Choosing Between a Fractional and Full-Time VP of Sales: A Strategic Decision for Growth

Intro

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In the world of sales, it is important for companies to continuously maintain competitiveness by adapting strategies to the ever-evolving world of consumer behavior. In doing so, companies constantly have to make key decisions to enhance the workflow. One such key decision that is especially crucial for startups and SMEs is to choose between hiring a fractional VP of sales or a full-time VP of sales. Both cases come with several advantages and challenges, so selecting the right fit can have a massive impact on a company's growth trajectory.

Within the past years, the concept of fractional executives has gained more traction as many businesses have realized the potential and leveraged this new type of hiring. The concept of fractional executives goes across various positions, including fractional Chief Marketing Officers (CMOs) and Chief Financial Officers (CFOs). When it comes to sales, which is a foundational department affecting the bottom line, making a decision about fractional hires is one of the more complexities.

The basics of the role of a VP of sales

To understand the depths and complexities of making the decision of fractional versus full-time, it is firstly important to understand the role of a VP of sales. A VP of sales has the responsibility to oversee the sale strategy, while also managing the sales team, setting revenue goals, and ensuring the business meets all the set targets for sales. On top of these responsibilities, the VP of sales also have to stay engaged with the customer side of the business. This entails developing customer acquisition strategies, which includes understanding the experience of customers, while also improving customer retention, and ensuring smooth sales operations.

Due to these vast reaching tasks and responsibilities, the leadership of a VP of sales is having direct impacts on a company's growth rate. Furthermore, the sales operations will also impact on the market share of the company, and the ability of the company to secure funding. All in all, a VP of sales is in such a crucial role, that when hiring a VP of sales, it does not only come down to filling a vacancy, but also to ensure the best conditions for sustainable growth.

The growing trend of fractional executives

The concept of fractional executives entails experienced professionals working with multiple companies on a part-time or contractual basis. The concept has been seen as a win-win for companies and professionals alike, since it is a way to bring decades of industry experience to organizations who can't afford or don't require a full-time executive. It is especially among small and medium-sized businesses (SMBs) that the fractional model has become popular. The reason relates to the need for strategic direction among such businesses, but limited resources can be in the way of hiring a full-time senior executive.

Within the past few years, the popularity of fractional sales executives has grown, as more companies are realizing the benefits of this model. By bringing in senior leaders on a flexible and as-needed basis, companies can ensure enhanced operations at a lower price. According to a report by Deloitte, approximately 25% of U.S. businesses have adopted fractional hiring, and this number is expected to rise to 35% by 2025.

Key benefits of a fractional VP of sales: Cost and access

Possibly the main reason why businesses chose to go with a fractional VP of sales is related to costs. It can very quickly become expensive when hiring a full-time sales executive, and for smaller companies and start-ups dealing with tight budgets, it might not be realistic at all to make such a hire. The salary of a full-time VP of sales in the U.S. can range from $200,000 to over $300,000 annually, and this is just the base salary. On top of this can be expected bonuses, stock options, and benefits. On the contrary, opting for a fractional VP of sales does in most cases entail a contract of being paid hourly or on a retainer, which results in a significant reduce in costs. The hourly rate for a fractional VP of sales typically ranges from $150 to $500, the amount varying depending on work and hours required.

Another benefit leveraging a fractional model is the access to experience from professionals who have worked with multiple companies across different industries. By leveraging on this expertise, fractional VP of sales can provide strategic guidance and implement best practices which per experience has worked in other contexts.

Challenges with the fractional model

Despite these key benefits of the fractional model, there are also some downsides to the model. The main challenge is the limited availability of fractional VPs, as they are working with multiple clients. Consequently, they are not available full-time for each company, and this limited availability can be a challenge during tasks and operations needing immediate attention. This also means that if sales operations require constant oversight, it might not be the best solution with a fractional role, as it will not provide the right level of engagement.

Another potential challenge is the pattern of fractional VPs focusing on short-term wins. By focusing on wins with immediate results, it sometimes happens at the expense of long-term strategic initiatives. Some of the aspects also apply to yet another challenge, which is the lack of cultural integration. Fractional sales executive do not immerse themselves fully in the company culture, which can impact how the sales team and the broader organizational culture aligns.

Committing to long-term growth with a full-time VP of sales

If a company instead commits to a full-time VP of sales, the VP would only be dedicated to that one specific company, which entails a high level of commitment and engagement. This would allow the VP to work closely with the sales team and have time and resources to integrate into the culture of the company. This fosters stronger internal relationships, resulting in greater cohesion in the team and in the company altogether.

By opting for a full-time VP of sales, there is also more focus on long-term growth strategies. Instead of only focusing on immediate sales targets, there is great emphasis on fostering client relationships and launching new products and expanding to new markets. Any company deciding on a full-time VP of sales will also get the benefit of having hands-on management, meaning that issues can be dealt with as they arise.

Challenges with a full-time VP of sales

The biggest challenge regarding choosing a full-time VP of sales is the financial dedication it requires. It takes a significant financial investment to hire someone full-time, especially for smaller companies. One aspect is the baseline salary, which in itself can be quite a high amount for smaller businesses, but on top of this comes salaries, bonuses, stock options, and benefits, which altogether run up into hundreds of thousands annually. On top of this, any company choosing to hire a full-time VP for sales is taking the risk of hiring the wrong candidate, which can be expensive when having to replace a full-time VP.

Other factors to consider include the longer hiring process which it entails when recruiting a full-time VP of sales. The process of identifying the right candidate, conducting interviews, negotiating compensation, and onboarding can take months, and it requires a big-time effort from the company. Lastly, there is also a high-cost risk of hiring the wrong full-time VP, which can have negative effects on the business. This risk can both become reality if the candidate does not fit into the company culture, lacks the right experience, or fails to deliver results. Overall, this can result in underperformance, which can have wide consequences for the business.

So, what to choose: Fractional or full-time?

When making the decision of whether to go with a fractional or full-time VP of sales, the decision should be founded on the current needs, growth stage, and financial situation of the business. Choosing a fractional VP of sales is an ideal solution for companies that are in the earlier stages of growth, and where the funds are not yet ready for a full-time executive. It is also a good option for companies needing immediate sales fixes or to refine the sales processes, or companies that are in need of short-term leadership and to explore new markets.

Choosing a full-time VP of sales is the ideal solution for companies experiencing rapid growth, where consistent leadership is needed. It is also the best solution when there is a need for a long-term sales strategy to align these with the overall business goals of the company. If a business has a large sales team which needs continuous coaching and development, a full-time VP of sales is the best option.

Concluding remarks

As it has become evident in this article, hiring a fractional VP of sales or a full-time VP is not a one-size-fits-all solution. Both solutions have advantages and disadvantages, and this means it is important to weigh the opportunities and the needs of the business. Looking at factors such as specific needs, budget, growth stage. Flexibility, cost savings, and immediate short-term expertise are the benefits of fractional VPs. Long-term commitment and hand-on management are the benefits of opting for a full-time VP, which can help growing companies needing to sustain sales growth over time. By conducting careful analysis of the goals, resources, and the specific challenges of the company, it is possible to make an informed decision of hiring either a fractional VP of sales or a full-time VP of sales.