Best Practices for Hiring the Right Fractional CMO for Your Startup
As the business world continues to evolve at an unprecedented pace, startups are constantly looking for innovative ways to gain a competitive edge without spending their precious capital too early. When times are tough, marketing is typically the first area impacted, and a full-time Chief Marketing Officer (CMO) is just not within budget. Rather than go without, startups are turning to fractional CMOs, a part-time, consultant-like marketing executive with extensive marketing expertise and experience.
In this piece, I outline why startups should consider a fractional CMO and some best practices when doing so. I want to thank the thought leaders I interviewed researching this topic, including Matthew Benner (co-founder of Chief Outsiders), David Wiser (CEO of Wiser Partners, an executive search), and Tom Russell and Brad Simmons, two successful fractional CMOs.
The Dilemma of Hiring A Full-Time CMO For A Startup
An experienced marketing leader familiar with your category can bring a wealth of knowledge and expertise to a startup, having already worked with multiple companies and experienced first-hand what works and doesn’t work. They can provide valuable insights and advice on the best brand positioning, which is especially important in creating long-term marketing strategies the startup will invest in for years to come.
The challenge in hiring a full-time CMO is the hefty price tag. According to builtin.com, the average compensation for a CMO is close to $300,000 (and can easily reach over $500,000 once options, signing bonuses, and other expenses are included). Given all the other required investments, that’s usually not an affordable option for most startups.
An Affordable Alternative To Lead Marketing for a Startup
Hiring a fractional CMO is a cost-effective way to access high-level marketing expertise without paying for an expensive full-time executive. In addition to being more affordable, a fractional CMO offers several other advantages, including flexibility and objectivity. They can work part-time or on a project basis, with the business only paying for services needed at a particular stage of growth and development.
A fractional CMO offers flexibility a full-time CMO may be unable to. They can work on specific projects or campaigns, then move on to their next assignment at a different company. This means startups can get invaluable expertise without committing to a long-term employment contract and its associated cost.
As an external consultant, a fractional CMO can often give the CEO an objective perspective on the startup’s marketing strategy. They are not tied to internal politics or biases to offer an unbiased assessment of the startup’s market opportunity and current unmet needs.
What A Startup Might Lose By Hiring A Fractional CMO
There are some trade-offs the startup CEO must consider when deciding if she would prefer to hire a fractional CMO versus a full-time CMO:
- Level of Commitment — Due to the short-term nature of the role, a fractional CMO will probably have a different level of commitment to the CEO and the startup’s long-term success compared to full-time executive team members. This could eventually lead to friction with the fractional CMO, who will not be around (or accountable) if the marketing results fall short of what was promised.
- Availability During Crunch Time — A fractional CMO might also not be available at critical times for the start-up. This can lead to delays in projects and campaigns and resentment from full-time employees. A fractional CMO may have little influence on the CEO and Board in approving the marketing strategy or plans. She will have to work within the constraints and limitations the startup sets up, which can dampen the impact of the long-term results.
Disadvantages and Benefits of Being A Fractional CMO
There is a different level of job security in being a fractional CMO compared to a full-time CMO (but to note, the average full-time CMO tenure is just 18 months). They have less influence and control over the marketing strategy and plans than a full-time marketing executive, thus limiting their ability to generate the desired business outcomes. In addition, fractional CMOs are likely not eligible for the long-term incentives many startups offer their full-time executives.
On the other hand, if a marketing executive has reached the point in their career where they want more flexibility in who they work with and what they do, a fractional role might be ideal. That’s especially true if they have a successful track record in a specific category (such as Fintech) and can successfully market their experience and knowledge to a select number of startups looking for that type of seasoned marketing leader.
What Makes Sense for Most Startups
A fractional CMO will likely overcome the availability and accountability challenges and provide critical category expertise needed during the initial growth of a startup. In addition, a fractional CMO gains valuable experience working with multiple startups on various marketing challenges and campaigns, especially if it’s in the same category. This can help the startup maximize the “just in time” learning that an experienced fractional CMO can uniquely deliver.
If the startup team is looking to hire a robust fractional CMO who is going to be successful and happy, here are some best practices that could help you hire the right marketing leader:
- Be Clear On What You Need — Are you seeking deep category expertise? An outstanding strategist or brilliant tactician? Someone who has worked at multiple successful startups? Ensure you articulate your startup needs and that the candidate offers a strong match to deliver what your company seeks.
- Get Alignment on Key Deliverables and Timeframe — What timeframe are you looking for help? Are you looking for “one and done,” or should your marketing leader plan to continue for a more extended period based on initial success results? What are the key “must haves” that need to be completed during that initial engagement?
- Agree on Roles and Responsibilities — This is especially important if the fractional CMO will be working with other full-time executives since there is a tendency for other functions to want to take over various aspects of marketing. You need to ensure your marketing head knows they have the authority and resources to deliver the results they are signing up to deliver.
- Due Diligence — Consider what you value most in this critical role before interviewing candidates, and be sure to validate through references that they can deliver what they claim.
Getting The Best of Both
If you are clear on what your startup needs and can find an experienced marketing executive in your category who can deliver your requirements at a reasonable cost, a fractional CMO hire can be an outstanding investment that will be invaluable for years to come.
Thomvest works with business leaders who grow an outstanding portfolio of fintech, proptech, cloud infrastructure, and cybersecurity companies. We’d love to hear from you if there is something we can do to help your startup succeed in any of these categories. You can reach me at kip@thomvest.com.
