Accepting a Chief Marketing Officer (CMO), or a VP of Marketing position that reports directly to the CEO, is a significant career decision. The role is often high-profile, comes with substantial responsibilities, and can greatly influence the trajectory of your professional life. However, before you sign that contract, it's crucial to conduct thorough due diligence to ensure you're setting yourself up for success.
To that end, CMO tenure has been declining since 2009. Recent reports place last year's average tenure at 37 months, a decrease from 40 months in 2022. Likewise, the CMO/VP role now turns over more often than any other C-Suite position.
Here’s what you should evaluate before accepting a CMO/VP role:
1. Company Health and Stability
The financial health and stability of a company are critical factors to consider. Evaluate key performance indicators such as fundraising and burn rate figures, pipeline and revenue growth over the past year and quarter-over-quarter, contribution splits (Marketing, Sales, Channel), profitability, and cash flow. Additionally, since marketing programs take considerable time to ramp up and optimize, ensure there is an adequate runway. Neglecting this can lead to inevitable failure and significant stress along the way.
Understanding these metrics will help you assess the company’s capacity to invest in marketing and support your initiatives.
Key Questions to Ask:
- When was the last fundraising round, and when do you anticipate raising again?
- How many employees are in the company, and specifically on the go-to-market team?
- What milestones were setting for your last round, and were the reached
- What are the company's revenue and profit trends over the past few years?
- How did your last 4 quarters perform in terms of pipeline build and closed-won revenue?
- What percentage of pipeline and revenue contribution came from Marketing, Sales, Channel?
- How does the company perform against its financial targets y/y and q/q/?
- What is the cash flow situation, and how is it managed?
2. Customer Health and Satisfaction
Customer satisfaction and retention are critical indicators of a company's health. Metrics like Gross Revenue Retention (GRR), Net Revenue Retention (NRR), and Net Promoter Score (NPS) provide insights into customer loyalty and satisfaction.
Key Questions to Ask:
- What are the current GRR, NRR, and NPS scores?
- How does the company track and respond to customer feedback?
- What strategies are in place to improve customer retention and satisfaction?
- What is your current churn rate, and plans to improve it?
3. Team and Culture
The culture of the company and the dynamics within the marketing team are pivotal to your success. High employee turnover and negative reviews on platforms like Glassdoor can be red flags indicating a toxic work environment.
Key Questions to Ask:
- What is the employee monthly attrition rate?
- Can you share recent employee engagement survey results?
- How does the company promote a positive and inclusive culture?
4. Growth Opportunities
Understanding the market potential and the company's growth opportunities is essential. Total Addressable Market (TAM) and Serviceable Addressable Market (SAM) are useful metrics to assess the potential for expansion.
Key Questions to Ask:
- What is your Ideal Customer Profile (ICP)
- What are the TAM and SAM for the company’s products or services?
- What are the company’s plans for market expansion?
- How does the company differentiate itself from competitors?
- Why do you win deals? Why do you lose deals?
5. Sales and Marketing Alignment
The relationship between sales and marketing is crucial for a CMO/VP. You need to ensure that there is a cohesive strategy and alignment between these two functions to drive growth effectively.
Key Questions to Ask:
- How are you currently reaching your ICP?
- What inbound and outbound channels are most effective, and why?
- What are the current bookings targets and sales cycle lengths?
- How large is the sales pipeline, and what are the close rates?
- Did all of the reps hit their targets in the last two qtrs?
- What is the marketing budget, and how is it allocated?
6. Support from Leadership
The support you receive from the CEO, senior leadership team (SLT), and the board can significantly impact your success. It’s important to understand their expectations, how they perceive marketing, and their commitment to supporting your initiatives.
Key Questions to Ask:
- How does the CEO and SLT view the role of marketing in the company?
- What are their expectations for the CMO/VP?
- How accessible are they for regular strategy meetings and discussions?
- Does the company embrace the "First Team" concept, which emphasizes the importance of the executive team working as a cohesive unit with shared goals and mutual support.
Conducting Due Diligence
Performing thorough due diligence before accepting a CMO/VP role not only protects you from entering a potentially damaging situation but also demonstrates your seriousness, thoroughness, and data-driven approach to potential employers. This process involves:
- Gathering Data: Collect information on customer health, team culture, growth opportunities, sales and marketing metrics, and overall business health.
- Asking Tough Questions: Don’t shy away from asking detailed questions about the company’s performance, strategies, and internal dynamics.
- Evaluating Responses: Pay attention to how forthcoming and detailed the responses are. A lack of transparency can be a significant red flag.
Conclusion
The decision to accept a CMO/VP role should not be taken lightly. By conducting thorough due diligence, you can better understand the company’s health, culture, executive and cross-functional alignment, and growth prospects, which will help you determine if the role is a good fit for you. Remember, if a CEO or leadership team is unwilling to share critical information, it’s a red flag indicating potential challenges ahead.
Invest time in building a comprehensive due diligence process and stick to it. This approach not only helps you avoid pitfalls but also positions you as a serious and prepared candidate, ready to drive success in your new role.
Check out our latest blog for a deeper analysis on why CMO tenures are shrinking.