It’s a question people ask me a lot. CMO is the acronym for Chief Marketing Officer. The idea behind creating the CMO position was to give a marketing person a seat at the table in the C-Suite. It’s a tumultuous position. According to MarketPro, the average term of a CMO is only 18 months, yet according to a study done by Frank Germann, of Notre Dame, companies with a CMO perform 15% better, on average, compared to companies without one. So what is it that CMOs do to help their companies grow (and get them run out of their positions in a year and a half)?
Let’s take a look.
Position the Company, Brand and Offerings for Today and the Future
To earn a seat in the C-Suite, a CMO must be able to understand where the CEO wants to take the company, and then start working toward that goal. Equally important, a CMO must grow revenue today, particularly in a publicly held company. Quarterly earnings calls won’t wait for tomorrow, particularly in the current business environment, and too many bad ones will get you fired! Maybe that’s why the tenure of a CMO is so short.
Of course, positioning begins with defining target customers and then aligning your offerings to what they want while differentiating from the competition. Customer base is one of those things that should be clear, particularly for established companies. But oftentimes when we consult with our clients, they tend to have faced some disruption in the market, and their customer base isn’t as clear as it once was.
There are three common scenarios: (i) clients may want to target a new market segment that they’ve never targeted before; (ii) they want to launch a new offering that may – or may not – be valuable to their existing customers; or (iii) their offerings are out of line with new entrants into the market.
We like to work with our clients to set business goals based on a three- to five-year view of the market, and then align the marketing goals so they contribute to reaching the business goals.
Proactively Address Competitive and Market Threats
Positioning the company, brand and offerings and planning for the future is all well and good, but as Mike Tyson famously said, “Everyone has a plan until they get punched in the face.” If your business is like a lot of the companies we work with, you have a long line of competitors and market threats lined up to punch you in the mouth. Every strategy formed in the boardroom creates a reaction in the marketplace. Competitors will have something to say about your plans, and this is where a good CMO earns one’s keep. Helping your organization anticipate and respond to market threats is the only way to keep your strategy on track.
A good CMO will anticipate how competitors will respond to your marketing message. If you introduce a novel new offering, will competitors respond with a "me too" message or will they one-up you? Maybe your competitors will keep their current offering but lower the price to compete with you. Not anticipating their reactions and developing a counter response can short circuit your growth plans.
A good CMO is always a bit paranoid about competitors and should provide an outside-in view of the organization that keeps the management team from drinking its own Kool-Aid. This is particularly true today with many disruptive new threats entering new markets.
Help the Company Grow Revenue
Bing, bing, bing! That’s the right answer. If a CMO isn’t growing revenue, they have to go. It all goes back to the four Ps: Price, Product, Promotion, and Place. So many VPs of Marketing and CMOs only focus on the third P – promotion – and that, in my humble opinion, is why their tenure is often times shorter than expected.
Only focusing on the promotion of existing products isn’t much of a value add. Companies can work with creative agencies and PR firms to promote themselves, so why do they need a CMO?
If CMOs aren’t providing the voice of the customer and competitive analysis for the product development people, they aren’t doing it right. If they aren’t trying to optimally price those offerings to capture the greatest value, they aren’t doing it right. If they aren’t researching and finding the best channels to market, and today that goes way beyond tradeshows and industry print magazines, they aren’t doing it right. By not doing it right, I mean they are not going to achieve the growth the C-Suite is expecting, and they won’t be earning their seat at the table.
What’s a Fractional CMO
Having looked at what CMOs do and what they are responsible for, let’s take a look at what a Fractional CMO does. The short answer is, a Fractional CMO does the exact same stuff described herein. Fractional CMOs work with companies where it might not be practical to have a full-time CMO, but the company’s management team sees the need for some extra strategic horsepower to help grow its organization. The Fractional CMO can work on a part-time basis for an extended period of time, or they can work on a short- to medium-term project full-time.
For instance, as a Fractional CMO, I have two clients that I support on an ongoing basis. I helped one of them with a workshop to define how they should be positioned in the marketplace. Now, I work with them several days a month to help them keep their aggressive sales and marketing efforts on track for the year.
For a larger client, I work two days a week to help the company build its internal marketing capabilities and get the word out about its brand. This client had neglected marketing in the past but now finds itself in a much more competitive market than at any other point in the company’s history. The client now wants to drive growth and needs a bit of help to leading its internal marketing team.
I also do project work. One client is a startup that is unsure about how to price its offerings, so I’m helping build their pricing strategy. This should be about a month-long project.
Although these engagements are all different, they all have one thing in common. I am working with the C-Suite of their respective organizations to drive top-line growth.
I hope this article sheds a little bit of light on the mysterious world of a CMO and the even more elusive Fractional CMO. If you have any questions about either, feel free to comment below or reach out to me for more details. I can nerd out about this stuff all day. (And have.)