It’s Time to Pay Marketers Based On Their Financial Impact

Author: 
Mark Stouse

You know the old adage, “We all work for sales?” Well, if we all work for sales, then we should get paid like sales too.

As a C-level executive, I’ve worked with a lot of salespeople. When I meet one who has consistently over-performed, I know I’m looking at someone who will deliver the goods. And I also know I’m looking at someone who has made a lot of money in commissions, and will make a lot more in the future.

Business leaders need to be able to meet a marketer or PR pro and say the same thing. That’s true whether they’re corporate employees or work in an agency.

The commission model for marketers

As a former CMO and CCO in large technology companies, I’ve worked closely with a lot of marketing teams and agencies. I’ve seen marketers make huge contributions to business impact and business value creation. Those same marketers received sizable discretionary bonuses as a result. But I’ve never seen a commission model used to calibrate their compensation.

Here’s the bottom line: Great marketing and communications are often hugely important to the growth, health and prosperity of a business. They also are expensive parts of the business, and the opportunity cost on marketing dollars can be significant. It’s therefore critical that marketing and communications be tightly aligned to the business in clear economic ways.

If marketers believe in what they do for a living, then the current salary and bonus structure is selling them short. The top priority for every marketing leader should be making every effort measurable and impactful (using the same metrics expected from sales: revenue margin and cashflow). That way, marketing managers and their teams can stop deflecting — and start making the same big money as their successful sales teams.

Data makes it possible

For years, the idea of compensating marketing and communications professionals based on their business impact wasn’t possible because the data wasn’t able to support such an approach. Only salespeople were so clearly tied to sales performance, and the commission structure was not only supportable, but highly desirable for both the company and the sales pro.

The world has turned. Recently, Chief Marketing Technologist blogger Scott Brinker, released his annual report showing that the marketing technology universe, which includes marketing, advertising, ecommerce, communications and PR technology, had spiked to about 5,400 vendors. That’s 5,400 companies producing data that’s begging to be analyzed and crunched with sales data and other business data to provide a more complete picture of marketing’s performance.

The ability to hold marketing departments and their agencies accountable for their business impact — and determine the right investment and appropriate compensation — is real. We are fully capable of computing all of the “cause and effect” relationships that determine marketing’s business impact. In addition, the analytics necessary to ingest all of this data and compute the relationships that impact marketing and sales performance are here and ready to take us across the finish line. Big data and AI tech can provide a compelling portrait of what’s working, how long it’s taking for it to have an impact, and what the overall ripple effect of marketing and sales performance looks like across time.

Be ready to tell your story

Of course, the real action is in the white space between the KPIs. Commissions demand that their marketing teams compute cause-and-effect relationships that exist between what they do, how the audience responds, and what specific impact those changes have on sales performance.

If you’re a CMO, you probably have a great business impact story to tell. You should look forward to the opportunity to show up in the boardroom with the analytics tying your investments to improvements in revenue, margin and cash flow. When that is provable, you and your team can confidently negotiate compensation based on that impact. Just like sales.

Marketing’s credibility also would get a big boost. According to a recent study by Accenture Strategy, CMOs are the most likely executive to be fired when the company misses its growth targets. 2016 saw unprecedented CMO turnover. 2017 saw a lot more of the same, and Gartner just published a new report in November that showed marketing spend down and CMO tenure falling. This is a huge problem, not only for marketers but also for the companies that need them.

It all boils down to this: marketers and their agencies create a lot of value, but their companies need them to prove it.

Mark Stouse is the former chief marketing officer of Honeywell and currently the CEO of Proof Analytics.