56548

Why Most Construction CFOs Shouldn’t Manage Marketers

In the construction industry, it’s not uncommon for Chief Financial Officers (CFOs) to find themselves managing marketing departments. However, this arrangement often leads to significant challenges and missed growth opportunities. Here’s why entrusting CFOs with marketing responsibilities can be a huge mistake and what the ideal reporting structure should look like.

The Misalignment of Responsibilities

CFOs are traditionally responsible for finance, risk management, human resources, and technology. These areas are fundamentally different from marketing. As the famous Sesame Street song goes, “One of these things is not like the others.” Marketing is a revenue-generating function, not merely an expense, requiring a different approach and mindset.

The Power of Marketing

I’ve been fortunate to work with some exceptional CFOs who understood the strategic value of marketing. They either supported marketing initiatives or, at the very least, did not interfere with them. Unfortunately, this is not the norm. 

Marketing is often viewed as a necessary evil, leading to budget constraints that stifle creativity and effectiveness. This mentality can hinder a company’s growth, as marketing budgets are often minimized to the point where only the bare minimum is achieved. That creates a ripple effect, where poor-performing results give the CFO more reasons not to invest in marketing.

The Impact on Marketing Effectiveness

When CFOs manage marketing, initiatives are frequently reduced to the cheapest options rather than what is best for the customer or what will provide the highest return on investment (ROI). This approach can lead to subpar customer experiences and diminished brand strength.

The Ideal Reporting Structure

So, if CFOs shouldn’t manage marketing, who should? 

The head of marketing should report directly to the CEO. This structure allows the marketing team to align closely with the CEO’s vision and growth goals. It also ensures that quantitative KPIs and qualitative data support marketing strategies, which is crucial for informed decision-making.

Especially in ConTech start-ups, the CEO often deeply understands the company’s audience and the problems the company solves. They typically embody the company’s brand qualities, making them well-suited to oversee marketing. This direct line of communication and alignment can drive more effective marketing strategies and business growth.

Real-World Consequences

I know dozens of marketers who have left their jobs because they felt handcuffed by their CFOs. Many have also turned down attractive job offers due to the prospect of reporting to a CFO. This trend highlights the frustration and limitations experienced by marketing professionals under such an arrangement.

Bucking the Trend

As a fractional Chief Marketing Officer (CMO), I usually work directly with CEOs and in-house marketing teams. However, I have had productive conversations with CFOs who were open to investing time and resources into enhancing the customer experience. These exceptions prove that with the right mindset, CFOs can positively impact marketing, but they are not the norm.

In summary, while there are exceptions, the best structure for most companies is for the head of marketing to report directly to the CEO. This alignment fosters a more strategic and effective approach to marketing, driving growth and enhancing the customer experience. By recognizing the unique value of marketing, companies can avoid the pitfalls of treating it as a mere expense and unlock its full potential as a revenue-generating powerhouse.

69498

Fractional CMO Isn’t a Fancy New Term for a Marketing Consultant

Not all marketing consultants operate as fractional Chief Marketing Officers (CMOs); the business models and scopes of these roles vary significantly. 

Recently, I had a conversation with a CEO I’ve known for over a decade who was curious about the “true” responsibilities of a “Fractional CMO” because he wasn’t getting what he expected from the one they hired about six months ago. 

Defining the Role of a Fractional CMO

During our conversation, the CEO asked me what a fractional CMO does. I explained that a fractional CMO focuses on three core areas:

  • Marketing Strategy – Developing comprehensive marketing plans aligned with the company’s goals, budget, and competitive landscape.
  • Executive Leadership –  Providing high-level oversight and strategic direction for the marketing team, often sitting in executive leadership meetings.
  • Mentoring – Guiding and developing the in-house marketing team to enhance their professional skills and effectiveness.

The CEO agreed that this aligned with his understanding but expressed dissatisfaction with his current fractional CMO, who was not delivering on these fronts.

Additional Core Differences 

Fundamentally, the structure of the relationship between client and marketer is quite different. A marketing consultant typically works on a project with a clear deliverable within a specific time frame. In comparison, a fractional CMO usually works on company objectives with no established end date. The fractional CMO is similar to a part-time hire and often represents the company in that role and leads the in-house marketing team.

The Current Situation

The CEO mentioned that his fractional CMO, whom I know to be a talented marketer, was providing creative ideas and some project management. However, his in-house marketing manager needed to develop into a stronger leader, which was a significant concern given the company’s rapid growth. While culturally a great fit and eager to grow, the marketing manager needed more mentoring and development to lead an effective internal team.

Addressing the Misalignment

I recommended that the CEO have an open discussion with the marketing consultant to clarify whether being a fractional CMO aligns with her business model. It’s possible that she may be offering a different type of marketing consultancy service and that the current engagement may be her only foray into fractional CMO territory.

If she wants to expand her fractional CMO services, I suggested the CEO ask her to provide a roadmap for the marketing manager’s development and offer more direct mentorship. This approach aims to ensure that the service meets the company’s needs without pushing out a capable marketer due to a miscommunication about the scope of work.

The key takeaway from this conversation is the necessity of aligning a service provider’s offerings with the client’s expectations. A fractional CMO should deliver strategic oversight, executive leadership, and mentoring to add significant value to the company. When these elements are missing, it’s crucial to address the gap to ensure that both parties are on the same page.

To recap, most marketing consultants do not function as fractional CMOs. 

blog1

Why CFOs like Fractional Executives

In most small to medium-sized businesses, the CFO manages all non-operations departments such as Finance, HR, IT, and Marketing. As the company grows, its leadership team grows to include more specialized executives including the CIO (Chief Information Officer), CMO (Chief Marketing Officer), and potentially the CPO (Chief People Officer) or CHRO (Chief Human Resources Officer). Until then, many companies outsource these roles or rely on consultants. Since 2020, we’ve seen a rise of fractional executives in Construction, including the CFO role.

9 Reasons Why CFOs Like Fractional Executives

  1. Subject Matter Expertise – a fractional executive is an expert in their field and has an expertise that the CFO often isn’t knowledgeable in such as marketing. This allows an industry expert to make recommendations and decisions based on their experience and knowledge.
  2. Industry Knowledge – many fractional executives specialize in a specific industry like how AltCMO focuses on the Construction industry. 
  3. Continued Education – good fractional executives continues to learn and hone his/her craft. They read industry articles, attend conferences, watch webinars, and talk with their peers about challenges, trends, and innovations in their expertise that a CFO couldn’t keep up with and probably doesn’t have access to.
  4. Value – because a fractional executive is a fraction of their salary, often 15-25% of their salary and burden, companies get an extreme amount of value by pairing the expertise of a fractional executive with an entry-level employee such as a marketing coordinator, which costs less than a marketing director.
  5. Predictable Monthly Expense – fractional executives have a set monthly rate so CFOs can easily budget their expenses instead of worrying about huge fluctuations with outsourced companies or consultants that charge per project.
  6. Hire Better Talent – since the CFO may not have the knowledge or resources to distinguish the difference between candidates, they tend to overpay for lesser-skilled team members or underpay valuable employees who leave quickly. A fractional executive can see who “gets it” and find those diamonds in the rough that they can mentor and grow to be valuable assets to the company.
  7. Consistency Through Turnover – turnover happens with every company, but it can be detrimental for smaller companies with one-person departments like HR, IT, and Marketing. A fractional executive can cover for that person’s absence, utilize their network for a temporary solution, and hire a replacement faster to minimize the impact of the disruption.
  8. Vetted Network – a fractional executive can tap their network to bring in additional experts and vendors that they trust, which saves the CFO time and frustration.
  9. Scalable – fractional executives can scale their offering as the company grows and recommend when and what to hire in their respective departments. 

A fractional executive can make a significant impact on a company and generally make the CFO’s job a lot easier. Additionally, fractional executives can provide CEOs and CFOs with insights they see from their other clients. If the fractional executive focuses on a specific industry, they’ll also see trends happening in real-time instead of having to wait 1-2 years for those trends to be reported in industry publications.

altcmo-hero-image

What is a “Fractional CMO”?

CMO stands for Chief Marketing Officer and a Fractional CMO is a senior marketing executive working with a company part-time (or fractional) instead of full-time. It’s really that simple of a concept; let me elaborate. 

As the senior marketing leader of the company, the Fractional CMO develops the marketing strategy and manages the execution of that strategy. Typically, a fractional CMO operates like a company leader on payroll, providing leadership and mentoring other marketing team members including marketing managers, marketing coordinators, visual designers, copywriters, photographers/videographers, etc., or managing vendors and freelancers like digital agencies and graphic designers. 

Fractional CMOs are commonly hired by small to mid-sized companies to provide the company with strategic viewpoint, expertise, and leadership when the company may not have the need or budget to hire a full-time Chief Marketing Officer. Larger companies utilize a Fractional CMO to offset skill gaps such as brand management, marketing operations (process and tools), or data analysis.

Companies, large or small, may also utilize a Fractional CMO for large projects that span multiple months like migrating CRMs, entering new market sectors, or rebranding the company, and to bridge leadership transitions.

Fractional CMOs provide a cost-efficient way for companies of all sizes to gain additional marketing expertise and leadership.

A unique aspect of Alt.CMO’s offering is marketing implementation. Most fractional CMOs craft and manage the marketing strategy, while we can also provide the graphic design, copywriting, website development, SEO, digital advertising, and more that complement our clients’ in-house resources.

Our team’s focus and expertise is in the Construction industry. We work with residential contractors, commercial construction companies, trade partners/subcontractors, engineering firms, and ConTech (construction technology) companies including start-ups.