For those who have them, how do you mange your marketing team bonuses? The topic of a company bonus program overall is a delicate one.
It seems few organizations have truly figured out a way of using this approach to motivate people the way its intended. There are three fundamental issues. First, when companies structure incentives based on corporate metrics such as revenue, gross profit, EBITDA and the like, people often don’t understand the context and possibly the jargon, making the meaning of these numbers seem disconnected and abstract. Next, there is typically a lack of clarity around what the employee needs to do personally to impact these goals. Finally, when a bonus isn’t paid until the first quarter of the following year, no one refuses it, but few know how, or why it was earned either.
With marketing people, the problem is further exasperated by the fact that they work closely with sales (hopefully) and get constantly reminded that the hard work they do helps the sales people get all the accolades and big commission cheques. Of course, it’s easy for marketing folks not to fully appreciate the risk, stress and hard work that goes with along with “carrying a bag.” But, the grass is always greener, right?
So how do you get marketing and sales pulling on the same rope in unison, with the same level of intensity? Well, one way I have used effectively in the past is to tie marketing’s performance directly to the sales achievement results. In industries with longer sales cycles, companies usually drive towards a sales target on a monthly or quarterly basis. Simply making that periodic sales goal the only number that matters to marketing for bonus purposes has a number of distinct advantages.
1. This type of program helps breaks down some of the natural sales and marketing friction and gets both camps working synergistically. It encourages marketing people to go that extra mile and continually improve because there are shared clear objectives and rewards.
2. The math is easy. You can use any permutation that makes sense, but for simplicity, my preference was always a linear scale with no minimums or maximums. In other words, if we finished the quarter at a 100% of plan, the marketing bonus was paid at 100% of the eligible amount for that particularly quarter. If we over achieved by 20%, the marketing bonus was 1.2x the eligible amount. If we missed the mark, you guessed it, marketing shared in that pain as well.
3. There is clarity. The reward is tied to the numbers the team is tracking, working towards and talking about in every weekly (and sometimes daily) sales meeting. It’s easy to understand and it has meaning. We need to sell “this much” by the end of the quarter!
4. A feeling of control. Marketing has an impact on the sale numbers, but can’t control how well the CFO manages cash flows, or how the other functions in the company perform. In this model, the marketing team has more control over its destiny (at least in terms of a bonus)
5. Its pay-for-performance based. If marketing helps get you to the sales target, often helped along with work done in previous quarters, everyone wins.
So what are the downsides and risk of such a program? Some might say this idea will shift marketing away from longer term objectives such as brand building, or other activity that is important, but has less immediately impact. My counter to that sentiment is that being closer to sales, prospects and clients will better arm marketing to do what still needs to get done, but with better insight and greater focus. Let’s face it, marketing exists to help companies sell.
It might potentially cause consternation with the rest of the staff. I would argue that more function-focused and timely bonus payouts are a good idea across the organization anyhow. My strong belief and personal experience has been that bonus programs are generally dysfunctional and they quickly become an expectation without clear cause and effect. More often than not, they don’t drive the behaviors they were intended to as discussed above.
I have seen the positive impact of having rewards paid quarterly and tied to specific, relevant metrics. It has brought the sales and marketing teams closer together, helped them better align and significantly improved results. If what you’re doing now doesn’t produce the desired effect, it may be worth a try. I’d be very interested in the perspective of others who have experimented with alternatives outside the traditional corporate bonus programs.