Comparing Fractional CMOs & CROs with Henning Schwinum
Making the Case
The adoption of Fractional leadership has been on the rise for years, particularly within finance (Fractional CFO), operations (Fractional COO), and HR (Fractional CHRO). But the demand for interim—or, fractional—sales and marketing models, which has recently become the driving factor behind growth and revenue for companies, is just now taking off. It begs the question: why is the fractional aspect of CMO and CRO/CFO leadership growing so quickly, and what can interim leadership solutions provide for emerging tech companies that permanent roles cannot?
On the podcast this week, we were honored to have a special guest: Vendux Co-Founder Henning Schwinum, who spoke with GROW Powerful’s Managing Partner Brett Schklar about a few of the advantages of fractional work within the sales and marketing spheres.
Schwinum, whose professional background is rooted in construction sales and has progressed to fractional sales matchmaking, boasts an impressive roster of nearly 440 sales executives at Vendux, all of whom are outsourced, pre-vetted, and matched to growth-minded companies around the world to assist in chief revenue operations. Vendux’s interim sales leaders are subsequently paired based on a variety of qualifications such as previous deal sizes, sales cycle lengths, and availability, ensuring optimal fractional experiences for clients and executives alike.
So, Why Fractional?
As fractional models have increased in popularity, previous friction between marketing and sales executives has come into question, particularly in relation to traditional CMO and CFO roles. So, how is fractional work changing this landscape, and why might it be the right switch for you?
Firstly, most pertinent to this discourse is the element of company size. For clients with companies ranging between 50 to 100 people, or even start-ups with a team of 2-3, full-time CFOs and VPs might not be the best bang for your buck. For newer companies, and even those who are well-established, but reconsidering their needs, growth-minded sales is an ever-evolving animal. Hedging your bets on one full-time employee to oversee all marketing and revenue operations could potentially be a waste of your time, funds, and attention.
Enter: Fractional CMO and Sales Leaders, AKA, The Fractional Revenue Department
In the world of B2B tech, the average tenure of the full-time CMO is 17 months. Even worse, the full-time head of sales lifespan in a company is around 10 to 16 months – thus, nearly always a lose-lose situation. By nature, emerging tech companies change as they grow, finding new routes to market, new ways to position themselves, and new capabilities that place them into new environments.
Full-time revenue leadership (CMO’s and sales leaders) are set up for failure in many cases. In SOME cases, there is an amazing leader who knows how to pivot, can adapt on the fly, and can bring resources together when needed at the right time and in the right way. However, that’s a rare occurrence.
Companies are now realizing that the success of having a virtual or fractional CFO also reap the benefits in the growth department – for a fraction of the cost.
Understandably, this model might not be right for everyone at certain times in the marketplace, but for the right CEO at the right time, a fractional model could mean the difference between revenue stagnancy and a complete brand revival. The optimal executive for fractional recruitment will be open to change, results-focused, and willing to abstain from micromanagement. Once companies obtain some experience and familiarity with the fractional process, then they’ll be more open to further interim positions in the future.
[Read more here to learn about the right fractional model for you and your company.]
To Compete or Not to Compete
As per the aforementioned “friction” between CMOs and CROs, interim, fractional-based contract work has the advantage of diminishing the traditional ‘dog-eat-dog’ culture that historically existed between marketing and sales leaders within the same company. Rather than competing for limited resources, fractional CMOs are provided the space to enter a company, complete smaller, more strategic goals, consult with executives for a limited time, and hand their work over to the resident CRO, who then gets to reap the benefits from the fractional executive’s work.
Bridging the gap between sales and marketing work removes the proverbial superiority contest which can often impede upon meaningful, high quality work, leaving only that which propels the company farther toward success and further away from being stunted by the historic, detractory marketing systems which have plagued startups for years on end.
As with much of the work executed by a fractional CMO, small wins are the name of the game. Many companies and CEOs are already aware of the challenges which exist within their companies, but are unsure of the general prioritization process; while many hiring managers would be tempted to reach out to consultants and non-CMO contract workers to complete such tasks—which we’ll be discussing during next week’s livestream — Henning Schwinum warns against this move.
“The consultant comes in, tells you what’s wrong, then leaves,” Schwinum says. “A fractional executive comes in, tells you what’s wrong, and fixes it.”
Your Questions Answered by Vendux & GROW
In response to a few of the questions submitted during the livestream, and in the spirit of friendly competition, we thought we’d answer a few of your questions from both the Vendux and GROW perspective.
What happens when a client wants to hire a fractional CMO or CRO for full-time work?
GROW: We have an amazing team of fractional CMOs who are battle-tested, proven, and have had at least one exit under their belt. In many cases, that fractional CMO doesn’t necessarily want to take on a full-time role.
For most of our iCMO’s, this fractional model to have more control is much more attractive. But, sometimes a client loves what the fractional CMO does so much that they say “We just can’t live without you, and we want to take you on.” So, we basically have a typical, small finder’s fee that’s attached onto the salary of the iCMO, so that if they do decide to go work full-time, we have a cost to acquire that CMO. It’s not very big, and I don’t think anyone’s going to get rich off of it, but while we don’t want to stand in the way if a company wants that CMO, we also need to refill our buckets from what that hired person does.
Vendux: Contractually, we do the same thing. For Vendux, there’s a finder’s fee, or a conversion fee, if a fractional employee becomes a full-time employee. And, it happens. This kind of conversion happens in about 20% of cases; kind of a ‘Try-Before-You-Buy.’ In other statistics, I’ve heard as high as 40%. Ultimately, it has to be a fit for both sides. As you said, the executives sometimes are not in the market for full-time employment; they enjoy the variety, the changes, the new challenges. It has to be a fit for all parties. We as an organization certainly don’t want to stand in the way of a match made in heaven.
What does the typical fractional contract look like?
V: Well, the way we structure it is that we, Vendux, become the service provider to the client through a service contract, and the executive becomes a 1099 contractor to us – that’s the contractual side of it. As far as how these contracts are set up, when we look at things like assignment length, intensity, number of hours, compensation, statement of work or goals, it’s all over the place. There’s no standard or ‘typical.’ There are things that occur more often than others—clusters. From a sales leader perspective, a ‘cluster’ would be an assignment that’s fractional 1-2 days a week against a monthly retainer, and it’s a month-to-month contract with no minimum or maximum length. That’s a more common contract or agreement than others.
G: On my side of the equation, our engagements with our clients can be a mix. It’s always a retainer, so a fixed amount per month. We’re definitely not the cheapest, and there are a couple of reasons why. One, we very carefully vet each and every one of our fractional CMOs, and we’re very cautious as to who we put with what opportunity. Second, because we’re purely B2B technology-focused, we are a niche, and we’ll do a better job in that arena than probably anyone else. The third reason is that our engagements with our clients are very flexible, so, with 30 days’ notice, you can scale up, scale down, or scale out of our engagements, and we think that low risk of working with us makes us much more attractive. In turn, our average lifespan with a client, right now, is going on about 10.5 months, which is longer than I thought it was going to be.
What does the average fractional sales role look like?
V: As before, we have clusters, and a more common type of assignment is around 8-16 hours a week. From an executive point of view, most fractional executives layer between 2 and 5 assignments on top of each other, and it’s driven by whether you have a couple that are maybe only 4 hours a week, or an hour a week of coaching and you need a few more on top of each other. If you have a 50% assignment, or maybe even a higher percentage, then that limits your ability, and maybe two assignments is all that you can handle at any given point in time. The challenge and the excitement of it is the diversity of assignments that you have, and the fact that you go from one to the other, and that they each have their unique challenges and environments. Your role as a fractional executive is always slightly different depending on how big the team is and where they are in their growth cycle, but that’s the spice of life, and that’s what most fractional executives like to have.
G: On this side of the equation, it’s very similar. We start out with three different levels of engagement with our clients; one is for approximately six hours a week (GUIDE), the one for 12 hours per week is more operational (GROW), and then the 18-hr per week is more hands-on (GROW Powerful). So, we have GUIDE, GROW, and GROW Powerful as our starter levels. Having said that, there have been a few companies where we’ve had to bring in an entire marketing team, and the fractional CMO is spending 15-18 hours a week while there’s a tactical team behind them that might be spending 50, 70, or even 100 hours a week. So, that’s what our side looks like.
To learn more about GROW Powerful and fractional iCMO life, be sure to tune into our livestream next week, September 6th, to hear more about the pitfalls of fraudulent fractional CMO services, and how you can pick the right CMO resource for your business. Register below!
All the best,