How to hire a great CMO: 3 mistakes to avoid

Hiring a great CMO is a key step for any scale-up. The danger in this part of your journey is that acquisition costs can skyrocket as you try to build your pipeline. The trick here is to ensure that effectiveness increases (or CAC decreases) as your marketing scales, but getting that right is harder than it looks and more often than not an increasing investment means increasing complexity and increasing CAC.

The key to avoiding that of course is to hire a great CMO or Head Of Marketing to lead the charge. But for non-marketers, or those without deep and broad marketing experience, selecting the person that will 10x your business is tricky. So how do you tell the difference between the mediocre and the great?

Recently, I’ve been speaking with a range of experts from in-house recruiters, to agency recruiters, CEOs and senior marketers about what it takes, and how to think about the CMO/HOM hire (I use the terms interchangeably in this piece). Following those discussions, 3 key mistakes emerge as clear challenges.

1. Scope - Not defining the scope of the CMO remit properly so as to lay the foundation for the firm to drive optimal benefit from the role or the discipline of marketing

2. Qualification - Overvaluing superficial aspects of a candidate’s history (such as brands and roles) or appearance (attractive, dresses well, great teeth!) or behaviour (answering questions quickly and with certainty - aka ability to bullshit) without effectively understanding the candidate’s underlying capabilities or achievements, and how those map to the marketing challenge or organisational context at hand.

3. Salary - Setting the salary range of the CMO role with a cost-control mindset, rather than an investment mindset or from the perspective of what kinds of skills and experience would be needed to get the job done.

I’ll discuss each of these in the following pages but first a giant caveat.

All of this is true given my experience and the experience of those within my network and after 20 years doing this stuff. The notes below probably don’t apply as well in some organisations as they do in others. Especially in very large organisations (say a total marketing budget over around AUD $50M), or very small organisations (a total marketing budget of under AUD $1M). In big organisations the CMO is in very rarified air and needs a whole different political skillset in addition with the fundamentals discussed below. In smaller organisations there’s no room for a CMO and likely there is just a need to for marketing to take a ‘best efforts’ approach and for the rest of the business to nail the business fundamentals first so that marketing can have a reasonable hope of generating sustained ROI. At any rate, situations can vary and these things will apply with differing levels of fit in different situations.

Mistake 1 - Not defining the scope of the CMO remit properly

Many job ads for CMO or Head of Marketing roles are a jumbled blancmange of attributes, skills, tactics, and broad statements that are vaguely in the general direction of marketing. Often they mix up big picture strategic responsibilities with extremely junior skills requirements (must be able to use PowerPoint!). Suffice to say that they indicate that the role of Marketing or the desired skills of the marketer to be put in charge, is really up for grabs and there is uncertainty as to whether the role is akin to an office manager/intern role, or an understudy for a charismatic startup founder. No wonder the tenure of the average CMO is 2.5 years.

So, let’s clear this up - there are many ways to describe the role of marketing, here are three:

• The role of marketing is to help a firm grow by helping an audience see the value of the products that the firm produces and to help the firm produce products of greater value to that audience.

• The role of marketing is to drive sales for prospects currently in market, and to build awareness and affinity with prospects who will be in market in the future. So. sales today AND sales tomorrow.

• The role of marketing is to make sales easier

However you define it, great marketing has a few key measurable impacts.

• It drives more sales over time by bringing more customers into market and/or ensuring that they prefer your product when they are looking,

• It protects margin by increasing customers willingness to pay and by reducing the need for discounting,

• It speeds up sales cycles by making your products easier to choose against competitors and by lowering the perception of risk of buyers remorse.

All of this ads up to greater commercial momentum, higher stock valuations, and more options for diversification of your product base when the time comes due to enhanced levels of trust (future optionality).

And so in a nutshell, the role of the CMO is to ensure that the firm benefits to the greatest extent possible, from the discipline of Marketing.

So, what is the discipline of Marketing?

Sometimes you will hear it said that there are 4 P’s to marketing. Product, Price, Place, Promotion. A strong marketer will know that the effective management of these 4 levers in concert with each other is the way to fully acquit on the potential of marketing as stated above. However, the reality is that it’s often not quite that simple.

Often organisations choose a more decentralised approach to marketing whether intentional or not:

• Product is split from marketing into it’s own team.

• Place (distribution) decisions are often made by a sales team or is sort of assumed and not part of any explicit decision process or responsibility

• Pricing decisions are often made by finance or by reference to cost fundamentals with a target profit margin on top - rather than a nuanced understanding of the marginal utility the product presents to the customer or the customers willingness to pay for that product

• So, Promotion (or communications) falls to marketing and that becomes 100% of the job of the marketing team. The marketing team is often responsible for delivering a fraction of the marketing discipline

It’s not an ideal situation really. These 4 P’s represent incredible leverage for a marketer (and their organisation) when used together, and constraining access to them really lowers the value that the firm can derive from the marketing discipline.

When designing the CMO role you should consider how these dimensions can be impacted by that CMO if not controlled directly. You should also lay some groundwork so that the connectivity between marketing and these areas of the business is established well before the CMO even begins.

For example:

• How can Marketing and Product teams collaborate to ensure that product and product messaging are designed together and from the same customer research? So that the things your product team build have genuine demand when the product hits the market.

• How can marketers impact discount cycles? It’s well documented that the wrong discount cycles can significantly erode net margin. But margin protection is a core goal of marketing, so generally speaking, a marketer will try and grow net margin by limiting discounting to channels and times where the discounts can be used to encourage new customers to sample the brand, and minimise margin-loss through discounted sales to existing customers or customers who would have bought anyway.

• How can marketers bring their experience of consumer psychology and consumer research to the table to set prices in the first place? In doing this - the price will be set so it sits well against the competition, the value proposition, and the customers’ willingness to pay. Setting the foundations well to optimally balance margin and sales volume.

• How can your CMO impact distribution decisions in order to maximise sales overall whilst minimising channel conflict?

I should note here that for many firms, marketing doesn’t just impact customer acquisition, it also impacts talent acquisition. Want the best people? Speak to marketing about how to improve your employer branding efforts so as to help support the talent team.

95% of marketing is invisible

95% of the work of great marketing is invisible to the untrained eye. Where a non-marketer might look at a great ad and just see a pretty picture and a snappy title, a trained marketer will see layer upon layer of work. Consumer research, competitor research, strategic ideation, creative ideation, positioning strategy, media strategy, data analysis, brand management, creative production, internal consultation, not to mention the scrapped concepts and re-written copy lines, how it connects to the in-store or online proposition, how it melds with the history of the brand, or highlights a shift in focus for the future.

Of course if it’s a bad ad, the non-marketer just sees a less-pretty picture, or a less-snappy title and thinks nothing of it, the audience ignores it, and the trained marketer cries at the missed opportunity. What if it was in a different channel? What if it was an activation instead of an ‘ad’. Why didn’t they do a sponsorship or partnership? Imagine if they did a collab with Tiffany’s! And their membership program sucks too! And so on…

You get my drift. Untrained people think marketing is ads and don’t see why good ones are hard to make. Trained people see a constellation of discrete capabilities being exhibited in a multitude of ways and world of opportunity for each brand to plunder, some of those opportunities are ads, most of them aren’t.

Whatever style of marketing your firm needs to execute, for the most part truly great marketing takes time, money, and resource. To go some way towards articulating why, it’s useful to break marketing into some clear buckets (see table below). Generally each of these buckets is a sub-specialism, so in large team there would be specialists or specialist agencies doing each job, and in a smaller team individuals tend to stretch across specialisms doing some of them well, and having a red-hot go at the others.

While doing this work won’t be part of their everyday, if you are looking for a great CMO, they will have demonstrable capability and experience across the vast majority of these areas. They will be able to tell you stories about where and when they’ve experienced these things and what lessons they learned. They’ll also be able to give you a very quick outline of what good looks like for each one, and how to create an environment which is optimal for each specialism to succeed.

You may argue that that is a lot to ask of a CMO. And you’d be right. It’s a big job! You may also argue that the CMO role is an executive managerial role and as such the right person for the job doesn’t need capabilities in these areas, they just need to have really great managerial capability and be a really great leader of people. So the model would be, some very smart person, with high EQ that can ask the right questions and motivate a team to work well together. The marketing bit (or the bits of marketing that our outside the capabilities of this individual) can be learned on the job.

I can see how you would think that.

You’ve no doubt heard about the infinite monkey theorem. To paraphrase “1000 monkeys given 1000 typewriters and given an infinite amount of time can write the works of Shakespeare”.

In the marketing context, if you have an unlimited amount of time, any person sufficiently motivated, can learn marketing to a level of depth to be able to transform a brand or business. This is true. But it’s not a practical reality.

In today’s business environment we want results yesterday. Marketing is already a slow moving thing in the sense that it takes time between making an action and seeing a result. In many firms that means the CMO role is in the firing line from day one.

If your CMO candidate can’t discuss these things in depth and with specifics, you’re either speaking with someone who is more superficial and likely will be more of a politician than a solid marketing leader, or you are speaking with someone who will be doing a huge amount of on the job learning.

While political ability is no-doubt important in the role, as is the ability to rapidly acquire new knowledge and skills, progressing up the ladder through political nous alone often means they’ve left a body count behind them. Which is extremely problematic. If the learning curve is too steep, you will be paying a hefty price for their mistakes, misjudgements, and delays, you won’t get the quality of work your brand needs to transform and stand out.

At the end of the day a key part of the CMO job is to connect the dots across these specialisms and help these specialists understand how their contribution connects in to others’ contributions and helps achieve the overall objectives. It’s about creating a productive culture where a diverse group of individuals can do the best work of their careers. And lastly, it’s also about helping that team frame the value of those specialisms to non-marketers.

Someone who has progressed by way of political skill alone, will end up creating poor team culture because they don’t understand the nuances of driving performance within those specialisms. They will very quickly face situations where their only choice will be to shift blame when things aren’t working, and ultimately just throw others under the bus. Despite the direct human cost of that, commercially speaking it results in more redundancy costs, a less efficient and effective team, and outputs that don’t hit their commercial mark.

Mistake 2 - Miss-qualifying the quality or applicability of a marketers’ experience.

Marketing as a discipline is sometimes tasked with making a brand famous. So when reviewing the CVs of marketers, sometimes the experience can be a little like watching celebrities walk down the red carpet. Be careful though. Big brands can take less skill to maintain than more nascent brands.

Generally speaking, big brands already have established systems and processes, a body of work that provides clear examples of what the brand stands for, and a team more or less onboarded as to how to execute. Small brands however, often have very few formal guardrails established. Sometimes consistency is maintained by a highly involved and instinctual founder (which has it’s own challenges), other times a CMO must develop those guardrails at the same time as managing the brand, which can mean much more work in the short term.

Another way this mistake can present itself is the tendency to hire someone from a company that seems identical. If your company makes plastic widgets for tweens, you will try and hire someone from your key competitor in the tween-focussed plastic widget market. In doing so you will probably feel a range of really cool things:

• They are less risk because they know our business/category!

• We can get the competitors playbook!

• We can be just like the category leader!

Marketing is the art and science of standing out. Being different from your competitors in ways that matter to your customer base. So, the closest competitor in your category can be completely irrelevant to your marketing challenges, and the most relevant example can be a brand in a completely different category. Beyond that, your firm comprises different people, different suppliers, is in a different stage of maturity, has different products, sells them differently, than your key competitor. Your key competitor is successful because of a confluence of events in a time and place that you could never orchestrate. Even if you had their playbook, your timing is off, you’ve already moved too slowly, the market has shifted and you don’t have their learnings. In copying another firm, the best you can hope for is to be a poor substitute.

So while direct category experience seems good on the surface of things, the truth is that there are many dimensions of experience that are more important. Category terminology, key competitors, competitor strategies, can be established very very quickly. A great B2B marketer can switch to B2C very easily. A great marketer in Auto can switch to SAAS easily. What can’t be replaced is a breadth of deep experience across relevant marketing sub-disciplines (see above), across a large variety of brands, and coupled with a strong ability to draw those disciplines together in a way that is effective, and right for the challenges the organisation faces. It may seem like you could get that from the marketing team of the direct competitor, but without breadth of experience, that marketer only has one other model to lean from which invariably, isn’t enough.

As the hiring manager keen on finding someone that can help your firm win in the long term - your only choice is to focus on the fundamentals in the capability grid above. Acquiring the playbook won’t get you there, but having the fundamentals nailed will. Think about the karate kid. There is a reason Mr Miyagi trained Daniel by waxing cars and painting fences. It taught him the fundamentals. Too many hiring managers get blinded by the celebrity of big brands, the thrill of getting the competitors’ playbook, and their firms suffer because those things are far less useful than hiring on the basis of good foundations.

Mistake 3 - Setting the salary range with a cost mindset rather than an investment mindset

Let’s set the scene. The CMO job pays…let’s just say $300k (average for a CMO in AU according to https://www.spencerlane.com.au/). Recruiter uses candidates’ salary expectations as an initial filter in order to whittle down candidates so the best candidate - asking $350k gets cut out of the race without even a phone call.

The hiring firm is pacing at $100M annual run rate revenue. They wants 20% growth in the next year powered via marketing. That represents 5 new customers, and a bit of organic growth in existing customers. Marketing budget is $5M all-in (salaries plus tech etc) - A bit low for the category but nothing to sneeze at all things considered. Budget is currently split 33% Team (salaries etc), 33% Foundation (tech, data, etc), 34% Activity (campaigns, events, creative etc)

What those numbers imply is that the target CAC (gross) is $1M but CAC (net) is $330k. Tumble the numbers and you find out that for the firm to entertain the candidate that is over their current salary range, and still achieve the same business fundamentals that candidate would need to decrease CAC (net) by 3% to compensate.

You may say, well 3% reduction sounds like a tall ask: competitive category, established brands etc etc. But for context - in my last 3 engagements, I’ve decreased CAC for one customer by 90%, I’ve doubled team efficiency for another customer, and for a third I increased the size of their pipe by 86x. These were established businesses in competitive categories, two of them were scaleups. These are enormous impacts that fundamentally change the game for them. Enabled by having a breadth and depth of knowledge and by knowing exactly where to look to make things more effective. Big impacts are possible with the right experience. Actually all three of those solutions were not incredibly complex and none of them were copied from competitors. Just the right actions in the right place. Like the story of the man with the hammer

So you need to ask. Which course of action is best? Take a conservative, cost-base approach to setting the CMO salary, hire the best CMO you can afford at that range, and hope for the best, or do you hire the best CMO for the job knowing that they’ll likely be able to overachieve by an enormous margin. I’d say the extra cash is worth it.