How To Choose a CMO

Researcher Frank German and colleagues have proven firms with a CMO achieved on average a 15% better financial performance compared to firms without.

CEO satisfaction with the marketing more than 30% higher in companies that adopted marketing performance measurement

As a Silicon Valley-based CMO Council (invitation-only organization of authority leaders in technology marketing, including such companies as Adobe, Apple, and Microsoft) noted in their report “Measures and Metrics“, that they “see the revolving door of the CMO position at many technology companies. The typical CMO is able to neither measure nor systematically communicate on the fundamental business processes in the marketing function and their results. This can set the stage for a CMO’s failure”.

According to the CMO Council’s survey, marketing performance measurement (MPM) is the key ingredient to re-establish marketing’s credibility in the executive suite and to the career longevity of the CMO. CEO’s of companies with a formal MPM system are rated as being significantly more than 30% satisfied than CEO’s with no MPM system in place.

Three Types of CMO

Before even considering candidates for the job, a CEO must decide which kind of CMO would be best for the company.

1. Most CMOs focus on commercialization, i.e revenue-producing activities like sales support and lead generation. They don’t drive innovation but promote the services and products that others – engineers in tech firms – design, and thus have little responsibility for firm-level strategic decisions.
2. If you think that your CMO should deliver profitable growth, give them the responsibility for innovation, sales, distribution, and pricing. However, CMO in such a role requires taking responsibilities away from another function. And if that function has been managing those areas for a long time and doing it well, this may become problematic.

That’s why it’s often easier to start with a CMO who focuses on commercialization and then to expand their responsibilities when it’ll make sense to do.

6 Signs that Your CEO is Taking Marketing Seriously

1. The CEO includes CMOs in Almost All Company-Level Strategy Meetings: Those CEOs who include marketers in top-level strategy discussions have significantly better marketing performance. Why does marketing capability matter? In our research, the firms that are the best at marketing (i.e., top marketers) have nearly 2/3 higher market share than the bottom performing firms.

2. The CEO prioritizes Marketing: Those CEOs who lead the firms with the best marketing performance prioritize marketing more than those CEOs who lead firms with worse marketing capability. This makes sense. There is only so much marketers can do if the CEO doesn’t value or prioritize marketing.

3. The CEO doesn’t Create a Revolving CMO Door – And Instead Retains their CMOs Longer: Firms with better marketing outcomes tend to have CMOs with greater continuity (on average nearly a year longer). In contrast, high CMO turnover is associated with firms that are underperforming on marketing. When high turnover over time occurs, it suggests that either the CEO doesn’t know what s/he is doing (keeps hiring CMOs, realizes it was a mistake, and then replaces them) or the CMO is leaving volunatarily because there is something wrong with the role (e.g., design, level of authority, support, culture, etc.). The critical point is that high levels of CMO turnover are not good for business results.

4. The CEO has Longer Tenure: While much has been written about CMO tenure, in our sample, CEOs in high marketing capability firms have 35% more months in their jobs than do CEOs in low marketing capability firms. Every time you change the CEO and /or the CMO, the potential for the marketing direction to change increases. Direction change should be dictated by the business circumstances, not a leadership change.

5. The CEO doesn’t have a Manufacturing Background: Interestingly, CEOs who had either a marketing/sales or finance/accounting background tended to lead firms with better marketing capability. However, CEOs with a manufacturing background tended to steward firms with worse marketing capability. Whether this is driven by industry dynamics (e.g., manufacturing experienced CEOs work in industries with lower marketing IQ), we can’t parse out. However, it does suggest that the experience and training of the CEO is an important factor to consider.

6. The CEO Appropriately Measures and Holds the CMO Accountable for Results: One of the learnings from the Fournaise study mentioned above is that CEOs don’t think their CMOs are accountable enough. And yet, who measures the CMO? Who determines the measures and ensures that the CMO is reviewed? In our research, those CEOs who are perceived to appropriately measure and hold the CMO accountable lead firms in which marketing is stronger.

What does this all mean? 

Although CEOs express disappointment in their CMOs, they typically don’t realize that they may have played a role in creating the problem. 

While most CEOs may be disappointed in their firm’s marketing, they need to look no further than themselves to attenuate the disappointment.

The CEO’s ability to lead, design, staff, empower, measure, include, and prioritize marketing can impact whether the firm’s marketers are able to create and sustain a superior marketing capability. And so, not only do CMOs matter when it comes to marketing, but CEOs do as well!

CMO Responsibilities

How to evaluate a CMO

According to Stijn Hendrikse:

• Make sure to check if your CMO candidate has managed Marketing Budgets, created a Marketing Plan, is great at reporting (succinct, up and down, and across the team).
• Ask what their weekly/monthly/quarterly marketing rhythm looks like (standups, team meetings, planning sessions, OKR usage etc.).
  How do they manage a team of a-player Marketing professionals?
• Look for experience coaching and developing marketing talent. What’s your CMOs track record regarding Talent attraction, development and retention? The right people in your marketing team are ultimately the best path to both short term and long term marketing ROI. Do they have experience hiring (and firing!)? How have they dealt with top performers and retained them? How have they developed or resolved challenges with low performers?
• How do they focus on short term results and progress, while impacting long term growth?
• Does your CMO have relevant experience in the market segment you service? Understanding the industry, size of customers, type of personas or partner ecosystem is crucial for a CMO to be successful. 

It’s hard to “judge” the contributions of a CMO with less then 2 years tenure in a role. If a CMO does not last 2 years, that’s a red flag. 4 years is great as it’s allowed the CMO to “Build” in the first year, “Optimize” in the second year, deliver “Results” in the 3rd year and shown loyalty to stick around for another year and deliver great “ROI”. 

Marketing ROI

• What is their track record delivering measurable, visible results? Think about funnel growth and new customers. Winning a specific market segment, a product category (Gartner Magic Quadrant, top Capterra rankings) or winning industry recognition (awards? press/analyst coverage?).
• Look for Chief Marketing Officers or VP Marketing pros who’ve shown they can drive Demand Generation at a reasonable cost. 
• Look for a promo track record that shows they’ve delivered ROI to the organization. Find at least one promotion in a marketing role. From Marketing Director to Marketing Vice President. From Marketing VP to Chief Marketing Officer.

According to Steve Olenski:

• The role of CMO is not for those who consider themselves loners. It’s also not for anybody who refuses to listen to other people’s opinions or take in other points of view. CMO acts as a mediator between the different parts of their team, in order to solve issues and foster cooperation (constantly seeking the input of all involved). Their job is to keep everybody focused and remind them of the bigger picture (getting all of the team members on the same page, united under a single cohesive vision). It’s equally as important to know how to reach each of your marketing campaign managers. 
• A smart CMO has great verbal communication skills (necessary in the day-to-day operations of a marketing team) and written communication skills. They remove complications in order to not lose the meaning of the message.
• A good CMO should be willing to conduct extensive experiments and measure the results in order to refine their findings. They need to be observant and prone to asking questions.

When Do You Need a CMO

Let’s start with making the value proposition clear. You need someone to tell your story in a way that resonates with your desired audience and emphasizes value.

Marketing is about convincing. No matter how great your idea may be, it won’t excite people and win over customers without a message.  This explains why some companies are choosing to set aside the title of chief marketing officer and instead name the position chief storyteller.

You need a head of marketing who will determine the category your company either fits into or needs to create, and then craft the story that will help you own the category. This requires knowledge and expertise. It takes unique research, fine tuning, and a record of success in differentiating a company among competitors.

CEOs often ask me when to hire a marketing head, and tell me they already have four salespeople. I tell them they’re late! Marketing should be one of the first hires you make—either at the same time that you hire a sales director or quickly thereafter. You also need to have a small set of customers that you can learn from.

Your sales reps are going to be calling prospects and customers. They need to be equipped with a single, clear message that they can all coalesce around. And they need content, such as pitch decks, demos, and other materials, that make the message clear.

If you don’t have a marketing head, each salesperson will make up a different story. Clients and prospects will have different understandings of what your company does, and why it exists. As these stories spread through word of mouth, it will sow confusion about what your startup even is. This will burn through a lot of leads. People don’t buy what they don’t understand.

And who will set up your marketing tech stack, create a process of getting new leads into the funnel, and nurture the people you speak to? It takes a marketing leader to do all that. 

This person doesn’t have to have a CMO title. 

Make sure this person is also ready and willing to find and hire people who can complement their strengths by bringing in the other superpowers. A great marketing leader recognizes the importance of building a team that covers all the bases in the best ways possible.