Stop Missing the Big Goal
In general, sales compensation is based on results. When deals close, sales people are rewarded. Why is this system of incentivization not mirrored throughout other organizations that support and extend the impact of sales? Marketing's effectiveness directly affects sales' effectiveness, and the effectiveness of customer success teams extends the revenue impact of sales.
08/29/14 6:07 PM PT
Why do you go to work each day? Some people may claim it's love of the work. What they do is so rewarding and wonderful that they'd do it for free. "Don't tell my boss!" they joke. Hardy-har.
However, even the most fulfilled, self-actualized and altruistic person lives and works in a world where money talks. It takes money to keep a roof over your head and food on the table, and that dream job probably wouldn't be so dreamy if you had to do it for nothing.
For the vast majority of us, the financial considerations are a driving factor in our work -- not just in the jobs we select, but in the ways we work, and how we prioritize our work tasks. If you work in a field that pays bonuses or commissions, you know exactly how compensation drives behavior.
That's why picking compensation criteria is critical for achieving business goals, especially in sales and marketing. Performance-based compensation in sales and marketing -- commissions, bonuses, etc. -- has evolved over the years, but similar incentives in marketing and other parts of the business that affect sales have not.
Roots Go Deep
This creates some natural divisions -- not just in how people are rewarded for good work but how much prestige that work receives within a company. While sales is feted for achievements in bringing in new customers, the leads generated by marketing are taken as a given -- that's just marketing's job, right?
Even worse, the teams charged with customer retention typically are under-rewarded for their success. This is a terrible hazard in a subscription economy. While customer acquisition is great, the real money comes from a sustained, satisfying relationship that lasts.
If you place these key people in a position where they feel under-rewarded and under-recognized for their efforts, you're likely to see them move on to another company. Churn among these employees is even more dangerous in a pay-as-you-go environment.
The roots of this problem go deep -- in many companies, right to the board of directors and the CEO. Unless they understand what they really want to incent, they may find that individuals in the company achieve their goals, but the company fails to meet its own.
For example, a CMO who is goaled on lead numbers -- with no mention of qualification of those leads -- may focus primarily at top-of-the-funnel efforts. Even if the CMO makes the lead-number goal, it won't pay off in improved revenue for the company.
Sales can suffer from similar misapplied goals. For instance, goaling a salesperson on the number of calls made only ensures a lot of calls -- not closed deals. In general, though, sales compensation is based on results. When deals close, sales people are rewarded.
Why is this system of incentivization not mirrored throughout other organizations that support and extend the impact of sales? Marketing's effectiveness directly affects sales' effectiveness, and the effectiveness of customer success teams extends the revenue impact of sales.
I'm not suggesting that marketing and customer success pros switch to a commission-based form of compensation. Instead, they should have their bonuses tied to results -- closed sales -- and not to metrics that are particular to one of their tasks, like delivering leads or making calls.
All of these employees play key roles in the sales process. Rewarding them in different ways may sow seeds of personal dissatisfaction and set the stage for inter-departmental conflict.
By the same token, making goals and incentives more congruent among all of the people working on the revenue-generation team can help align them better. It can refocus them on their common mission instead of on their compensation differences.