When is the right time to hire your first CMO?

As a B2B tech company scales, determining the right time to bring in a Chief Marketing Officer (CMO) can be a tough decision. The CMO serves as a visionary strategic leader, a manager of managers focused on expanding the marketing department. Selecting the right CMO is critical as it can either make or break the company’s revenue growth, market expansion, product-market fit, and brand perception.

Firstly, let’s look at the talent landscape, at the time of writing this, according to LinkedIn, there are 835 CMOs in B2B Tech across companies of all sizes. Out of these, 237 have changed roles in the past year and the median tenure rate is 1.5 years…! (it’s the role that has held the lowest tenure rate for the longest). The majority of CMOs (516) are in London and in terms of gender diversity, the data shows that 44% are female and 56% are male.

So, when is the Right Time to Hire Your First CMO?
To help answer this question, I turned to my LinkedIn community of marketing leaders for their first-hand experiences. I asked them what one core metric a B2B SaaS startup/scale-up should track to know when to bring in their first CMO.

Of the 55 respondents in my poll (mostly from UK Start-Ups), 49% suggested that annual recurring revenue (ARR) growth is the most important metric to track. While there were varying opinions on what level of ARR growth should trigger the hire the range was from £5mill – £50mill ARR, it’s clear that it’s a metric that requires careful consideration when making this decision.

31% of respondents suggested that the funding stage of the company should be the main driver. Commenting that Series B+ funding is a good indicator.

18% commented that the go-to-market motion (product-led growth, inbound, outbound) should be a critical factor in the decision. On this point, the Marketing Leader who launched GitLab in Europe commented –

“In B2B SaaS, it can take up to 18 months to build out a marketing team, a working SaaS funnel, a scalable system and a GTM plan.

While a product-led SaaS can go a long way without a CMO, a sales-led SaaS will require a CMO right from the start. The requirements to generate the thousands of leads sales require to qualify a few (Generate pipeline) will only increase with growth.

Startups that grow quickly without bringing in a CMO early, will face the situation of slowing growth and high churn. I call this “Growth by accident” or “How did we even grow over the past 24 months?”

Because it will take time to build, bringing in an experienced CMO too late or only after growth slows, can have a significant impact and there is no shortcut to recovering or turning things around quickly. This is very often a wrong assumption to bring in a CMO once growth slows down. It will still take time.

In my experience, the first CMO should always be an experienced builder who’s done it before. There is no room for trying at this stage. It takes experience to build out a marketing organisation and a GTM plan from scratch. Ideally, this early stage CMO will hand over to a “maintainer” CMO for the second growth phase after 24-36 months.”

Our Advice:
• ARR growth and GTM motions are to be very carefully considered when deciding to hire.

• For marketing to truly succeed in any business, it is critically important to align marketing’s role with the company’s vision across the executive leadership team and investors.

• Before hiring a CMO, there should be a point where all stakeholders share their opinions and thoughts on the marketing plan. This will ensure total alignment with the CMO, wider executive team, and investors on the expectations and timeframes of deliverables.

If you would like to discuss how Zeren is helping clients to overcome the challenges of building marketing leadership teams for scaling success, we’d love to chat.

Please reach out on LinkedIn or get in touch at tom.pearce@zerenglobal.com