Question

Topic: Strategy

Bonus Structure For Marketing Team

Posted by doggie1979 on 10/7/2008 at 12:44 PM ET 500 Points
I am trying to design a bonus structure for marketing team members based on coming in at or under budget. I am interested in how others have done this with their teams.

1. Did you compensate on a per project basis, a quarterly budget basis or an annual budget basis?

2. How did you handle the issue of quality of finished project when budget was the driving factor in the compensation plan? For example, how did you ensure that quality was not sacrificed at the expense of coming in under budget? Did you combine quality metrics with budget metrics and if so how did you do that?

3. How was the payout structure designed - flat sum payout for coming in at or under certain percentages of budget or percentage of salary?
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RESPONSES

  • Posted by CarolBlaha on 10/7/2008 at 9:30 PM Accepted
    No plan should begin without a spreadsheet. You need to identify costs, revenues and profit. Don't give away the farm.

    You can build a bonus, a spiff (short term) or annual plan. Begin with the end in mind. What milestones do you want? What is your situation-- long or short term? I just worked on a plan that is very short-- we call it a "road trip" That is a spiff. We got some hot deals that are here for 60 days and first come. Spiffs can work with longer term bonuses. But they put yourself quickly as a resource to your customers.

    As long as the numbers work- you have a whole bunch of crayons to work with! But it is-- all about the numbers.



  • Posted by doggie1979 on 10/8/2008 at 3:18 PM Author
    Thank you everyone for the responses. I was thinking of possibly identifying the areas of responsibility where cost savings is possible in each employee's job, then establishing one cost-related metric (i.e. reducing average cost-per-lead for a campaign) and one quality-related metric (i.e. increasing the % of delivered leads that convert to opportunity or sale). Then somehow developing the bonus structure around both of those metrics so both cost and quality are drivers for their compensation for each major project. Obviously this example would be for my Direct Marketing people and I would need different metrics for my events and MarCom folks but I haven't thought that far yet. Thoughts on this cost/quality combined approach?
  • Posted by CarolBlaha on 10/8/2008 at 7:59 PM Accepted
    Do you have a product that is more profitable than another but perhaps overlooked? That would be a way to a higher margin for same effort. As far as converson, how about an incentive for number of new accounts?
  • Posted by doggie1979 on 10/9/2008 at 1:27 PM Author
    Great idea, Carol. We do have several overlooked products that have more profit potential and also ones for which we need to build out our client list to gather a larger referral base. I will think about that.

    Thanks everyone, this has been extremely helpful.
  • Posted by matthewmnex on 10/9/2008 at 9:13 PM Member
    Whilst cost savings are always good, in the sales and marketing business, we are more focused on driving revenue growth by improving the number of sales.

    Instead of putting the incentive on cost savings in pure terms, take a look at ROI.

    Make you marketing budget a percentage of income so as the income grows, the marketing budget will also grow.

    Your metric should marketing spend per unit sold.

    Set a base line based on what you are currently achieving and work from there.

    Put the biggest bonus on the sales achieved over quota and a small bonus on the cost savings.

    If you focus too much on cost savings, then the team will stop spending money in order to earn the savings bonus :) Of course your sales will suffer but they will still get the bonus.

    Throw NPS into the entire mix as a measure of customer satisfaction, focus on ROI and keep your cost per unit sold within your desired range.

    Good luck,

    Matthew
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