That was the first question a skeptical prospect asked me the other day as he looked at me over his bifocals. I looked him straight in the eye and said, “It depends.” I wasn’t trying to be coy, it’s just that different fractional CMOs charge different amounts. It also depends on how much of their time you will need. Here’s the longer answer.
The good ones cost a lot, and they are worth every penny in most cases.
The way you pay a fractional CMO can vary depending on the CMO. They’re never salaried, rather they work on an hourly basis or on a retainer. From the jump, the employer will be aware of the payment terms, so there are no surprises when working with their new CMO.
What to look for in a fractional CMO
The skills it takes to become a CMO can be extensive, but the list includes the following:
They must be strategic and able to sit down with the leadership of a company to understand all of the short-term, mid-term and long-term revenue goals for the organization, and then form a strategy to help meet those targets.
The person must have a “been there, done that” mentality. This means they are seasoned in the industry and drawing on experience.
They need to understand your market and industry.
A fractional CMO must be able to respond to and overcome unexpected changes in the market and your business.
If you already have a small marketing staff and are looking for the CMO to be a leader, make sure they have the management skills to motivate and lead a team.
Someone who will understand and get along with your sales team is a MUST.
They also must have a keen understanding of both modern and classic marketing tactics and when to use them.
Last but not least, a fractional CMO is someone who takes it personally, has some skin in the game and keeps your business welfare at heart.
The benefits of a fractional CMO
The list of benefits are lengthy, so let’s begin.
You get more talent for less money. You do not have to pay for a fractional employee’s benefits since the position is contract. You also don’t have to pay a portion of their taxes or worry about paying for unemployment like you do with a W2 employee. That’s a big deal because according to U.S. Department of Labor, benefits add about 30% to an employee’s total compensation package. So whatever salary you have in mind, you can add 30% to that when calculating the true cost of the employee.
A fractional CMO is less risky. Since you can release them if they aren’t the right fit, it is less disruptive for your team if you need to let them go. Let’s face it: Marketers can be hard to hire. They all interview well, so it can be hard to know if you’re making a good decision until it’s too late. By then they have been on seat for months or even years, and your company still hasn’t met revenue that you would have with the right hire.
Technical organizations particularly struggle with this. Plus, many times the culture of a technology company is not a good fit for a marketer, and they wind up leaving just as they start to understand the client’s technology, markets, and industry.
You get a fresh perspective. Fractional CMOs usually work with companies from a variety of industries and can bring an outsider’s view to creative problem-solving. They also pick up best practices from other industries that can translate to your industry, which you can put to use for your business.
You also get sage wisdom at the right time. We had a client whose business was heavily impacted at the beginning of the COVID-19 pandemic. We had just launched a marketing campaign geared to respond to the changing market. The client was understandably very stressed. To be honest, I was, too. We were in uncharted water along with the rest of the world. We went back over our strategy, and the client’s stress level decreased a bit. As it turns out, the campaign worked, and the client wound up having the best month in the history of the company. Having an advisor you can rely on when the chips are down can be very powerful for a leader.
Signs that you need a fractional CMO
It can be hard to tell if you need a fractional CMO, but here are some indicators that you might need some strategic marketing help.
Your business has plateaued or is not growing fast enough. Business not what you want it to be? All companies have growth periods and non-growth periods, but if your business plateaus for too long, it might be time to take a strategic look at your marketing efforts and get back to a growth phase. Fractional CMOs can provide that nudge you need without having to hire a full-time marketing person, commit to a full-time employee and increase your payroll.
You are not winning in the market. Are your competitors winning more than their fair share? If you see one of your regular competitors or a new entrant growing faster than you, that could create big issues down the road. You don’t want your company to become an “also-ran.” It might be time to take a strategic look at your messaging and positioning, and fractional CMOs are good at that.
Mergers and acquisitions. Whether you are buying another company or looking to exit yours, having a seasoned fractional CMO can add serious value. If you are looking to sell your company, the sell price is going to be based on a multiple of your EBITDA. Why not pump that number up with some good marketing? Also, you will want to get your sales pipeline looking strong to entice investors on your potential earnings. If you are buying a new company, that could mean new customers, markets, offerings and competitors. Your positioning, messaging and value propositions will most certainly need to be re-examined.
Big changes to the business. Has your company undergone a big transition? Has the management team changed? Are you entering a new geography or launching a game-changing new offering? You will want to make the most of these changes and have a strategic marketing person on seat to help you do so.
Your strategic marketing person just left. If you had a great full-time marketer on staff who moved on for green pastures, rushing the decision to hire their replacement is tempting. But for the reasons I motioned earlier, this can be risky. Hiring an interim fractional CMO that can get up to speed fast and keep the company on track can help you take your time to find the right person. We even help our clients recruit, interview and hire the perfect fit for the company.
The final chip
For the right company, a fractional CMO can make a massive contribution to the success and growth of that company. Having an experienced marketer at the helm can help you achieve your revenue growth at an affordable and less risky engagement. If you think a CMO could add value to your organization, let's chat.