Stijn Hendrikse provides a quick overview of the four stages of growth that every B2B SaaS Company goes through as they build their SaaS Marketing...
Why a Fractional CMO is a no-brainer for B2B SaaS Startups
You need a marketing leader for your start-up.
As the founder, you no longer have time to do the marketing yourself, and you need to professionalize and scale your marketing function.
Do you need to hire a full-time executive? Or could you benefit from a Fractional CMO to get you going fast and with reduced risk? Here are seven reasons why this is worth considering.
But first, some of you may be wondering what exactly a fractional CMO is.
What is a Fractional CMO?
An interim, or fractional, chief marketing officer (CMO) is a part-time marketing leader that oversees and directs all aspects of your marketing function. Rather than hiring a full-time CMO, many companies have started to rely on an outsourced marketing leadership services to gain their experience and strategic oversight without the costs associated with a full-time CMO hire.
Also called a CMO-as-a-service or Interim CMO, the Fractional CMO is an increasingly popular choice for Start-ups and niche markets that need focused experience.
What does a fractional CMO do?
Depending on your current marketing needs, an interim CMO’s role can vary greatly. However, for SaaS companies without any marketing team or function in place, it’s the same as hiring a full-time CMO with less at stake.
Here’s a high-level breakdown of examples of what an interim SaaS CMO’s responsibilities and results could include (but extend beyond):
- Create, implement and achieve a holistic marketing plan determined by your Objectives and Key Results (OKRs).
- Deliver marketing qualified leads (MQLs) to sales from marketing. If you haven’t defined funnel benchmarks or what an MQL looks like in your SaaS company, your fractional CMO can identify this.
- Define and achieve 50%+ of your serviceable obtainable market (SOM) within your ideal customer profile (ICP). You can do this with account-based marketing (ABM) or other inbound and outbound marketing techniques.
- Drive brand awareness and resonance across the industry, vertical, or market.
- Lower your software customer acquisition cost (CAC) to below $2,500.
- Increase your user and partner conference attendance by 50%.
- Increase your sales meeting with qualified marketing leads by 50% each year.
- Create and implement an updated brand messaging and positioning guide across the website within the first nine months of onboarding.
- Build your marketing team with a set amount of specialists who achieve their OKRs in the first year of hire.
- Improve your organic search marketing and keyword positions to increase your organic leads (this is more cost-efficient than paid search and delivers long-term results).
- Create and implement an onboarding nurture program to reduce your customer churn within the first year by 10%.
- Grow your average revenue per user (ARPU) with upselling, cross-selling, and account expansion campaigns.
While this may seem ambitious, a Fractional CMO’s real value comes from their subject-matter expertise around the building and scaling your marketing function. At Kalungi, our SaaS Fractional CMOs have a wide range of experience across the inbound, outbound, and strategic marketing functions.
SaaS start-ups that come to Kalungi receive end-to-end access to subject matter experts needed to start and scale. But what are the tactical, concrete reasons to pick a Fractional CMO over hiring an in-house CMO?
Seven reasons to hire a fractional CMO for your SaaS Start-Up
Fractional chief marketing services are on the rise, and for good reason. Here are seven reasons to hire a Fractional CMO for your SaaS start-up, and how they can support your growth.
1. You need instant access to a CMO with relevant experience
It’s not easy to find SaaS CMOs who have not only “done it before,” but who have done so successfully and who you can afford. Many strong growth leaders are often at larger software companies once they’ve experienced, or they’ll stay with a software company that gets to the $100M+ ARR stage.
This leaves your SaaS start-up with slim pickings from many marketing leader candidates who have tried to lead Marketing for a B2B SaaS Startup but failed, or haven’t shown sustained, repeatable success that indicates they were making the difference themselves.
Fractional CMOs have led marketing teams and efforts multiple times and focus much more heavily on setting and meeting goals because their compensation depends on their performance. This ‘Pay-for-performance’ model means your Fractional CMO engagement has been scrutinized by the direct need to hit hard MQL contribution growth goals and related marketing metrics.
Kalungi uses this pay-for-performance model to ensure that we’re as committed to seeing results as you are. Another great way to capture and scale the experience of our Associate CMOs working with SaaS Companies is through templating automation, website, and content we use to scale and support our SaaS GTM playbook quickly.
Most recently, we built the Hubspot Atlas Theme, a website template to build B2B SaaS Company websites. The Atlas Theme is a complete website toolkit for software companies with best-practice templates and modules designed to convert your prospects, display the voice of customer (VOC), explain your product, build your brand and launch your website pages quickly.
2. You need B2B SaaS industry specialization
Most CMOs who have experienced success at multiple startups are old or at enterprise-sized companies. The B2B SaaS buyer’s journey has a unique set of constraints and milestones, so developing and deploying your SaaS marketing function must be laser-focused on this funnel.
It’s challenging to find the marketing expertise that effectively anticipates your market’s trends, finds product-market fit, builds your entire marketing team, etc., and even harder to afford that as a start-up. As a SaaS company looking to scale, your go-to-market strategy will be a calculated, precise strategy made of stepping stones to T2D3 growth.
A SaaS fractional CMO will be tenured in the world of software GTM strategy and execution, channel partnerships, and pricing optimization, giving you the skill to effectively scale your marketing needs as you increase revenues and market share.
3. You want to get the most ROI
When you hire a CMO-as-a-service, you’re sharing one person’s expertise across other clients. That means the CMO doesn’t have one full-time job to lead, get bored and leave, or they’re overqualified for their jobs.
An experienced CMO costs $250k annually plus the executive search, equity, and potential several if it does not work (which often happens). Rather than investing significant time and resources into someone with little to no interest in sticking around for the long-run. And if you have to pay severance when you part ways with your marketing VP or CMO, this could be $3k-$35k each month. Because of this, many SaaS companies with fewer than 100 team members can’t afford the expertise or experience needed to scale a CMO successfully.
To combat this, Kalungi Fractional CMOs operate on a pay-for-performance model that ties results to clearly defined goals. An excellent way to do this is through Objectives and Key Results (OKRs) every quarter. You can determine the amount of variable and fixed compensation, and invoices are based on KPI achievements. Here’s an example of what this might look like for two quarters of a Fractional CMO service at 10% variable, 90% fixed pay:
This ensures that you’re not stuck on the hook with an expensive bill and no results to show for it.
4. You’re in a hurry to see results
Whether you’re facing stakeholder pressure or you’re waiting to reinvest within your company, your stakeholders probably don’t want to wait nine months (or years) before they start seeing a return on their investment.
Still, locating, hiring, and onboarding the right CMO takes time. SaaS companies can spend six months finding and onboarding your CMO, then another three to six months to get ramped up, implement a strategic plan, and start delivering results. Depending on your industry, vertical, and target market, this can take another three months to adjust and improve your marketing efforts.
If your CMO decides to leave a year or two after joining your company, this could set your progress back another year. Even with a CMO that sticks around long-term, their bonus is likely all you can tie to performance and results.
To combat this, a Fractional CMO’s compensation should be tied to delivering results. This allows you to hold them accountable for their promises and measure growth over time. They can do this because they’re backed with experience and best practices, such as the SaaS marketing playbook, to spring into action and focus on what makes your company truly unique.
The Fractional CMO should have a wealth of templates and playbooks to pull from, remove the repetitive tasks, and focus your marketing function’s strategic elements. One way we do this is through our B2B SaaS Marketing Playbook, which includes everything from your Go-To-Market (GTM) strategy to pricing optimization and messaging guides. This means your marketing roadmap is proven and solidified, giving your marketing leaders time to optimize and analyze the plan rather than build it from the ground-up. You can also adopt SaaS-specific website templates that make scaling your site with valuable content (rather than building it yourself).
5. Your needs change every year
As a technology company in a quickly changing environment, staying up-to-date and on top of trends takes time and energy out of the day. Software providers must stay informed across the marketplace, and your marketing needs today could pivot overnight.
Aside from rapidly changing dynamics, your marketing needs to change and evolve. In the beginning, you need a Big ‘M’ marketing leader that can build a foundation to drive future growth. As a start-up or company under $1M in revenue, your marketing priorities should entail:
- Identify product-market fit (PMF)
- Develop strategic positioning and branding
- Plan and execute your GTM strategy
- Implement a marketing technology stack
- Kick-off content marketing strategy and execution
As your company grows and ages, you’ll need less strategic marketing leadership and more tactical support. Companies with $1M to $10M of growth include setting up:
- Initial funnel conversion rates
- Demand generation tactics such as PPC
- Organic content marketing and sales enablement
- Market penetration and diversification through Account-Based Marketing (ABM)
- Web development and messaging refinement
- Lead nurturing campaigns
In the final stage of SaaS growth, leaders can expect “triple, triple, double, double, double” annual revenue growth -- or T2D3 growth, for short. In this stage of SaaS growth, you need a CMO with the skills to hone and optimize your marketing function’s tactical aspects. Here, you need a CMO that can:
- Optimize your digital content and web pages for search engines (SEO)
- Reduce friction along the inbound and outbound buyer’s journey
- Improve your paid search and social media marketing efforts
- Drive overall brand awareness and resonance
- Reduce customer churn and improve onboarding
- Increase your Average Revenue Per User (ARPU ideally over $2,500)
- Lower your Customer Acquisition Cost (CAC)
6. You need a solid foundation
As a Start-up, the first years of your company are make-it-or-break-it. The foundation of your future growth is built upon your first marketing strategy and priorities. You want to invest in pursuing the right serviceable obtainable market (SOM), positioning, messaging, and ICP.
Many CMOs are more experienced leading marketing at billion-dollar companies with marketing departments and functions across the world. Other CMOs are more experienced at SMB marketing once the company has identified a PMF. For your Start-up, you need someone experienced with the foundational building blocks of a marketing strategy. That’s where the SaaS marketing playbook comes in -- by leveraging a proven six-month marketing strategy that’s helped 15+ companies scale and profit. You can feel confident in the projects, campaigns, and marketing initiatives implemented at your start-up.
Laying the right foundation also means investing in the right technology for your business. Often, companies make the mistake of investing in various disconnected tools (your CRM, website, email marketing, social media marketing, etc.). Down the road, this adds the need for integrations and configurations between disjointed platforms -- bringing the risk of incorrect or incomplete data, broken integrations, and messy, disorganized tech landscapes. We’ve seen many companies face this challenge.
Our solution is simple: adopt an integrated marketing platform that encapsulates your website, CRM, email, content, social media, and more to create a centralized, single source of truth for your marketing operations. You will also have access to the Atlas Website Template, with built-in user experience and web design best practices that make your inbound buyer’s journey more comfortable.
Simply put, it’s much better to establish your tech stack correctly in the beginning than migrate three years of operating data across six different platforms. Your Fractional CMO can point you towards a sustainable marketing platform, like Hubspot, to make this as streamlined as possible.
7. You want to achieve T2D3 growth
‘T2D3’ stands for ‘Triple Triple Double Double Double’ and describes the ideal revenue growth of a SaaS start-up. This growth model is the inspiration behind many SaaS investors and start-up owners alike. But to achieve this, you need a carefully planned growth model.
To achieve T2D3 growth, SaaS start-ups must diversify their marketing tactics and strategies for a well-rounded, sustainable flywheel of growth. T2D3 growth requires optimizing your demand generation, reducing churn, developing ‘engaged advocates,’ expanding ARPU, optimizing conversion rates, and implementing a customer success department.
You’ll need a Fractional CMO that’s a real T-shaped marketer, someone with a wide range of knowledge into modern-day SaaS start-up marketing trends and tactics, from search engine optimization (SEO) channel partnerships to your pricing and packaging strategy. Your Fractional CMO can lower your Customer Acquisition Cost, GTM diversification across new markets, new offerings, or both.
Find your fractional CMO
However you decide to expand and grow, a tenured SaaS marketing leader will ensure you have the proper guardrails and provide strategic oversight into your company’s long-term future. You can learn more about scaling your SaaS start-up with a Fractional CMO here.