Startup Lessons: Hiring a CMO Part 1.
Hiring a Chief Marketing Officer (CMO) for your startup can be one of the most important decisions you make as CEO. The right CMO can build a world class marketing team that not only helps you acquire more customers at less cost, but also enhances the perception and brand value of your company in ways that could have been inconceivable just a few months or years earlier.
However, the reality is that despite its importance, the CMO role is often misundertood and CEO’s, particularly first time founders, usually end up either hiring a CMO at the wrong time or hiring the wrong person.
Start with “Why”
Do you really need a CMO or could you simply hiring a VP or SVP of marketing. When I look back at my career, of the 4 times I was CMO, there were only two cases where the organization I was going into legitimately needed that role. Here are some reasons you might need a CMO:
1. You’ve reached your maximum level of competence: I’ve seen CEO’s or COO’s who run marketing for a number of years and at the beginning they can usually get away with it. But as you grow marketing becomes highly complex and you may simply be reaching a point where the existing marketing team you have (usually 6 -15 people), are simply not getting enough or your time or are asking you questions to which you have no good answers. In addition, a VP level person may not have the experience or breadth of skills to come in an manage or scale the team. You simply need someone more seasoned and who has done this before.
2. The team is telling you they need more leadership: Good people usually know when they need leadership and are self aware enough to know when they’re out of their depth. You might have 1–2 director level people who start to tell you they need more leadership and are making suggestions about what that person might do on the team. They will reach a point where they want someone they can learn from and you just don’t have that person currently in the company. Alternatively, maybe your sales team is telling you that the marketing is no longer cutting it or that competitors (see below) are doing more.
3. Your competitors are eating your marketing lunch: You know, or might think, you have a better product but your competitors are winning more deals, getting more press, growing faster, launching innovative partnerships or doing TV / billboard advertising. I’ve said this time and time again but having the best product doesn’t mean you win. Great marketers can actually create the perception that their product is nearly as good enough and in a world where the average person has less time and too many options, perceptions matter. If you’re getting whipped it’s time to even the odds.
4. Your story sucks: Human beings are emotional creatures. People want to be inspired, entertained and delighted. However, tech companies in particular struggle when it comes to translating their technology into human speak. If you go around the office and ask 10 people how to describe who you serve and how you do it in 25 words or less and either they can’t or they all say something different, just imagine what your potential customers are hearing. In this case you might need a Storyteller CMO (see below).
5. Death by data: There are a ton of data points to measure in marketing. From the obvious cost per download or cost per lead to net promoter score (NPS), brand awareness, brand recall, and Share of Voice (SOV). If you’re overwhelmed by data and aren’t sure which data points you need to track, the complexity of your marketing may be reaching a point where a need a Quant CMO (see below).
6. Big Bang Budget: You’ve established clear and consistent product market fit, have been scaling the business nicely for a number of years and maybe you’ve just closed a new round of funding. You reale that to meet next year’s goals you’ll need to spend $20 million in marketing. When you get to those types of levels of marketing spend, you need to ensure you have proper marketing leadership, superb tracking and measurement and are focused on the right target audience using the right messaging. When you consider that in some cases $.42 of every dollar spent in marketing are going to tools and measurement (which is sadly becoming the case in the complex world we live in), you need someone steering the ship who knows what they’re doing.
7. Organizational nightmare: In the early days of marketing, you or more junior marketers, can usually manage the complexity. But as your business grows, competition sets in and budgets increase your marketing organization becomes more complex. When you go from having a few people running growth marketing, PR and promotions to suddenly needing a content marketing director, designers, content editors, multiple product marketing managers and a brand management team, clearly you need someone to come in and organize things.
Storytellers vs. Quants
Congratulations, you’ve figured out you need a CMO. In my experience, the type of CMO you hire really depends on what type of industry you’re in and what your organization really needs.
Generally speaking, I break CMO’s down into 2 categories.
The Storyteller: Storytellers are masters at weaving great stories and strategists. They intuitively get what clients want and have knack for understanding who exactly the audience should be and how to create a story which not only holds their attention but reels them in to try / buy your product. Storytellers are generally very creative, extroverted and may have great stage presence. They can be inspiring leaders and also act as terrific spokespersons for the company. The sweet spot of these type of CMO’s is usually B2C businesses and businesses where the focus is more on branding, content marketing, PR and high profile marketing programs (video ad campaigns, events, partnerships, TV, billboards). The downside with these types of CMO’s is that they may require sizeable marketing resources to be effective (in terms of people and capital).
The Quant: Quants are performance ninjas. They live and breath numbers and are often highly analytical. Quants usually have backgrounds in product or growth marketing and may even come from a product management background. They will not only have experience building and managing growth teams at scale, but also be very familiar with all the tracking and analytics tools you’ll need to measure campaigns as well as best in class CRM tools (Salesforce, Marketo, Pardot, Hubspot). A good Quant also understands how all the pieces fit together and has experience in and is capable of creating lead generation “engines” where content, growth marketing, data science and PR all come together to produce a virtuous wheel of great content that drives leads, awareness and PR all in one.
The Wizard: OK, so I know I said typically CMO’s fall into 2 buckets. The Wizard is, as you would expect, the best of both worlds. These folks are extremely rare. Wizards are able to not only to see the big picture and weave a story but also are adept at understanding how performance marketing can capture and deliver that story at scale in a way which not only connects with customers emotionally but also does so in a way which is economical for the company. These individuals often have worked in very diverse environments and across B2B and B2C products and services.
OK, What Should I hire?
First and foremost, you need to hire the right CMO for your business. If you’re in a highly competitive environment where you’re struggling to get yourself heard and your value proposition doesn’t seem to resonate, you may want to get a Storyteller. If a large part of your business is simply content driven lead generation which scales and is highly measurable then the Quant may be the better fit.
The important thing when looking for a CMO, however, isn’t to look for a Wizard but too find the right fit for your business and to ensure that whether you’re hiring a Storyteller or a Quant, the person you’re hiring either will have or has the presence of mind to hire a solid #2 which complements them in the areas where are less experienced.
In my experience, a good CMO, whether a Storyteller or Quant, generally sticks to their comfort zone but also surrounds themselves with strong people who compliment them where they are weak. So if you hire a Storyteller, you need to ensure that person has an exceptional VP or director of customer acquisition / growth. If you hire a Quant, you’ll want them to have a strong VP or director of brand marketing (as well as a great director of PR / communications).
Regardless, throughout the interview process you need to understand if your candidate has a solid understanding and opinion on how the following teams should be structured, what each team does and how they would get them working together:
Growth marketing: The team managing your performance channels and responsible for managing your performance budget, tracking, analytics and calculating customer acquisition cost (CAC), lifetime value (LTV), customer churn etc. This team is tasked with managing the “top” of the funnel (ie — getting new customers) and creating a baseline level of awareness of your product / service. They may also be in charge of sourcing and managing 3rd party analytics tools.
Customer Relationship Management (CRM): The CRM team’s mission is simply to move your customers down the funnel either to the point where your account reps engage them or to the point where they try or buy your product. The CRM team uses tools like email, retargeting and notifications to keep customers moving down the funnel and to keep existing customers engaged.
Brand marketing: This team develops your brand positioning, owns yourbrand bible and brand pyramid, creates marketing assets for brand campaigns and helps develop the overall story for your brand / company. The brand team may also have their own design resources to create webpages, videos, banners or share these resources with the content marketing team (see below). They also own all your brand metrics and manage vendors who work on brand related programs.
Product marketing: The PMM team works side by side with your product management team and helps develop competitive analysis, go 2 market plans, lead market research initiatives (with the Insights team — below), formulates product positioning / messaging and works with the brand team to create compelling product marketing materials (videos, webpages, demos, brochures). For a full description of what product marketing is and how they work with product see my post here.
Content marketing: This team helps create the editorial strategy for what type of content you should create, how often, who creates it and how you get it out there. I usually suggest this team either have or work closely with an SEO specialist to ensure all the content you create is SEO optimized. The CM team works very closely with the growth and CRM team to provide them with the right content to optimize the customer journey as they move down your funnel.
Marketing Communications (Marcoms): Marcoms generally includes public relations (PR) as well as social media. This team is tasked with communicating with the press and the public using “owned channels” (ie — channels that aren’t paid for). They work very closely with content marketing (who actually provide them much of their content) as well as brand. In organizations where the CEO is a strong public speaker, former marketer or deeply involved with the press, the PR team might report directly to the CEO.
Insights: Generally a term used my larger, publicly listed consumer goods companies. The insights team focuses on all things research. This includes quantitative (polls / surveys) and qualitative (focus groups) research, data analysis, competitive research (together with product marketing), brand tracking (with the brand team) and Net Promoter Score (again, with the product marketing team). They also manage 3rd party vendors engaged in market research (Nielsen, Qualtrics, Survey Monkey, Survata) and may also work with analytics vendors suggested by the growth team.
Partnerships: This team focuses on creating marketing partnerships with other companies where there is a mutual interest in working together. For example, a SaaS company might select a research company to help them do some research, write a white paper and then jointly syndicate the resulting news. Good partnerships teams can forge deals to increase distribution or advertising reach. The upside is that sometimes these partnerships also yield great PR opportunities.
Having the right CMO can make or break your startup. Not only is this a role costly ($250k+ base salary + bonus + .50%-1.25% equity) but as a member of the executive team, the CMO often has a significant say in strategy and product direction (given how much data they see from customers and the market) and is may also be the face, or one of the public faces, of your company.
So for you to hire the right CMO you need to ensure you’re hiring them at the right time, for the right reasons and have the right profile in mind. After that, it’s all about patience, diligence and getting them in the door. It’s a big step and one that could take your startup to a whole other level.
Join me next week when I talk about how to actually find the right CMO for your business and what you should be asking them during the interview process.
Patrick ‘Mad’ Mork
Marketing Coach & Chief Storyteller