Mike Volpe, the CMO of HubSpot, recently published this article entitled “CMO Warning: Don’t Tie Marketing Incentive Compensation to a Metric.” Mike shared six reasons why tying marketing compensation to a metric could have adverse impact on the marketing team and the business.
I shared the article with my Sales Operations colleague who is often championing for metrics-based compensation for marketing, and she asked me “So what do you think?”
When I paused to think about it, what I realized and shared back with her is that for performance-based marketing compensation to have a positive impact, you would need these five things to be in place:
- Strong Marketing Leadership - to communicate and manage the program
- A clearly documented & agreed to MQL Definition with sales
- MQL goals aligned to the business plan, based on revenue targets, forecasted win rate & forecasted MQL-to-Opportunity conversion rate – I have discussed a planning process for this here
- A plan for how the MQL numbers will be attained – I have discussed building a bottoms-up MQL plan here
- Closed loop reporting visibility to measure effectiveness of each vs. goal – in this Aberdeen CMO Essentials article I discussed how to do this with six essentials to setting up a closed loop marketing system.
Now here’s the rub - the marketing organization that has these five components in place should be set up to meet and exceed their target numbers, so the performance based conversation should be seen as a massive positive (not a negative) provided that like Sales there is no cap around the upside marketing can attain based on their performance. So it shouldn’t be seen (by either Marketing or the Business) as attaining a % of your bonus based on meeting MQL objectives, it should be seen as earning a % of the revenue growth driven through marketing’s efforts to meet and exceed the revenue growth plan.
And for those organizations that don’t have the five aforementioned points, any attempts at performance based compensation will surely lead to conflict and negative ramifications like those detailed by Mike Volpe.
So for marketing management, whether or not compensation is tied to specific MQL metrics, having an approach like it is, will help ensure the process and systems are in place to best ensure success.
And the best case scenario for boards of directors, executive teams and marketing teams alike – and the whole business for that matter –is that marketing drives the pipeline at the pace required for the target business growth (and beyond) and is rewarded for doing so in line with the performance.