Marketing Incentives: Setting the Right Goals for Performance and Impact

September 6, 2011

Motivate your demand generator, email marketers, content marketers and public relationship specialists the right way with proper incentives design

In a growing software and internet services company, one of the most contentious areas when it comes to setting goals and metric-based compensation is the Marketing Department. While there are some very easily-defined measures of marketing achievements such as online traffic (for online marketing), qualified leads (for overall productivity) or number of news article mentions (for PR), these measures do not fully reflect the full range of work that the marketing team accomplishes, nor do they truly represent the ultimate impact on the business (e.g. top line or profitability growth) of investment in marketing spend and resources.

Furthermore, because marketing activities are typically done at scale generating a huge amount of data points, it is very hard to analyze specific trends beyond typically high level aggregate statistics, which then turn a lot of the goal setting in marketing an exercise in “guesstimation”, leaving a lot to uncertainty.

Unlike sales incentives, which are predominantly dependent on achieving specific quotas, marketing quotas such as traffic, number of leads, etc. are notoriously unreliable and contentious. For the marketing team, marketing quotas force them to focus on a very narrow set of activities which result directly in the growth of that quota without giving them credit for longer term initiatives. For other teams, especially the sales team, marketing quotas are always viewed with a certain degree of suspicion, partly because of the gap in expectation of the output, for example, differing views on whether a lead is qualified or not. The marketing team, on the other hand, is just as concerned about the same qualified leads they deliver to the sales team, as they do not trust that the sales team will maximize those opportunities, especially when they want to see/show their dollar value impact for the organization. Thus, in many cases, the marketing team is given a compensation package that is heavy on the “routine”, “status quo”, and only a small part is tied to actual measurable attainment of aggressive goals.

At the same time, the marketing team needs generous bonuses for doing their job well and helping to generate more revenue for the organization. Having little upside means that the marketing team is encouraged to think of itself as a “keeping the lights on” function, going through the motion to keep the status quo. There lies one of the biggest issues with technology startup’s marketing: companies often focus too much on tools, the next big “idea”, and budgets as a venue for marketing excellence, without finding the best marketing employees and truly motivating them to achieve high performance. This could also be a major cause of the high turnover in the marketing department, because while their compensation is not as tied to the company’s performance, the marketing team is still going to be evaluated by the company’s overall performance, as marketing is (and should be) considered a major direct lever of new business. When there is a discrepancy between the compensation and the perceived performance (such as a failure to achieve opportunity growth), it leads to management’s conclusion that the marketing team is not pulling its weight while it is partly because they were not encouraged to be aggressive.

How do we reconcile these opposing notions? The marketing leadership should set a logical, achievable yet challenging goal and tie a substantial part of the performance bonus to them.

In order to do so, management needs to identify the right set of behavior (not metrics) that it wants to encourage in the marketing department, and then devise a combination of measures of quantity and quality which would result from the desired behavior. All of these sound theoretical, but for a small growing technology startup, there should not be so many marketing employees and activities that make it overwhelming. In the list below, we will give some examples to illustrate this principle at work:

Junior Marketing Employees: Marketing Analyst, Marketing Manager

– Desired Behavior: Do their task well, make no mistakes -> Metrics: Maintain level of performance, minimize errors (which can be defined more clearly depending on the most typical type of mistakes)

– Desired Behavior: Generate new demand through combination of well executed campaigns -> Metrics:
Quarterly Campaign-level conversions and conversion rates growth, minimal rate of conversion to qualified leads (to ensure quality)

– Desired Behavior: Participate in social media marketing to generate buzz and presence for company -> Metrics: number of social media engagements, number of true followers, and overall influence measure such as measured by www.klout.com

Middle Level Marketing Managers:

– Desired Behavior: Identify key marketing channel and supervise execution of campaigns -> Metrics: Monthly growth of generated leads by channels, conversions of leads by top channels/lead sources

– Desired Behavior: Optimize marketing spend -> Metrics: monthly trend of cost per lead, lowest conversion rate, and cross-channel weighted conversion rates

– Desired Behavior: Effective management and training of junior level employees -> Metrics: The subordinate’s performance metrics

Senior Marketing Leaders:

– Desired Behavior: Set productive marketing strategy in selecting and retaining the right team members -> Metrics: Overall performance levels of their middle level managers

– Desired Behavior: Make sure that the marketing team’s operation is optimized -> Metrics: Aggregate Cost Per Lead, Marketing Cost per Opportunity

– Desired Behavior: Hold themselves accountable for marketing outputs to other teams -> Metrics: Marketing Leads Conversion Rates

– Desired Behavior: Contribute to the overall performance of the company -> Metrics: use the same set of metrics that is used for senior management team

Chief Business Officer at UserTesting

Tien Anh joined UserTesting in 2015 after extensive financial and strategic experiences at OpenView, where he was an investor and advisor to a global portfolio of fast-growing enterprise SaaS companies. Until 2021, he led the Finance, IT, and Business Intelligence team as CFO of UserTesting. He currently leads initiatives for long term growth investments as Chief Business Officer at UserTesting.