JCL Blog

Sales Incentives, Can't Seem to Live With or Without Them

Steve Jobs talked about the balance between product design and sales/marketing (as recounted in the Walter Isaacson biography) where he describes the arc of company evolution from great product creation to an over dependence on sales and marketing.  The latter being the death of great technology companies like IBM and Xerox.  Jeff Bezos is famous for saying that advertising is for companies that don't have good products.  Of course neither sentiment is completely true.  Great products still need sales and marketing and advertising is often a necessary tool employed to drive demand for a great product. 

In my post Market Like an Engineer I proposed that people running marketing departments should encourage the virtues often found in an engineering culture in their marketing departments.  The desire to create something truly new, the open sharing of knowledge, and the pursuit of critical customer feedback is often missing in the sales and marketing culture.  These virtues suffer when the prevailing mindset is that salespeople are coin operated. 

Over compensating on revenue drives out collaboration and the pursuit of the truth.  Executives are forever tweaking compensation models to discourage these behaviors.  Nevertheless, we regularly see glowing departmental revenue reports that merely chronicle a shift in revenue recognition from one department to another, or the quarterly selection of the "good" numbers cherry picked from pools of mediocre performance.  It is just as common for the company to pay big bonuses the next quarter when this phantom revenue shows up in yet another department -- even though overall sales have not increased at all.  It is no wonder leaders like Steve Jobs and Jeff Bezos want to spend as little as possible on sales and marketing.  Those crazy incentives seem like they always produce unintended consequences, but at the same time seem essential for creating action.