Should Marketers Be Paid for Performance?

There has been a debate among business experts of late about whether or not pay-for-performance works or not. Competing articles published by Harvard Business Review (here and here) last month make the argument for and against paying executives (CEOs specifically) based on the performance of their companies.

They both point to similar studies from various social sciences which all but proves that performance-based pay only works for routine tasks. For creative tasks, performance-based pay has actually been proven to hurt performance.

So why are most executive pay packages so heavily skewed toward incentives?

I’m not the one to argue that. But I can weigh in on whether or not marketers should be paid based on performance.

If you take the studies mentioned above into account, you have to lean toward eliminating performance-based pay for marketers. Marketing is not a routine task. And so performance-based pay should not work to improve performance.

A marketer who is good at his or her job, who values the work they are doing and is committed to providing maximum effort should expect to perform as well or better without payment incentives.

But can we really say all marketers fit the description above? Might payment incentives help you recruit and retain better marketers? And doesn’t basing part of a marketer’s payment on performance help companies limit their own risk?

My opinion, knowing full-well that’s all that it is, is that marketers should be paid for performance. Marketing is the department within organization where the company’s performance is most directly related to the job done. And so marketers should have a little “skin in the game”. When the company does better, the marketers do better.

This might sound like an obvious argument made by a marketer looking to make more money. But I think this strategy makes sense from a business standpoint as well.

For one, I think this strategy will help business recruit and retain the hungriest marketers available. And two, by basing a large part of one’s pay on company performance, you create a win-win scenario. If performance is not there, the company’s obligations will be lower.

What do you think? Share your opinions in the comments below.

Marketing Definitions: SEO

Welcome to the latest edition of our new weekly blog series, Marketing Definitions. Each week, we will identify an oft-used term or phrase in the marketing community and break down its use and meaning for the broader population.

Last week’s term that we defined was Click-through Rate.

Today’s Term = SEO

SEO, which stands for Search Engine Optimization, is a common term used by marketers in the digital age. It is a relatively new term, compared to many others. And that’s because search engines themselves are relatively new.

Google was founded in 1998. They essentially invented the modern search engine. And as they grew, it became increasingly important for companies who wanted to drive traffic to their website to look to Google for answers.

People would start their web sessions on Google, or Yahoo, or some other search engine. They would type in what they were looking for, and the search engine would suggest sites and pages for them to visit.

And so SEO developed as a tool that companies could use to help their websites show up higher in those search rankings. The exact definition of search engine optimization is the process of affecting the visibility of a website or a web page in a search engine's unpaid results—often referred to as "natural," "organic," or "earned" results.

Over the years, the practice has changed and evolved to meet stricter standards of conduct. As Google and other search engines change their formulas, companies and SEO firms must adapt. But at its core, SEO is about making sure Google knows what your website is all about so that it can show it to people searching for something you offer.

SEO is critical because companies that master it take advantage of huge amounts of “free” traffic, instead of paying to place ads and drive traffic that way.

That does it for today’s definition. Have a term you’d like defined in a future post? Email us or post it in the comments below.

Zach Heller Marketing Week in Review

No change is too small to test. Any test that you run is a chance for you to find something that works better/improves the performance of your marketing initiatives. A whole bunch of small improvements can add up quickly to make a big difference in your business. The key is to prioritize your tests based on the potential value. You should obviously conduct the big tests first. But sometimes the only test to run is a small one. And I would always run a small test vs. none at all.

Here are last week’s posts for your review:

  1. Marketing Definitions: Click-through Rate
  2. The 1% Theory of Pricing
  3. Building Your Marketing Profile

Happy Saturday!

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Building Your Marketing Portfolio

Many of those inhabiting marketing positions don’t often think that they need a portfolio of work. We are businessmen and women, taught that we need a resume, a LinkedIn page, and a strong professional network. These are the tools that we can use to establish our credentials and work to climb the ranks in our professional lives.

On the other hand, portfolios are the “resumes” of the art world. Designers need them. Photographers, developers, and architects need them. But not marketers. Right?

Wrong. While a marketer’s portfolio may not resemble exactly the artist’s portfolio, it is becoming more and more crucial for marketers to maintain a record of their work in an easily-presentable format.

And a personal website is the perfect tool for that. Whether you use blog posts or articles, slideshows, images, videos, pages, or all of the above, this kind of presentation will help set you apart from other marketers in an increasingly competitive field.

What belongs in the marketer’s portfolio?

  • Major projects – any large scale projects that you were a part of. Break down the strategy – what problem you were attempting to solve and how. And share the results.
  • Examples of leadership – did you take the lead on any project or team? Did you manage any staff?
  • Personal and professional accomplishments – awards, recognition, certifications.
  • Work samples – will vary from person to person, but should include presentations developed, writing samples, screenshots of campaigns, etc.
  • References
  • Contact information

The portfolio, a living collection of your life’s work, available online, is the single best tool you have to reach your professional goals. It is available for all to see, and can be included both in your LinkedIn profile and your physical resume. Potential employers can view it themselves, or you can walk them through it during the interview process.

Best of luck!

The 1% Theory of Pricing

Pricing, in general, is a very under-utilized tool in most marketers’ toolkits. Remember the 4 P’s?

Price, Product, Promotion, Place

It’s the first one!

And today, I want to share with you a bit of wisdom that originally came to me from Rafi Mohammed, author of The 1% Windfall. In the book, Mr. Mohammed uses a simple example to illustrate a way of thinking about pricing that shows marketers and business owners just how important a tool it can be.

Think about the price you charge for your product or service now. What would happen if you increased your price by 1%?

Most people would answer something along the lines of “not much”. That’s because 1% sounds like a very small change. The same amount of people would probably still buy, and revenue would go up 1%. Not a big deal.

But let’s look at an example that illustrates why the “common” thinking might miss the big picture:

Say you sell Widgets for $100 a piece. For every Widget you sell, you have calculated that you earn a profit of $10, after all costs are accounted for.

When you increase the price of your Widgets to $101, a 1% increase, what happens to your profit? It goes up to $11, a 10% increase!

I think we’d all say yes to a 10% increase in our bottom lines. Yes?

When most marketers do think about price, we think that we can increase demand by lowering prices. But why aren’t we talking about higher prices?

If you can justify them, even small increases in the prices you charge can result in massive growth in your bottom line.