What is a Fractional CMO?
How Fractional CMOs Provide Marketing Leadership at a Fraction of the Cost
A fractional CMO, or Chief Marketing Officer, is a marketing executive or consultant who provides part-time services to an organization. The beauty of hiring a fractional CMO is that it allows smaller organizations that may not have the budget for a full-time CMO to reap the benefits of having a CMO at a fraction of the cost.
What Fractional CMOs Provide
Unlike marketing specialists or technicians, who may only provide a single service, such as paid advertising, SEO, creative copywriting, web design, or graphic design, fractional CMOs help organizations define and execute their broader strategic goals. In most cases, they will train existing employers or freelancers or hire new ones.
Several goals of a fractional CMO may include:
Conducting in-depth market and competitor research
Helping an organization define or refine its mission statement, competitive edge, and key value proposition
Helping define buyer personas and refining strategy to reflect this
Planning both major and minor marketing campaigns
Ensuring that different marketing campaigns, such as Facebook ads, Google ads, SEO, and influencer marketing, all work together in concert
Helping to cultivate a rapt audience via high-quality content and thought leadership, such as blog posts, e-books and whitepapers, and email newsletters
Training or retraining current or new employees and ensuring the company’s marketing team is aligned
Ensuring that the marketing team and its objectives align with other departments, such as sales/business development, product development, and finance
When To Hire A Fractional CMO
If your business is growing and you have a small marketing team but feel like your marketing strategy lacks direction, it could be the right time to hire a fractional CMO. In addition to the lower cost, since fractional CMOs generally don’t have the long-term job security of a traditional marketing executive, they may be much more motivated to provide better results in a shorter period of time.
Fractional CMO Pricing
Fractional CMO pricing can be expensive, but depending on your individual needs, it could have a great return on investment. Generally, fractional CMOs charge at least $150-$200/hour, and contracts often begin at $3,000-$5,000/month for a 6-month contract.
Some fractional CMOs, especially more experienced ones, may require a monthly retainer to be paid upfront, while others may be fine being paid at the end of each month.
Fractional CMO KPIs and Metrics
Lifetime customer value explanation. Source: Clevertap.
Like a full-time CMO, a part-time CMO will focus on helping a business report and improve upon multiple key performance indicators (KPIs). Some of these include:
Lifetime Customer Value (LCV): This measures the value of a customer to a company over the entire sales cycle (or cycles). Lifetime customer value is more important to companies that offer recurring product or service, such as software-as-a-service (SaaS) companies, and may be less important to a company that typically only deals with a customer once or twice in their lifetime (for instance, a residential real estate brokerage).
Cost Per Customer (CPC): Cost per customer, or CPC, sometimes called cost per customer acquisition (CPAC) is the amount of money it takes to acquire a single customer.
Cost Per Lead (CPL): This measures the cost to generate one lead, and can be specific to a single marketing campaign or can be a broader metric across all the company’s marketing campaigns.
Conversion Rate: This is the rate at which leads convert to closed sales (i.e. customers).
Brand Equity: Brand equity is the intangible value that a company’s brand carries with it, and while essential, brand equity can be difficult to measure. However, this doesn’t mean you shouldn’t try, particularly if you have enough customers that you can send them surveys for feedback.
Annual Recurring Revenue (ARR): This is a company’s annual revenue that is likely to continue due to ongoing subscriptions or contracts. This is more important for companies like SaaS startups or other subscription-based businesses and less important for businesses that make fewer, larger sales.
12 Questions to Ask a Fractional CMO
If you’re thinking of hiring a fractional CMO for your business, there are a few questions you should definitely ask, including:
What do you think of our current marketing strategy?
In general, what makes effective marketing? How about for companies in our industry?
How would you describe our company’s competitive advantage, and how can we use that in our marketing efforts?
Have you developed marketing strategies for businesses our size, in our industry, or both? What metrics can you share regarding your past successes, such as increases in revenue, decline in cost per customer acquisition, or otherwise?
How do you measure ROI for specific marketing campaigns and a company’s total marketing efforts? How would you set up your CMO dashboard?
How would you make the most of our current budget?
What software tools do you prefer to execute and analyze marketing campaigns?
If you became CMO tomorrow, what would you do first? What would you change? Ideally, where would the company (and its marketing efforts) be in one year, five years, and ten years?
How will your marketing leadership efforts align with the company’s longer-term financial goals (i.e., VC raises, national or global expansion, private equity acquisition, IPO, etc.)?
How do you hire and retain great talent?
What is our biggest marketing opportunity? What is our biggest risk?
What marketing channels will be the most effective for our company in the short and long term (i.e., PPC, influencer marketing, SEO, etc.)?
8 Questions a Fractional CMO Should Ask You
While asking in-depth questions of a potential CMO (part-time or otherwise) is essential, you shouldn’t be the only one asking questions. In fact, it’s equally important that a potential CMO gets to know your company and its needs as early as possible in the interview and selection process. This will help them better pitch their potential marketing strategy and customize it to your needs.
Who makes decisions at your organization, particularly regarding the marketing budget? How are these decisions made?
What kind of authority and responsibility do you plan to delegate to this position?
What is your current marketing budget for this year and your planned budget for the next few years?
What do you think your company’s main competitive advantage is?
Who are your biggest competitors, and what have you learned from them?
What are your company’s long-term financial goals? Do you want to expand to a certain size, get acquired, or go public? When?
What results do you expect to get from hiring a CMO? When do you expect those results?
What is currently your strongest marketing channel? Your weakest?
Many of these questions are quite similar and may seem repetitive, but asking and answering these questions will save you time in the long run.
Fractional CMO Authority and Responsibilities
It’s particularly important that your CMO candidate understands and is comfortable with the decision-making process at your company. If your CMO candidate has only worked with small startups and is used to getting a quick yes from the CEO when it comes to hiring and ad spend, and you make financial decisions with a slow-moving 12-person committee, there could potentially (but not necessarily) be a mismatch in attitudes and expectations.
It’s also important for a fractional CMO to understand their authority over hiring and firing employees. For example, if your marketing team is bloated and doesn’t have the skills to execute your CMOs planned marketing campaigns, do they have the authority to let someone go? Conversely, if they want to bring someone on board quickly to solve a needed skills gap on the marketing team, do they have the authority to do so?
Fractional CMO Tech Stack, Analytics, and Automation
Sample Google Analytics dashboard. Google Analytics is often an essential part of most companies’ marketing tech stack.
Another important aspect to consider when hiring a fractional CMO is their technical knowledge and the software they’re comfortable utilizing.
Unless your organization is extremely technical (and even if it is), a great CMO doesn’t necessarily need to know how to code, conduct an engineering analysis, or solve math problems. However, they need to be comfortable enough with technology to, at the very least, understand all the pieces of marketing and sales-related software your company is using, how they fit together, and (if possible) how they can be streamlined.
Ideally, a CMO can create (or improve upon) your company’s current marketing dashboard and, if possible, utilize automation to streamline processes. While you can’t automate everything, you can automate marketing emails, text messages, social media DMs, employee reminders, future social media posts, and behavioral retargeting ad campaigns with “if this, then that” logic.
In Conclusion: The Right Fractional CMO Can Bring Exponential Results
If your organization needs more marketing leadership-- or a push in the right direction, hiring a fractional CMO could be a great next step. However, before pulling the trigger (or even starting the search process), you should define exactly what you want out of your ideal candidate, both qualitatively and quantitatively.
For instance, in terms of qualitative characteristics, you may want someone who has great communication skills, experience working with small, fast-moving teams, and is great to work with. Regarding quantitative expectations, you can hold the CMO responsible for reaching highly specific goals in revenue, leads, conversion rates, website traffic, and overall brand impressions.
In fact, one study reported that 80% of CEOs don’t trust their CMO, and a large part of that is due to unclear expectations on both ends-- making this trust issue almost fully avoidable with the right candidate.
In the end, while hiring a fractional CMO is much less expensive than hiring a full-time Chief Marketing Officer, it still isn’t cheap, and you’ll have to make your own calculations when deciding if it will result on a positive ROI for your business. However, the more you know about what you want, and what your organization needs, the more likely your new fractional CMO will be a smashing success, rather than a disappointing dud.
