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 role now turns over more often than any other C-Suite position.
Some of the common reasons given for short CMO tenures include:
- Absence of a clear strategy
- Pressure for immediate results
- Sales & Marketing conflict
- No alignment with the CEO
In B2B SaaS this situation is even more dire, raising several questions about the pressures and challenges facing marketing leaders in SaaS companies. Let's dig into the key factors contributing to this trend and explore what it means for the future of SaaS marketing leadership.
The Accelerated Pace of Change
The SaaS industry is characterized by rapid technological advancements and ever-changing market conditions. CMOs are expected to stay ahead of trends, adopt new technologies, and drive innovation within their teams. And while many reports place CMO tenure around 37-42 months, this is often significantly shorter in the fast-paced SaaS environment.
The average tenure for CMOs in B2B SaaS companies tends to be shorter compared to other industries, often around 18 months. This shorter tenure is attributed to the rapidly changing nature of the SaaS market, which demands constant adaptation and immediate results from marketing leaders.
This disparity highlights the unique pressures and expectations within the B2B SaaS sector, such as:
High Expectations for Immediate Results
SaaS companies often operate under intense pressure to deliver quick results and demonstrate rapid growth. CMOs are tasked with driving customer acquisition, retention, and revenue growth in increasingly competitive markets. The pressure to deliver short-term results can lead to high turnover rates, as CMOs are frequently judged on quarterly performance metrics.
In a recent report, McKinsey & Company makes the claim that if the CEO is the CMO’s closest natural ally, the CFO is often their most challenging critic. The report cites a former consumer goods CFO who states: "When under pressure, marketing is the first to get cut because it is the hardest to justify." McKinsey’s survey revealed that 45% of CFOs indicated marketing proposals have been declined or not fully funded in the past due to a lack of clear value demonstration.
Investor Pressure
Venture capital (VC) funding in the B2B SaaS sector often places immense pressure on marketing leaders to deliver rapid growth, usually with significantly less budget than market incumbents. What’s more, investors typically expect quick returns on their investments, pushing CMOs to implement aggressive marketing strategies to achieve exponential growth within short time frames. This can lead to unrealistic expectations and an intense focus on metrics like customer acquisition costs (CAC) and lifetime value (LTV) ratios, which may not always align with sustainable marketing practices.
Such pressure can create a challenging environment for CMOs, who must balance the demand for immediate results with the need to build long-term brand equity and customer loyalty. The emphasis on rapid growth often necessitates heavy spending on digital advertising and customer acquisition strategies, which can strain marketing budgets and potentially lead to diminishing returns. Moreover, this focus on short-term metrics can overshadow the importance of nurturing customer relationships and investing in brand-building activities that drive sustainable growth over time.
Misalignment with Organizational Goals
A key contributing factor to the shrinking tenure of SaaS CMOs is the potential misalignment with broader organizational goals. CMOs often face challenges in aligning marketing strategies with the overall business objectives, especially in companies that are scaling rapidly. When there is a disconnect between marketing initiatives and company-wide goals, CMOs may struggle to demonstrate their value, leading to shortened tenures. Harvard Business Review highlights that alignment with the C-suite is crucial for CMO longevity.
The Rise of Data-Driven Marketing
The shift towards data-driven marketing has transformed the CMO role, requiring a new set of skills and expertise. CMOs are now expected to leverage big data, analytics, and AI to drive marketing strategies and measure success. This transformation can be challenging for those who lack the technical expertise, leading to a higher turnover rate. Gartner emphasizes that the increasing importance of data and analytics in marketing is reshaping the CMO role.
Talent Competition and the War for Digital Skills
The competitive landscape for marketing talent is another factor influencing CMO tenure. As companies vie for top digital marketing talent, CMOs with strong digital skills are in high demand. This competition can lead to frequent job changes as CMOs seek better opportunities and organizations seek fresh perspectives. Coursera reports that marketing leaders with strong digital and analytical skills are particularly sought after in the current job market.
What can be done?
To address the issue of shrinking CMO tenures, marketing leaders can take several steps. First, fostering a culture of alignment between marketing and broader business objectives is essential. CMOs must ensure they are well integrated into the C-suite and have a clear understanding of company goals.
Likewise, we suggest CMOs embrace the "First Team" concept, which emphasizes the importance of the executive team working as a cohesive unit with shared goals and mutual support. As a CMO, adopting the First Team mindset means prioritizing the company's overall success over individual departmental achievements. It involves collaborating closely with other C-suite members, aligning marketing strategies with the broader business objectives, and fostering a unified approach to drive growth and innovation. By embracing the First Team concept, a CMO can ensure that marketing efforts are fully integrated into the company's strategic vision, enhancing cross-functional synergy and contributing to a cohesive, high-performing leadership team.
Additionally, CMOs should invest in peer communities and ongoing education and development in order to stay current, as it relates to new best practices, martech advancements, and data analytics etc., that can equip them with the necessary skills to thrive in their roles.
Conclusion
The shrinking tenure of SaaS CMOs is a multifaceted issue driven by the accelerated pace of change, high performance expectations, organizational misalignment, the rise of data-driven marketing, and competition for talent. By understanding and addressing these challenges, SaaS marketing leaders, and the companies they serve, can foster better stability and long-term success in their organizations.