PE-Backed CMOs: How to Build a Team that Investors Love

April 24, 2023
how to build an insourced team investors love

When it comes to marketing, most of us envision an internal team responsible for creating a brand voice, coordinating campaigns and events, and serving sales prospects that require nurturing. However, when something significant happens, such as a rebrand or a major crisis, outsourced resources are often called upon to take on the workload and provide a fresh perspective.

Broad, overarching strategies like go-to-market (GTM) or customer experience (CX) are frequently left to the executive team to sort out. This is especially true with mid-market B2B companies where sales is the primary function responsible for filling pipelines and closing deals.  Marketing usually reports to them.

But it’s crucial that someone other than sales is responsible for determining what to sell, who else is selling it, who wants to buy it, and why. Marketing needs to play a more active role in providing strategic direction and informing the sales team about the market landscape and customer needs.

This brings us to the topic of insourcing versus outsourcing marketing functions. As companies face the decision of whether to keep marketing in-house or outsource to an agency or consultant, they must consider factors such as expertise, cost, and the ability to provide a fresh perspective.

If you don’t have time to read this entire thing, here’s the TLDR version from one of our Fractional CMOs:

“The challenge executives have when hiring strong marketing leaders is that they have not experienced “good”. They are in search of a magic bullet from a marketing leader to drive growth, and they usually don’t question their approach until after a year, even when there were clear signs at 90 days. This can happen when either outsourcing or hiring internally. What to do? 

  • Trust your gut, if it doesn’t ring true-say so

  • Use a “sprint mentality” with one-month gates & evaluations

  • Demand immediate progress. It can take multiple iterations to find the note that resonates with your customers, but there should be multiple attempts if you don’t see progress. The words ‘let’s give it a little longer” may be a good sign of a user. 

  • If you see progress and you are excited for your partners to hear what the person has to say, you probably have a winner, internal or external. Don’t lose them.

  • Recognize that most business leaders are in a perpetual state of discontent with their marketing leadership, it is up to you to take a different path to break the cycle.”

Is outsourcing a good strategy?

If we view marketing as merely a support function or a cost center that doesn’t contribute directly to growth, then strategic marketing activities may seem non-essential. For example, accounting’s role is to balance the books, write checks, and collect on invoices. The strategy is to make sure the business spends less than it makes.

However, marketing strategy should be an integral part of the core business, with clear paths to revenue and profit. Marketing aims to make the business appear larger than it is, make the offering appealing to the market, and attract the right customers who will remain satisfied and loyal. This is crucial to the success of the business.

Agencies that provide marketing strategy are often self-serving, treating their work as paid sales. They develop plans that promote and create more billable time, but this approach can quickly deplete the budget and lead to diminished ROI. As a result, next year’s marketing budget may be reduced even further.

Let’s keep the outsourcing idea for the thousands of other agencies trying to win your business. We want to explore insourcing in a strategic light and help you build that foundation.

Priorities when building your insourced marketing:

There are several priorities to consider when building an insourced marketing team.

  1. Important for marketing to report directly to the CEO
    1. Ensures that the buyer, consumer, and customer are at the forefront of the business’s strategic decisions
    2. Increases accountability and urgency 
    3. Empowering bold moves and risk-taking
  2. Your CMO should have a deep understanding of the market and your audience, rather than just focusing on technology and technique.
    1. A good CMO should possess a mix of research, analysis, and creativity, with a balanced focus on brand identity, lead generation, social media, communications, and events. 
    2. Avoid a CMO who is too brand-heavy, as this could lead to a decline in return on marketing investment.
  3. It is crucial to build a content team in-house (as outsourcing content is often the largest cost center with the most frustration tied to ROI)
    1. Having writers, podcasters, and video producers on your team allows for the creation of truly authentic content that connects with a broad audience, and insights gained from this content can inform a broader go-to-market strategy.
  4. Outsource key events and transitions, such as rebrands, launches, and tech implementations 
    1. This allows for clear direction, solid boundaries, clear goals, and contained budgets, reducing the risk of scope creep and missed results.
  5. Create your own clients by grouping products and services based on audience and market. 
    1. Marketing should start from the buyer’s perspective, looking at who the distinct buyers are and how to market to them differently. 
      1. For example, marketing for B2B could be built around the C-suite pillars, with distinct needs and languages, rather than chasing down dozens of buyers’ journeys. 
      2. This approach puts marketing in a more strategic position, optimizes budgets, and increases cross-selling and customer experience.

Ideal Order of Insourcing Hires

If you are building a marketing function from scratch, whether you’re a startup or looking to create an internal agency, it can be tempting to look for generalists with experience in your industry. However, it’s important to take a strategic approach to insourcing hires. Here’s the ideal order of insourcing hires for your marketing function:

Hire #1 Writer: Your first hire should be a writer who can communicate effectively with your business lines and sales team, understand your unique value proposition, and shift gears easily into different areas of marketing such as PR, digital and social. Outsource actual inbound/outbound marketing functions and creative to start, and let your sales team, CEO and product team formulate a GTM (go-to-market) strategy to give your writer a framework to work from.

Hire #2 Research/Analyst: Your second hire should be a research/analyst with the potential to become a future CMO. This individual should have a combination of research and writing skills, and should shadow your sales team and CEO to better understand how marketing fits into the fabric of your business.

Hire #3-#5 Project Managers: Your next three to five hires should be project managers who will oversee all resources, group initiatives into actionable tasks, optimize your marketing budget, and report directly to the CFO.

When it’s time to promote someone to VP or Head of Marketing, consider promoting from within rather than hiring externally. Ideally, this individual will be your analyst, but if not, a project manager can rise to the occasion.

Remember, your hiring strategy should flow with your specific GTM. For example, if your company is heavily reliant on trade shows, building an experiential marketing team in-house may be a wise investment. 

If you start with a CMO, they may be inclined to hire people and functions they’re familiar with, which can make it difficult to shift directions later on. Instead, let your GTM guide the composition and allocation of your marketing resources from the start.

Insourced teams often fit into one of two models:

Marketing teams are typically designed to serve the needs of various business units, such as Sales or Product, resulting in a structure that resembles an agency without the proposals and fees. There are two main categories for these teams: Bureau and Strategic:

The Bureau workflow involves assembling a team of individuals to execute specific tasks requested by clients, such as creating a booth for an event, generating leads, or designing business cards. 

  • Strategic planning happens on a quarterly or annual basis, during which senior marketers work with business units to shape, budget, and scope their needs. 
  • However, this model can stifle innovation and outside-the-box thinking, leading to a status quo approach. Disruptions, transitions, and acquisitions can easily disrupt this model, and routine can set in. In such cases, agencies are often brought in to revitalize the brand, but this can be costly and difficult to maintain. 

Strategic Staff Augmenting: In this model, each business unit is assigned dedicated marketers who exclusively know and understand their go-to-market (GTM) strategy. 

  • They work full-time and are responsible for Product X, Product Y, Service Z, Sales, etc. Centralized or outsourced production and execution resources support these marketers and form temporary teams to meet the fluctuating resource demands of the business unit.
  • To make this model work, there must be multiple GTMs that roll up to one at the corporate level. A full-time CMO may not be necessary to manage this, and a Fractional or COO could fill the role. 
  • This model can stimulate more entrepreneurial, bold, and creative thinking within the marketing function as marketers are closer to the end customer, and insights gained from experimentation across a variety of markets are invaluable.

However, without true governance in place, this model can lead to a fragmented brand.

A more optimal workflow to consider….

We want to try and strike a balance here between strategic innovation and effective governance, while having a very flexible approach that can expand and contract to meet fluctuating demand.  At the same time, the marketing function should start to take ownership of the GTM.

In essence, we want marketing to accomplish the following:

  1. Create the strategy for business units
  2. Build one universal GTM that is updated regularly.
  3. Own all customer data, not just what shows up in GA or Salesforce.
  4. Own customer and market research based on that data.
  5. Execute what’s connected to growth and can prove an ROI. 

This means…

Budget should lean toward Strategy and Ops. insourced marketing

Instead of allocating budget towards building an internal digital marketing team, consider investing in outsourced work instead. Keep outsourced activities to a minimum and focus only on critical production. Reserve larger budget outsourced work for major events such as rebranding.

Allocate more funds towards operations such as data collection, technology platforms, automation, and even AI. Marketing operations should not only support talent, but also allow non-marketers to be more involved in decision-making processes with the help of data.

Strategy is an important focus area that often requires time and investment, making executives hesitant. However, investment in this area is necessary for marketing to be adaptive and innovative. Areas of focus should include GTM, PMF, research, and CX.

Creative work should mainly consist of writing, design, and video production. The availability of a gig workforce makes it easy to expand and contract creative services on-demand. Building a stable of talent is important for consistent delivery.

Don’t try building an insourced agency. 

Avoid trying to create an insourced agency because it won’t work the same way. This is due to a few reasons:

  • Clients can’t be fired.
  • The agency can’t be fired by clients.
  • Talent only works on one account.
  • Value is measured slowly, not through billable rates.
  • Pressure and urgency are replaced with consistency and continuity.

However, there are a few adjustments that can lead to more innovative outcomes. Consider implementing the following small improvements:

  • Create proposals, scopes, and estimates that require signatures, rather than just plans and budgets.
  • Establish a revenue per Marketing FTE or another quantitative method to associate talent output with value.
  • Work on external projects at least once a year, such as nonprofit opportunities.
  • Hold regular strategy sessions that address significant issues like competitors, CX, churn, CAC, PMF, and profit.
  • Reduce the number of meetings to focus more on writing and less on talking about what to write.

Before building or optimizing a marketing department, take the time to examine the foundations. Mavenray can assist Private Equity and Portfolio Companies in constructing the Office of the CMO. 

This is a framework used to more effectively architect the marketing function both internally and externally, with the aim of achieving value and growth during the holding period, typically 3-5 years.

Want to discuss further?

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Download our free, sample go-to-market template that we use with a number of our clients to get them started from ground zero. It covers all the basics, including budget, pricing and audience segmentation.
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