In the current economic situation, B2B SaaS companies are looking at creative ways to cut costs while continuing to grow. One of the topics that many are considering is bringing onboard a fractional CMO. Put simply, a fractional CMO is a seasoned CMO who works for your company several days per month, and you pay their company for their services.
The idea isn’t a new one. In the technology space, we are used to bringing on developers to plug gaps in our team or fill competencies. Agencies sell developers following an FTE (full-time equivalent) approach, and companies contract with agencies for a set number of days and a set skill set.
This fractional approach is common in finance and accounting as well. Many smaller companies use services that provide fractional CFOs to help their business grow. Put simply, the idea of fractional employees is bringing new competencies and skills that you couldn’t afford full-time to help you at the highest levels of your business.
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Do You Need a CMO?
The first question to ask yourself when you’re considering bringing on a CMO (fractional or otherwise) is: do you need a CMO at all? At Nituno, we work with fast-growing B2B tech companies, and there is a very clear stage where they need a CMO. The common wisdom is that this is around Series A or B funding when they need to institute processes and begin to scale up their business.
However, the reason that is the common wisdom has more to do with economics than with reality. A fast-growing tech company needs a marketing strategy much earlier than Series A. In fact, they may struggle to raise Series A at all if they can’t show ROI on marketing spend and what they project the ROI will be from investing the VC’s money in marketing.
The truth is that, based on my experience, you need a marketing strategy as early as the seed stage. Now, to be clear, I don’t think you need a full-time top-tier CMO at that time, but you need a strategy.
What About a Marketing Agency?
Many B2B SaaS companies hire marketing agencies to set their marketing strategy. The problem is that 99% of marketing agencies are built to help you scale marketing that already works. They don’t understand the test-and-learn approach that you need to build a SaaS marketing strategy from scratch. SaaS marketing is different from marketing established products or services. Many SaaS companies need to build demand and target top-of-funnel prospects and that’s not something that most marketing agencies can do.
Yes, I am saying this as the cofounder of a marketing agency. However, I cofounded Nituno specifically to help B2B SaaS companies that need to set marketing plans and scale up because we saw a massive gap in the market here. However, we’ve built a boutique B2B SaaS marketing agency that sells fractional CMOs into B2B SaaS companies, so our company isn’t really like the majority of marketing agencies.
What if I Hire a Junior and Train Them?
The next question I get from B2B founders is: why don’t I hire a junior and train them? I understand the thinking process here, juniors are cheaper and if you get the right person they can be really ambitious. The problem is that as the founder of a company, your time is limited. You can’t afford to spend 20 hours a week training even a high-potential junior.
A junior might cost you 60% less than a CMO but they will take up 100% more of your time. Also, this whole approach assumes that you’re an expert in building a marketing strategy, which isn’t the main responsibility of most B2B CEOs.
I wouldn’t recommend hiring a junior and expecting them to be a VP Marketing or a CMO. However, I think hiring a smart, hard-working junior to be a marketing assistant is a brilliant idea. They could work with you and with your fractional CMO and with that approach, they will save you money and expand your capacity. However, you won’t be expecting too much of them or needing to invest too much of your own time.
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How Much Does it Cost to Hire a CMO?
As with everything, the cost of hiring a CMO depends on a lot of different factors. What skills are you looking for from the CMO? Do you want them to be an expert in your space and at scaling up B2B SaaS companies? Or, do you want a brand name CMO whose former companies lend gravitas to your company even if he or she isn’t really an expert in scaling a company? Finally, your geographic location impacts the cost a lot as well.
For example, a CMO based in New York City will set you back about $225,000 plus benefits and taxes. Realistically, you’re looking at spending almost $300,000 when it’s all said and done. In San Francisco, it’s even more expensive. The average CMO sets you back $420,000 plus taxes and benefits, meaning the total cost is around half a million dollars.
If you’re not based in the US, the costs are a little lower but still very high. In London, a CMO will cost you £110,000 (about $130,00) in salary, or about £140,000 ($160,000), including taxes and benefits. In Paris, you can expect to pay €175,000 ($172,000) in salary or about €215,000, including taxes.
The high price tag of a CMO is really one of the main reasons why B2B SaaS companies wait until Series B to get a CMO, even if they need a marketing strategy much earlier. After all, if you raised $10 million in Seed, you can’t, with a straight face, spend $1 million of that on a CMO in San Francisco.
How Can a Fractional CMO Help?
As mentioned earlier, a fractional CMO is a seasoned CMO who joins your business for a predetermined number of days per month. Fractional CMOs let companies bring on marketing experts earlier in their development, helping them to build their marketing strategy.
For around the cost of a junior marketer, you can hire someone who has been through this all before with over ten years of experience in the space. A good fractional CMO will save you money on your marketing budget because they will know how to manage paid advertising, inbound, content marketing, and SEO.
They will start by auditing your current lead generation and understanding how your business has grown. They will speak with customers to understand the buyer persona and refine it via surveys and market research. Finally, they will draft a marketing plan, incorporating a test-and-learn phase if necessary. The marketing plan will discuss the tactics as well as the strategy. Put simply, it will describe the ideal marketing mix and how to use paid content marketing, events, and partnerships to grow the company.
A solid marketing plan will help you raise money because it will show VCs specifically what marketing activities they will be investing in and give them the confidence that you will spend the money strategically, following a pre-agreed plan.
A Good Fractional CMO isn’t One and Done
Finally, a good fractional CMO won’t disappear after the plan is written. Instead, they will oversee the implementation of the plan and adjust it based on performance. They will also work with your team to help upskill your juniors and train them to improve their performance. Admittedly, the first few months are likely more days of work than once you get to the implementation phase of the plan. This is because researching, surveying, and writing a marketing plan is a lot of work. However, the best fractional CMOs continue to work with you to help you hit your marketing goals just like an internal CMO would, but for less money than a CMO would cost you.
Fractional and Freelance Aren’t the Same Thing
The advantage of working with a fractional CMO agency is that if one person in the company doesn’t have all of these skills, they will have colleagues to hand off aspects of the job. No one is an expert in everything and if you hire a freelancer or a part-time employee, they will have gaps in their knowledge. On the other hand, a fractional CMO agency will have other people on staff with different skills. They will also have internal processes to make sure they produce the highest quality work.
As an example, at Nituno we are a fractional CMO agency. We offer what we like to call “a Fractional CMO as a Service” for B2B SaaS companies. We have a robust internal Quality Assurance process whereby another CMO-level employee actually audits and verifies the work of their colleagues. The upside for customers is that they aren’t just getting one person, they are getting a team of FTEs and other high-level CMOs who will double-check all of the work.
In many ways, this CMO agency approach is actually better than hiring a full-time CMO. However, we do recommend to customers that they hire internally after they raise Series B. In fact, we have an offboarding process whereby we work with the new full-time CMO to hand off work and explain the decision-making processes.
What B2B Companies Should Look for in a Fractional CMO
There are a lot of companies and agencies selling fractional CMO services, so it’s important to have a set of criteria with which to judge providers. As mentioned above, you should not work with part-time CMOs or freelancers because they won’t have the additional resources to deliver the best strategy for you. What’s more, there can be tax implications with part-time workers or independent contractors depending on where your business is located and where the provider is. Instead, you want to work with an established company.
Make Sure They Know Early Stage B2B Tech
Marketing B2B technology or technology services is very different from B2C or other B2B spaces. You want CMOs that have worked in small or medium-sized companies. Don’t be swayed by fractional CMOs who have worked in big companies, even if they are in the tech space. Marketing in a big established company is a completely different beast from marketing in an early-stage B2B company. Big companies have bigger budgets and agencies for every marketing tactic. A fractional CMO who comes from that space, won’t be well suited to your business.
Look For Longer Term Fractional CMOs
I’m not saying you need to sign a contract for a year but you don’t want a fractional CMO who writes a marketing plan and works with you for six weeks and then goes away. As a minimum, you will want a fractional CMO who commits to working with you for one quarter. A quarter will give them the time to monitor your marketing performance and adjust the plan accordingly.
Don’t Work With Yes-people
This is a good rule of thumb across the board, but it’s particularly important with a fractional CMO. Some companies who sell CMO services just listen to the company CEO and regurgitate back at them their own thinking. You need someone who will challenge your thinking, not reinforce it. Sometimes an outside person can bring a very different perspective because the internal team is so close to the product. However, this only works if you have an honest partner who tells you what you need to know not what you want to hear. My business partner and I believe in this mantra so much that we actually named our company Nituno, a portmanteau of ‘need to know’.
Make Sure They Know Sales
This may seem out of place for a marketing role but in early-stage B2B companies, everyone needs to have a sales outlook. I’m also a firm believer that sales and marketing really are one team and they need to work together to drive sales performance. Sales, ultimately, is the KPI on which good marketing should be judged. However, this isn’t the universal view in the marketing space. Some marketers are more focused on branding, design, and softer KPIs (softer in my opinion). If you share my vision that marketing must drive sales in a B2B company, then you want to find a fractional CMO agency with a sales outlook.
Let Us Help
As I’ve mentioned, I co-founded Nituno specifically to help B2B companies drive their marketing growth. We are a boutique marketing agency that specializes in fractional CMOs for the B2B space. I say boutique because our goal isn’t to service thousands of companies at the same time. Instead, we work with a small number of companies for a short period of time (minimum of one quarter) and then hand off marketing to their internal team after the strategy has been built and tested.
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