Technology companies that have crossed the start-up stage are often caught in a bind. The personal contacts of the founders and the sales team are no longer enough to grow the business. To scale up, the company needs a structured marketing program to build a brand and generate high quality leads on an ongoing basis.
There are two immediate problems.
One, most CEOs have no idea of what such a marketing program costs. Even a basic program involving minimum advertising, sponsorship, influencer marketing initiatives and trade shows and events quickly ratchets up the marketing spend and can cost upwards of $500,000. For a company that has till now relied on the reach of the CEO and the heroics of salespeople to generate business, this figure comes as a rude shock and the initial reaction is one of disbelief.
Two, you need an experienced professional to manage such a program. You need insight into customer, prospect, media, analyst, employee and investor behaviour; experience in managing agency relationships; an understanding of the product and the market; and the ability to manage in-house staff and work across organizational silos.
Such a professional is expensive to hire and difficult to retain (see why CMOs don't last).
Consider outsourcing
Most companies already outsource some of their marketing—advertising, PR, collateral creation, website maintenance, and event management are all activities that are commonly outsourced either wholly or partly. This is outsourcing to fill a skill set gap.
But for midsized companies, outsourcing can also solve their second major problem—that of not being able to attract and retain the right senior talent.
A full time senior marketing hire in India costs about $100,000 in salary alone, not including overheads such as computers and office space. Outsourcing the CMO can halve this cost without affecting the quality of the work.
That’s because marketing in midsized companies proceeds in spurts. There are periods of intense activity followed by lulls. An experienced professional is needed to set up a team, define goals, allocate budgets, standardize branding, set up a collateral creation program, firm up advertising and sponsorships, initiate engagements with media, analyst and deal consultants, streamline investor and employee communication, manage events participation and support a lead generation program.
It takes about a year or more to get such a program up and running. But it takes a whole lot longer for the rest of the company to scale up its sales and delivery capabilities to match up to the enhanced brand promise. During this period, marketing slows down to a holding pattern and the senior hire either gets bored and leaves or becomes an overhead.
Having an outsourced CMO enables the company to hire the right expertise for the job at lower than full time cost. And to pay for it only till needed.
Sunday, December 7, 2008
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5 comments:
Isn't marketing one of the key skills a company needs? Is it not better for them to learn it with a coaching model instead of simply outsourcing it?
Thanks for stopping by Dorai. For all intents and purposes, the outsourced CMO is the head of the marketing team and the normal mentoring and coaching is built into the engagement. But since the outsourced CMO comes at lower than full-time cost, the company in fact gets the advantage of a marketing leader they wouldn't otherwise have been able to access.
The concept of Outsourced CMO is interesting and has its advantages. However I think there are certain challenges and risks in adopting such an approach. The Startups are generally based on some deep rooted beliefs of the promoters as to how a particular market need/pain be solved. And the offerings are either fully defined and packaged or (in most cases) work in progress. Marketing these would also require deep understanding of the company history, value proposition, its markets and the future. And it requires lots of time and deep discussions. Do you think an Outsourced CMO would have time and inclination to appreciate the finer points and not be tempted to apply standard marketing knowledge to create such marketing programs? And I think that could be one of the reason delivery and sales generally will lag behind marketing.
Hi
ITs a interesting concept . I am also internet marketer . Promila.im@gmail.com
To answer Vineet Dahiya questions, to start with as Vijay mentions, a CEO and the sales mavericks typically lead from the front but are always bogged down by what an entire marketing effort would entails. A marketeer has it ingrained in his/her head what or how one has to go about all programs in order to get the right results. With an outsourced CMO concept, its could as well turn out to be cost effective and yet be the answer for a lot of SMEs who cannot afford an otherwise a full fledged marketing program. A good marketeer would be able to understand and deliver in the marketing efforts after understanding the company story and the brand identity to the fullest extent.
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