire. Usually, the best metrics include having a great marketing strategy that is actually being implemented within your organization, creating/ refining your overall branding strategy, managing current marketing spending and your overall marketing communications efforts.
How much does a Fractional CMO cost? We also talked about the cost of a fractional CMO. A fractional CMO will usually cost somewhere between $250 and $500/ hour, depending on the industry, and around $90,000 to $150,000 per year.
I hope you found this article interesting and actionable. If you ever need a fractional CMO, don’t hesitate to contact us at [email protected], by calling us directly, or by using the form below.