Can Incentive-Based Compensation Plans Work for Marketing Agencies?

incentive-based compensation plan work for marketing agencies

Sales and marketing go together like chocolate and peanut butter. And yet, there is often a divide between the two. The responsibilities for each differ, as do the respective department cultures. What motivates one team may not work for the other. So how do you motivate each department?

Research from the Harvard Business Review has shown that when it comes to sales teams, incentive-based compensation produces more effective results than unconditional bonuses. But can this method work for your marketing staff too? Is it possible to incentivize both departments using the same mechanisms?

Having a clear understanding of the differences between these two departments, and knowing how these differences influence goals, objectives, and responsibilities can help your company discover the answers to these questions.

Sales and Marketing are Not Created Equal

Sales teams leverage leads and employ outbound techniques to push a product or service. Offering supplemental (or even exclusive) compensation in reward for closing a sale can empower a sales staff to work harder and faster towards a well-defined goal. It’s a tried-and-true method that most sales departments across industries employ – sell more, earn more. The question is: can something similar be leveraged by marketing teams?

At brands, the answer might just be “yes.” That is because, at brands, marketing teams help create leads for the sales staff by advertising the company’s products or services. In other words, marketing works in conjunction with the sales team. Create more leads, earn more money. The similarities are certainly close enough to merit giving it a try. But at marketing agencies, the dynamic is different altogether.

In an agency environment, the sales team (or the executive staff) is the marketing team. The sales department sells the agency while also selling the agency’s services. With this shift in responsibilities, the “marketing” team becomes the production team. It’s important to make this distinction. A marketing team at an agency focuses on the clients’ needs – not the company’s. Thus, performance-based compensation may not be relevant, as the marketing team isn’t connected to sales in a traditional way.

Can Pursuing One Task at a Time Work for Everyone?

Your sales team has one goal: sell, sell, sell. As a result, motivations are clear. Sales teams know where their obligations lie and are incredibly focused on specific objectives. This focus lends well to a performance-based incentive program. Dangle an incentive in front of your salespeople, and they’ll be able to follow it to success. But your marketing force doesn’t have the luxury of pursuing one task at a time. In other words, there’s more than one carrot to follow.

So what’s the solution? You can give your marketing team a specific goal to pursue, and if so, its attention will be solely focused there – but at what cost? If you have a smaller marketing team, it’s likely juggling multiple tasks at once. What happens if you strip away some (or all) of those responsibilities to make your marketing team’s objectives more clear? How can your organization maintain the creativity, insight, and workflow that it needs to produce quality work on behalf of its clients? The answer is: you likely can’t.

A focus on short-term goals can squash the out-of-the-box thinking you need to sustain your long-term goals – and this can come back to bite you later on down the line. Though having teams pursue one task at a time may seem beneficial, it doesn’t work in every circumstance.

Money, Money, Money

For most professionals, money plays a huge role in why they do their jobs (and why they’re motivated to seek out greater responsibilities). But is incentive-based compensation the best way to reward your staff? Compensation should be tied to performance – the research shows that it works – but consider other alternatives: stock options or profit sharing, for example. And don’t underestimate the power of tying promotions, raises, or bonuses to overall performance. If you aren’t confident in the advantages of incentive-based rewards, that doesn’t mean you can’t motivate your staff by other means.

The key takeaway here is that your organization should take steps to ensure that it properly incentivizes employees. In a sales environment, performance-based compensation is a well-understood and accepted concept. However, you are likely to find that marketing professionals are not nearly as comfortable with the concept. This is because they tend to see success, not in terms of quantity, but rather quality. Because of this, performance-based compensation may produce the opposite effect on your team than the one you’re hoping to achieve.

“Proper” compensation carries with it different meanings for different teams and employees. Your job is to determine what those definitions are. But what options do you have other than money? You may not think that there are any alternatives, but in truth, there are many options.

Compensation Comes in Many Forms – Not Just Cold, Hard Cash

With a sales team, the goal is and always will be sales. At an agency, your marketing team’s first priority is client satisfaction. If you make the client happy, then your team has succeeded in its objectives. In fact, there’s probably an argument to be made that the client’s satisfaction is even more important than whether or not a campaign has an impact. So keeping this in mind, how can you leverage compensation to reward – and motivate – your marketing team?

It’s important to realize that compensation comes in many forms – not just cash. Even small gifts or extra vacation days can go a long way to keeping employees happy and motivated. To create an incentive-based rewards system for your team, first determine what your fundamental objectives are – this is the key to creating an incentive program that works. What is your primary goal, in terms of your employees’ performance, and how do you plan on achieving this goal? Do you want to improve attendance? Do you want to expedite the production process? Do you want to beat the project deadline by one week? By two weeks? Without determining what it is that you want to improve, you can’t enact a plan.

Once you determine a goal, you can then set about determining the reward. If cash incentives are out of the question, whether for budgetary reasons or simply because it doesn’t suit your marketing team’s work culture, what other rewards can you provide? Will a department BBQ suffice? How about an extra day off, with pay, when the next holiday weekend rolls around? Or perhaps it’s something even simpler, with no monetary value at all – a VIP parking space or the ability to work from home for a week. Determine these two fundamental components – the goal and the motivation – and you are ready to take action.

If you’re wondering if such a plan can work for your department, why not try it out yourself? Put an incentive-based program to work and see whether or not it helps your department achieve its goals. Remember, though, it’s important that you remain open-minded and think outside of the box. All too often, people forget that rewards come in all shapes and sizes; you can motivate people without giving out bonuses and raises.

So Will this Work for Marketing or Not?

Unlike a sales team, in which incentive-based compensation is a proven winner, weigh your strengths and potential weaknesses before adopting this technique for your marketing staff. Are you large enough to allow for a limited focus model or do you need your staff to keep their eyes on several prizes at once? Are you in a position to offer alternative models of compensation? If so, do you have a clear objective in mind? Perhaps most simply, will your marketing team take to this approach, or reject it? The answer to this final question may be all you need to make a decision. Think carefully before unilaterally deciding one way is the best for your organization.