On the Rise: Marketing Compensation & Incentive Plans Trends

How are marketing teams being incentivized for their efforts in the sales cycle?

The benefits of an effective, well-designed compensation program can mean the difference between profitable growth and stagnation. Despite market volatility, firms with commercial (marketing, sales and service) organizations that remain successful continuously and appropriately incentivize their teams―top commercial performance leads to improved margins.

Alexander Group’s recent Sales Compensation Hot Topics Survey report provides insights on seven compensation areas that enable commercial leaders to efficiently design their plans to remain competitive, including valuable data points and trends. Over 350 companies across seven industries gave input on sales compensation costs, quota planning and attainment, profitability and job-specific comp practices. But with the integration of Marketing, Sales and Service often reporting up to a chief revenue officer or similar role, how are marketing and service teams being incentivized for their efforts in the sales cycle? Is sales compensation really just for sales?

Alexander Group dove into this query to determine what, if any, emerging or mixed compensation and incentive practices are now including marketing roles.

Latest Trends in Marketing Compensation

Many organizations are moving towards variable compensation models for marketers, including performance-based bonuses, commissions and profit-sharing arrangements, to incentivize achieving specific goals and ROI. The use of data analytics and marketing technology has become increasingly important. 14% of survey respondents have at least one or more marketing roles on a compensation and incentive program with an average pay mix of 75/25. 45% of marketing roles’ comp plan measures align with sales measures for primary sellers. Marketers are often compensated based on key performance indicators (KPIs) and metrics tied to specific campaigns or initiatives such as conversion rates, customer acquisition costs and customer lifetime value.

As a result of the pandemic, the acceptance of remote work accelerated rapidly. Marketing compensation structures adapted to accommodate remote or hybrid work arrangements, often taking into account cost-of-living differences in various regions. With a new focus on the well-being of their employees, organizations are implementing compensation packages that include benefits related to work-life balance and health support.

In addition, marketing compensation is being tailored to the demand for specific marketing skills. Digital marketing, content creation, search engine optimization and data analysis are highly valued, leading to higher compensation for marketing professionals with expertise in these areas.

Importance of Marketing Compensation

The importance of marketing compensation isn’t only for attracting and retaining top talent. Providing competitive compensation packages drives additional advantageous activities, including:

Motivating Performance
Compensation structures tied to performance metrics motivate marketers to achieve their goals and contribute to the organization’s success.

Aligning With Business Objectives
Effective compensation strategies align marketing efforts with broader business objectives. When compensation is tied to specific KPIs, marketers are more likely to focus on activities that drive profitable growth.

Adapting to Market Changes
As marketing strategies and technology evolve, compensation structures must adapt to ensure that marketing teams have the necessary skills and expertise to remain competitive in the market.

Promoting Diversity and Inclusivity
Fair and transparent compensation practices are essential for promoting diversity and inclusivity within marketing teams, leading to a more innovative and dynamic workforce.

Contributing to Employee Satisfaction
A well-structured compensation package contributes to overall employee satisfaction, which can positively impact productivity and collaboration within marketing teams.

Marketing Compensation Best Practices for B2B Roles

Variable compensation structures can vary widely within the field of B2B (business-to-business) marketing, and whether a role includes variable compensation often depends on factors such as the specific job function, seniority level and the organization’s industry and culture.

The following B2B marketing roles typically have a variable component to their compensation structure:

Sales and Business Development: Sales and business development roles within B2B marketing often have highly variable compensation structures. These professionals typically earn commissions or bonuses based on sales performance, deals closed or revenue generated. Their compensation is directly tied to their ability to bring in new clients and increase sales.

Account Executives and Account Managers: Account executives and account managers responsible for managing and growing existing client relationships may have variable compensation structures. They might receive bonuses based on upselling, cross-selling or renewing client contracts.

Demand Generation and Lead Generation Specialists: Professionals responsible for lead generation and demand generation campaigns may have variable compensation tied to the number of leads generated, the quality of those leads and their contribution to sales.

Product Marketing Managers: In some organizations, product marketing managers may have variable compensation based on the successful launch of new products or product lines, including factors such as market share growth or revenue targets.

Channel Marketing Managers: Those managing relationships with channel partners or distributors may have variable compensation linked to channel sales performance and partner engagement metrics.

B2B marketing roles that have little to no variable compensation components primarily cover the marketing activities tied to overall strategy, branding, content and campaigns.

Examples include:

Marketing Managers: Marketing managers responsible for overseeing various aspects of marketing strategy, branding and campaigns may have less variable compensation compared to roles directly responsible for sales or lead generation. Their compensation may include a base salary with performance bonuses but rely less on commission-based earnings.

Content Marketing Managers: Content marketing managers typically focus on content strategy, creation and distribution. Their compensation is often less variable, with a greater emphasis on base salary, as their role doesn’t directly drive sales but contributes to brand visibility and engagement.

Marketing Analysts and Data Analysts: Professionals in marketing analytics and data analysis roles usually receive compensation based on their expertise and experience, rather than directly tied to sales or lead generation outcomes.

Marketing Coordinators and Assistants: Entry-level marketing roles, such as marketing coordinators and assistants, typically have less variable compensation structures, emphasizing a base salary with limited performance-based bonuses.

Brand Managers: Brand managers may have more stable compensation structures as they focus on long-term brand development and positioning rather than immediate revenue generation.

It’s important to note that these distinctions can vary from one organization to another and may evolve over time. Some companies may offer more flexibility in compensation structures or tailor them to align with individual and team performance goals. The industry and market conditions can also influence compensation practices within B2B marketing roles. Candidates and professionals in B2B marketing should research and negotiate compensation packages that align with their career goals and the specific demands of their roles.