My friend, Dan McDade, President ofPointClear, has been leading an interesting discussion at Focus. He asked me the question, “would sales people be willing to share commissions with marketing if marketing was perceived to have done a better job for sales?” (it’s a good discussion, I recommend reading it.)
My immediate reaction was, “Isn’t marketing’s job to be supporting sales? Why do we need to pay them some of sales’ commissions if they do their job well?” I still maintain that position, but Dan’s question started me thinking. What would happen if we put marketing on a commission plan, what if we made them more accountable for the results they produced?
What if we came up with metrics that were closely aligned with sales–perhaps shared with sales and put every marketing person on commission? Would that drive greater cooperation? Would it elinate the silo’s? Market and sales are both accountable for generating revenue and growing the company. Aligning everyone in marketing and sales around similar goals and objectives could only be good.
What metrics would we put in place? Clearly some level of revenue metric. Probably we’d look at some sort of lead quality metric. What about the nurturing programs that marketing conducts? How would we measure those? What about the other marketing deliverables used to support sales—clearly we don’t want to incent people on quantity, but we do want to look at some sort of metric around good quality collateral that really helps sales and is meaningful to customers.
Another thing we might do is align marketing and sales teams together–for example the marketing people supporting the financial sectors, with the sales people selling in those sectors. Likewise in manufacturing, health and so forth. Perhaps we can put these team on some sort of shared goals. Many sales people have shared goals with other sales people, so we can design a system that would bring marketing into the team. It might be very powerful.
I’m certain that we can design some metrics–some individual, some team oriented that can get sales people and marketing people to work more collaboratively. I think this should be done.
Now what about commission? I’m all for paying marketing people commission. Frankly, I would put everyone in an organization around some sort of “commission” or incentive program. But, there’s no reason to take that commission away from sales people. It’s easy to design a commission program for marketing. We use the same principles we do for sales people.
First, the commission program must be cost neutral to current spending–at plan. That is, what I’m spending for marketing people today, would be the same I would spend for them under a commission plan–at plan. (That’s the way we design compensation program for sales people, let’s do the same with marketing.). Presumably, we would take the current “budget” for marketing people and reallocate it, some level of fixed base pay and some level of variable–commission based pay. If marketing achieved their goals, they would earn the full amount–base plus the commission. If they failed to achieve their goals, they would receive base plus whatever commission they earned. If they overachieved, they would earn more—perhaps with accelerators. All of this is just like sales, except it would be funded out of the marketing budget, not sales.
Now some of you might have pulled out your calculators and may be scratching your heads. “But Dave, what you are saying is we have to take a salary cut. This is just unacceptable, why should we do this? We want the upside of commission, why don’t you just put that on top of our current salaries?”
Without going into a long story about commission planning, let me just say, the job of marketing is not changing. Marketing has always been accountable to work with sales in supporting revenue generation and growth. So we aren’t changing the job — all we are doing is clarifying the goals and putting earnings at risk. If we aren’t changing the job, the value of that job to the corporation doesn’t change–stated differently, the budget for salaries, bonuses, etc. has to remain constant. What can change is how we allocate that funding–we can allocate some to a base salary and some to commission, bonuses, whatever we think will incent people to overachieve.
Commissions can be very powerful in driving behaviors (good or bad). In the sales world we are very comfortable with that, we know our total compensation is based on a base (if any) and all the variable (commission) payments we earn. We know we have some portion of our expected earnings at risk. It’s a very powerful motivator.
I think commissions for marketing are fantastic! I think virtually every marketing person should be on commission, with some portion of their earnings at risk, just like sales. It can be very powerful in accelerating the alignment of marketing and sales in driving revenue growth?
What do you think?