Can you outsource your marketing function completely, even if it’s temporary? What questions to ask a B2B SaaS Marketing Agency to test the waters?
Getting meaningful chief marketing officer salary data for SaaS companies is hard.
Executive pay is highly distributed and can be a mix of various equity components that make comparisons difficult. But how much should a CMO cost?
For this blog, I used various reports from Indeed, Glassdoor, Payscale, Spencer Stuart, Korn Ferry, and LinkedIn to create a table with my estimates based on the CMO salary information available.
While the tenure of the average CMO keeps falling, pay keeps going up. The CMO role keeps growing in prominence, which explains the rising compensation. Base pay grew, on average, 6% last year, and benefits by 3%.
How much does a SaaS CMO cost?
Location, location, location—that's still the most significant influence on what a CMO gets paid, despite the rise of virtual teams and remote work.
The below analysis is based on a CMO with at least ten years of experience in the Marketing field, and experience with SaaS Marketing.
They have experience leading teams and are a member of the executive team of an organization with at least 50 employees.
Direct costs of a SaaS CMO
To calculate the total cost of having a Full-Time CMO, I assumed a 30% additional cost for benefits.
CMOs don't often get commissions. I've ignored equity since the future value of that is hard to calculate (especially since CMOs have low average job tenure and equity usually does not turn into a lot of vested value).
The following is based on the averages of the above cities:
- Base Salary: $247k
- Bonus: +$49k (OTE = $296k)
- Benefits: $78k (Cost = $374k)
This brings the monthly cost to your P&L for having an experienced Software CMO to ~$31k/month.
If you hired your CMO with the support of an executive search firm and paid another 30% of annual compensation, assuming an average tenure of a CMO in the SaaS sector of 30 months, your cost per month will be closer to $34k/Month.
If you have to pay severance when you part ways with your CMO, this could be $35k-$37k/month.
Many SaaS companies with less than 100 employees cannot afford a CMO with the right level of experience. But there is an alternative.
Indirect costs of a SaaS CMO
Beyond a CMO's salary and benefits, the process of getting a great CMO in the first place is not without its expenses.
Another cost to consider is the time it takes to find a full-time CMO. A prolonged search to find the "perfect fit" could prove to be fatal. The market does not wait.
Your SaaS Company will likely also develop different CMO needs as it grows. It's often difficult to find the right fit for rapidly evolving needs.
There is an alternative to consider, as well. Interim CMOs, fractional CMOs, and CMO-as-a-service offerings are common in Europe and are making their way into the US.
They all try to offer the right level of experience and service for small and mid-size SaaS companies while keeping it within an achievable budget.
Benefits of a fractional CMO
- Used to coming up to speed quickly and providing value early
- Saves the recruiter commission and search time
- No long-term commitment (or exit package)
- The nature of consulting business means interim CMOs are current with the latest tools, best practices, etc.
- Matches the need for flexibility, underscored by the short tenures of CMOs in SaaS
- Interim CMOs bring a network of connections that can be leveraged for speed (hiring, influencer marketing, social media presence, vendor support, etc.)
While they won't be the ideal solution for every SaaS startup but for many looking to ramp up their first real marketing function, a fractional CMO is a no-brainer. You can read more on which whether an in-house or fractional CMO would be a better fit for your company in this blog.
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After 15 years of experience in the Software Marketing Industry, Stijn adopted the SaaS model to launch Kalungi, a marketing agency that specializes in assisting B2B SaaS companies.