When to Hire a Chief Marketing Officer

“We need a CMO!”?

Or do we? 5 Key Questions for Hiring a Marketing Leader?

I’ve held a lot of marketing roles over my 25-year career in technology startups. Because of that experience, I am regularly approached by founders, recruiters, and venture investors who say they want to hire a Chief Marketing Officer (CMO) for their company. My first response is usually “Why?” I’ve often found that the thought process behind this critical C-level hire is not entirely clear, particularly by founding CEOs, who tend to be engineering/product types without much direct experience performing or managing the marketing function.

So I put together this primer outlining why, when, and how to hire a great marketing leader. From my experience both serving as a CMO and hiring this role, these are the key questions any CEO should consider before kicking off a search, let alone making a hire.

1) What Makes You Want a CMO?

The first simple but critical question is: What makes you think you need a CMO? Is an investor or board member telling you? Is there a specific pain point that you think a marketing leader could solve? Are you unsure what marketing tasks even need to be performed, and you want a CMO to figure that out?

Very often, CEOs make the mistake of immediately assuming they need a “CMO,” when there’s actually a specific and narrow issue they’re trying to address. Within early-stage tech startups, this pain point usually falls into one of two areas: either they want increased awareness (i.e. press coverage), or they want increased leads/customers/revenue. Each of these discrete pain points doesn’t necessarily mean you need a full-fledged CMO. A great PR or demand gen person, respectively, could suffice.

If your needs are acute and specific, it may be early to hire a CMO, pay them a C-level salary, and put them in charge of tactical tasks. That approach is going to be frustrating for everyone involved. Consider hiring (or outsourcing) the specific skills you need instead. Doing so will also give you a sense of what skills are important in your eventual CMO.

2) What Is Your Current Investment in Marketing?

Before hiring a CMO, leaders need to evaluate their current marketing investment. How many people do you have in marketing today? Will the CMO be your first real marketing hire? What is your current spend on marketing programs? What are your expectations and budget for building out a marketing function? What is your comp range for a CMO?

The advantage of hiring a CMO early is they can build an organization to their liking and the company’s needs. However, if your expectation is to have a two-person marketing team for the next year or two, you’re probably hiring a CMO too early. You wouldn’t hire a CTO with no engineers or a head of sales with no headcount for sales reps. As a general rule of thumb, your marketing team should be at least 10 people—either already hired or approved to-be-hired headcount—to justify a C-level marketing hire. Consider if you could start with a director- or VP-level hire instead to grow the team. Then hire, or promote from within, your CMO later.?

3) Do You Have Your Go-To-Market Strategy Nailed?

I’ve seen many CEOs who think all they need is a sprinkling of marketing pixie dust to unlock success. If that’s your perception, I’d encourage you to think harder and ask yourself if you really have your full business model figured out. Do you really have product-market fit? If customers aren’t gobbling up your product, do you know why? Is what you really need, not tactical marketing programs, but rather a full-fledged business strategy? If the latter, are you prepared to give your CMO the authority to truly put that strategy in-place?

This question is where I see an overly narrow scope of the “marketing” role in Silicon Valley really hurting companies. A proper CMO should have the full purview of the marketing function. For those with MBAs, you may recall the “Four P’s” of Marketing: product, pricing, placement, and promotion. Too often, so-called CMOs only have the latitude to deal with the last P: promotion. Product is handled by the product management leader, usually within an engineering organization. Pricing is handled by Sales, often loosely and opaquely. And placement (i.e. distribution) is handled by a VP of Business Development or similar role. I’m not saying all these functions need to report to the CMO. But for a go-to-market strategy to be successful, these functions need to not only be aligned but also fine-tuned into a comprehensive go-to-market strategy that everyone stands behind.

If the full business strategy is truly solved, then you can manage with more junior hires, and postpone your CMO hire. But if that larger strategy is unclear, then the junior hires will struggle to deliver results—spending money on programs that are doomed to fail. If this sounds like your situation, you may want to bring on a CMO earlier, even if your marketing team is small or nonexistent, to help figure out your business model. Ultimately, it’s your responsibility as CEO to articulate and execute this strategy. If that’s not your natural strength, then hiring a CMO and making it her or his responsibility to define and implement a repeatable go-to-market model will serve you well. Just be sure you empower that person, either directly or as your proxy, to affect the necessary changes to your product, sales process, and distribution networks to be successful.

4) Who Owns Revenue?

The fourth question may seem obvious: Who owns revenue??The default answer at most technology companies (particularly B2B) is the head of sales, of course. But is your head of sales really empowered to hit a revenue goal if they are dependent upon upstream functions such as SEM, demand gen, email marketing, or sales development? If you intend for those functions to be owned by the CMO, doesn’t that person, effectively, own a portion of revenue as well??If you’re not thoughtful about this question, adding a CMO to your organization can introduce ambiguity or finger-pointing around revenue responsibility.

Some organizations will appoint a Chief Revenue Officer (often with a sales background) or Chief Commercial Officer (often with a marketing background) to create a clear, single point of responsibility for revenue. Even with those roles in-place, however, the marketing function is often broken out separately. Do you intend to have your CMO report to a CRO or CCO? If not, what dependencies does your CRO/CCO have on the marketing function for his or her success? Are there other functions, such as “growth” that fall into neither sales nor marketing?

As your organization grows, you will inevitably have fault lines between departments and leaders. We all want and expect people and processes to function well across organizational boundaries, but it’s your job as CEO to put a structure in-place that won’t malfunction if those fissures widen. When you’re considering a CMO hire, it’s the right time to be thoughtful about who owns revenue. What’s important is that you’re explicitly clear about the handshake between marketing and sales, and, in particular, that there are no gaps.

5) How Important is Brand to Your Success?

Finally, it’s important to consider how important your brand is to your success. By “brand,” I don’t just mean your logo or website, but the entire brand experience. How is your brand differentiated? Is brand awareness, affinity, and loyalty critical to the customer purchase process?

This question can be a hard one for many CEOs and founders to answer honestly. Especially if they come from an engineering/product background, their minds tend to go to specific product features, while more intangible “brand” attributes are an afterthought. But are those product features difficult for competitors to replicate? Are they protected by intellectual know-how or patents? The reality in today’s fast-moving business climate is that feature-based differentiation is extremely difficult to sustain.

If that’s the case for your product or service, then brand-based differentiation may be essential to your long-term success—and hiring a strategic CMO early who can define, manifest, and shepherd that brand across your organization may be wise. For these types of businesses, it is also important to include in your CMO’s mandate the ability to either own or directly impact the customer experience, rather that defaulting that responsibility into a CS organization. Ultimately, your brand is defined by the experience of your customers, and no amount of marketing trappings will overcome a bad customer experience. Consider making your customer success function, or at least customer-facing communication, part of your CMO’s responsibility.

Take Marketing Seriously

A final piece of advice to both founder/CEOs and their investors: take marketing seriously. Too often in technology startups, marketing is an afterthought and the major investments go toward building product and growing a sales team. Without the go-to-market coordination that marketing provides—from first customer awareness through to repeat customer advocacy—the functions of your organization can be out-of-sync. This discordant feeling is probably why you’re thinking about hiring a CMO in the first place.

So, if marketing is not familiar to you, take the time to learn the function, consider the key questions above, and make the necessary investments in both people and programs to make marketing a core piece of your organization’s success. If you have questions, feel free to message me, and I’ll do my best to help.