There is an increasingly popular term in the business world: fractional CMO (Chief Marketing Officer). Is it a fad, or is it something truly effective that can provide value for mid sized firms in search of marketing strategy and leadership? In this article, we are going to explain what exactly a fractional CMO is and help you decide if hiring one is the best option for your business.
What is a fractional CMO?
A fractional CMO is a marketing leader hired on a contract basis rather than through internal headcount. They bring marketing industry expertise and strategy to organizations who can’t or don’t want to hire an in-house dedicated marketing executive. They handle up to five clients at a time, the number of hours they commit to each client varies, and they may be engaged from a few months to a few years.
Other common terms for fractional CMO are virtual CMO or outsourced CMO. When people hear “outsourced,” they often think of cost cutting. While it’s true that you can save a significant amount of money by hiring a fractional CMO instead of a full-time in-house CMO, this is an oversimplification. It misses the more important point that hiring a fractional CMO means paying for only the highest-value elements of the Chief Marketing Officer role. A fractional CMO will perform as part of your management team, contributing their experience and connections, leading and driving strategic initiatives, without spending time on all the typical daily workplace distractions of full-time employees.
The fractional CMO model offers other benefits, and eliminates a few risks, compared with hiring a full-time CMO. Let’s examine some of these in detail.
Fractional CMO vs. full-time CMO: Key differences
Level of involvement
Full-time CMOs are 100% dedicated to your business and your business alone. They likely work from a corner office and attend many meetings. As mentioned above, fractional CMOs aren’t involved in the granularities of office work or politics — they focus only on the objectives they’ve been hired to advance. A fractional CMO may dedicate between 10 and 80 hours per month to your marketing, depending on your needs.
In-house CMOs usually receive a base salary, bonus, benefits, and other perks. Fractional CMOs typically charge a monthly retainer based on the amount of time they’re committing to your business. Some fractional CMOs might charge a lower retainer but receive performance-based incentives.
Hiring an in-house C-suite executive requires a significant time commitment, typically taking several months to screen, interview, and eventually hire. The stakes are high. Hiring a fractional CMO requires due diligence, but it can usually be done within a few days or weeks. There’s less commitment required by the business, so it’s possible to work with a fractional CMO for a few months to ensure they are a good fit.
Why are fractional CMOs becoming so popular?
Increasing need for marketing leaders
As marketing becomes more specialized, a wider range of expertise is required. Previously, a business could hire an agency to handle all of its marketing. But since agencies manage so many clients at a time, they aren’t always able to identify creative ways to help a business stand out from the crowd.
Companies with a Marketing Director or CMO are able to develop custom marketing solutions and adapt more quickly to market demand. They can easily outcompete companies that hire agencies to manage less effective templated campaigns.
“The Great Resignation”
Much of the world’s workforce has gone through a transition recently, experimenting with remote work, reduced workweeks, and other evolutions from the traditional 40 hours per week. Marketing leaders are no exception. Many in-house CMOs have been reflecting on the typical full-time office work style and decided that they need a change. They left their positions as marketing leaders at large successful companies and are now consulting.
Some of these marketing leaders are deciding to become fractional CMOs so they can experience a wider range of industries and benefit multiple businesses at a time. The problem now for any firm trying to hire an in-house CMO is that finding a quality individual can take months (or years, if the first hire doesn’t work out), and the competition is fierce.
Openness to experimentation
Along with more remote work, businesses are learning that there are benefits to trying new things. It’s possible to run efficient teams remotely, and it’s even possible to hire remote leaders. The businesses that are experimenting and adopting new work styles are gaining competitive advantages that their more traditional counterparts are missing out on.
What do fractional CMOs actually do?
It’s important to think of a fractional CMO as someone who transforms your business rather than just optimizing or facilitating your current operations. If all you need is someone to keep your current marketing activity moving along – like blogs or social media – then a less experienced marketing hire will suffice. But if you are unsure how to market your business, or if you’re sure what you’re doing isn’t working, then a fractional CMO will be able to make a positive systemic change.
One of the most important roles of a fractional CMO is to help you develop your own in-house marketing competencies. A fractional CMO investigates the current state of your marketing and then proposes and implements the transformation. They build you a marketing system – they can trial, optimize, and evaluate various marketing strategies and tactics to find the best fit for your business. Then, they will establish reproducible procedures that you own and can apply in the future.
Here’s a more specific list of a fractional CMO’s typical responsibilities:
Your fractional CMO will learn about your business, your rivals, your existing client base, and your goals and challenges. They’ll help you identify your ideal customers and clarify the messaging you use to target them. They’ll conduct market research to define your competitive advantages and reveal growth opportunities, and they’ll help determine the ideal marketing channels for reaching your customers.
Your fractional CMO will develop or transition your marketing systems to improve your data collection and utilization, (e.g., CRM workflows, prospect segmentation, CSAT and NPS surveys, and testimonial collection). They will help you develop competencies within your organization for the effective use of this sales and marketing data to help grow your business.
To reduce dependency on paid advertising, your fractional CMO may develop a strategy for producing relevant and useful content that pulls new prospects in. By extracting knowledge from your existing team and packaging and publicizing it, an effective content strategy boosts brand awareness and credibility.
Fractional CMOs set goals and monitor key performance indicators (KPIs) closely. They provide direction to marketing specialists or agencies and monitor campaigns to ensure they deliver.
Fractional CMOs typically manage the marketing budget. They distribute the budget across internal marketing resources (writers, coordinators, etc.), as well as marketing agencies or vendors. By monitoring inflows and outflows, they can ensure marketing efforts result in the highest return on investment.
With all the above, a fractional CMO will be leading the meetings and reporting the results, as would be expected from a full-time internal CMO. It’s important to understand, however, that their role will not normally extend to project management or other execution-related tasks. Instead, their core responsibility — and greatest asset — is to serve as a guide, helping you build your own marketing strategy and competencies. These are the things most businesses struggle with.
How much do fractional CMOs cost?
Highly credentialed fractional CMOs who have worked in leadership roles at large firms typically charge between $300 and $500 per hour. Therefore, a 20-hour monthly retainer amounts to $6,000 – $10,000 per month or $72,000 – $120,000 per year. This provides substantial cost savings over an internally hired full-time CMO, given that the annual salary averages $161,745 per year according to Glassdoor, with benefits easily bringing the total to well above $200,000.
Experienced fractional CMOs who have led marketing departments at businesses outside the Fortune 500 typically charge $200 – $300 per hour. An equivalent 20-hour monthly retainer amounts to $4,000 – $6,000 per month, or $48,000 – $72,000 per year. This option may be ideal for mid-sized businesses who need marketing leadership but don’t have the budget to hire a full-time in-house CMO.
Marketing consultants may also package their offerings as a fractional CMO solution. Rates vary widely between consultants based on their skill sets and experience, typically between $100 and $200 per hour. Because of the range in quality, it’s essential to thoroughly vet consultants to ensure they can provide a comprehensive solution, and aren’t just taking advantage of the buzz around fractional CMOs. In short, be careful of self-described fractional CMOs who don’t provide a clear methodology or system to support their offering.
Another variable that influences price is location. Whether working on-site or remotely, fractional CMOs located in areas with a high cost of living are likely to charge more than their counterparts in less expensive areas. A solution here is to hire a fractional CMO in a remote, or “virtual,” capacity. You’ll need to have a good communication/collaboration platform up and running, but nowadays these are simple and reliable. The point is, if you don’t need a fractional CMO in your office or your time zone, you may be able to stretch your budget further by hiring someone in a remote capacity.
Common misconceptions about fractional CMOs
They are an all-in-one solution
Fractional CMOs bring marketing knowledge and strategic and problem-solving abilities. But there is a common misconception, particularly among businesses who haven’t had a marketing leader on their team that a fractional CMO can do everything. This may include producer tasks like copywriting, designing, or coding; managing ads; or acting as a project manager or coordinator/administrator.
But hiring a fractional CMO isn’t outsourced marketing like with an agency. As mentioned earlier, a fractional CMO should be thought of as a strategist, guide, and leader. They will lead your marketing strategy, but they need other talented individuals who can execute. The good news is, a fractional CMO will have the experience and acumen to work well with your existing team, and if you lack in-house resources, they will have connections with agencies and contractors to help you fill all the required positions.
They operate independently of your internal team
While your fractional CMO may not attend all of your company meetings or events, they can’t operate completely independently. To have an impact, they need to become part of your team. Good-fit fractional CMOs will have everyone on your team, including sales and operations members, involved in creating content that engages and attracts your ideal customers. A fractional CMO will likely lead marketing meetings to get buy-in from other leaders, and drive forward transformation in your company.
They produce immediate results
Experienced fractional CMOs will likely identify “quick wins” and opportunities for improvement that should begin showing results in a few months. But don’t expect your fractional CMO to move mountains in days or weeks. The first thing a fractional CMO will do is ask you to share a lot of information about your business and your marketing efforts up to this point. After all, how can they lead, advise, and provide direction if they don’t have the necessary background? If the fractional CMO isn’t taking time to learn about the business, this should be a red flag. Expect a month or two for your fractional CMO to get up to speed.
What are the types of fractional CMOs?
Agency fractional CMOs
Some marketing agencies have now identified the need to add a fractional CMO service to their list of offerings. Regular account managers typically handle 10–20 clients at a time, so a new role is needed to deliver more tailored solutions to a smaller subset of clients.
Pros: Companies already relying on an agency may be able to add a fractional CMO relatively easily. This provides a convenient all-in-one solution.
Cons: Your agency fractional CMO may not always act in your best interest. They will likely be sitting on the agency’s side of the table, incentivized to sell you their agency’s services rather than seek the best cost performance from the industry at large. In addition, they may not be experienced or well trained.
Licensed fractional CMOs
Some brands attract fractional CMOs by providing a certification or license. The fractional CMO may undergo some level of vetting and training, and then pay an annual license fee. The fractional CMOs will often be hired as independent contractors, running their own operation.
Pros: The brand providing the license will likely vet the fractional CMOs, at least to some degree. To increase their license renewals, they may also provide fractional CMOs with some community events and ongoing training.
Cons: Similar to the agency model, there is some conflict of interest. The brand can potentially earn more money (in the short run) by being less selective with their applicants. The fractional CMOs may have to charge more to offset their license fees.
Employed fractional CMOs
Some companies, like Growth Connect, believe so much in the fractional CMO offering that they hire CMOs as full-time employees. These companies provide CMOs with training, base salaries and employee benefits, but also give them the independence to work with their own clients. These fractional CMOs must apply, undergo multiple interviews, and stay involved with their community of peers.
Pros: Vetted, trained, and always learning through their peer groups, these fractional CMOs tend to be efficient and dedicated, working with only 2–5 clients at a time.
Cons: Given the overhead expenses required to provide fractional CMOs with training and benefits, this isn’t always the cheapest option.
Independent fractional CMOs
Some fractional CMOs may avoid license fees by going it alone and working 100% independently. This provides them with the ultimate flexibility of working for themselves.
Pros: Without license fees, this may be the lowest-cost solution.
Cons: It can be difficult to vet independent fractional CMOs, as this is a title any marketer can give themselves. It can also be difficult for an independent fractional CMO to keep abreast of all the marketing changes by themselves while balancing their client workload.
Alternatives to hiring a fractional CMO
Hire an internal full-time CMO
If you have a substantial marketing budget, you may be able to attract a highly skilled full-time CMO or marketing director. This is obviously a great option for a lot of businesses, but be careful not to select someone who overpromises and underdelivers. If a candidate doesn’t have a credible portfolio and real-world references, or is substantially cheaper than others on the market, there’s reason to be skeptical. Make sure to conduct extensive interviews involving multiple members of your team to check for compatibility, and investigate references thoroughly.
Build a marketing team organically
You may have people in your organization who are interested in marketing and willing to contribute. These motivated team members can provide a lot of value. Just beware that without an experienced leader, your marketing could lack an effective strategy, and it will likely take much longer to start seeing results.
Outsource to a marketing agency
If you’re looking for simplicity, working directly with a marketing agency can be a good option. They will typically offer a wide range of marketing services. Some agencies don’t lock you into long-term contracts, so you’ll have flexibility. The challenge, however, is that agencies spread their time across many clients. This means you may not get the dedicated, personal attention required to develop a tailored marketing strategy that sets you apart from your competitors.
This is the most expensive option. Imagining that the marketing problem you’re facing will solve itself is the path chosen by countless failed businesses. It can “save” money in the short term, but can result in a catastrophic loss of competitiveness in the long term.
As we’ve now seen, fractional CMOs are not a fad. They aren’t just marketing consultants by another name. Fractional CMOs provide an alternative for businesses that need a marketing leader but don’t require or can’t afford a full-time resource. As fractional CMOs continue to fill mission-critical roles, businesses are finding real value in hiring them to develop and lead their marketing initiatives. This makes sense, considering how efficient and effective they can be.
If you are looking to hire a fractional CMO for your business, we can help. Schedule a call directly with one of our Growth Connect Fractional CMOs and see if they can be the missing link for helping you reach your marketing goals.