Accountability

If you're considering hiring a marketing partner, there are really only two options for accountability. And neither necessitates "paying for performance."

"Measuring by their results" basically means that you judge your vendor's performance based on their ability to successfully deliver their product or service. For example:

• If you hire an SEO company to improve your page ranking, and they do it, they're successful - regardless of whether or not it positively impacts your sales.
• If you exhibit at a trade show, and there's a decent amount of traffic, they're successful - regardless of whether or not it positively impacts your sales.
• And if you hire a lead generation firm to generate leads, and they do it, they're successful - again, regardless of whether or not it positively impacts your sales.

"Measuring by their results" assumes that the vendor can only control what they do, not whether or not it results in more sales.

"Measuring by your results" means that you judge your vendor's performance based on solution's impact on your sales and profitability. For example:

• If you hire an SEO company to improve your page ranking, and it results in an increase in your sales of 15%, they're successful.
• If you exhibit at a trade show, and you make a $50,000 net profit from the leads generated at the show, they're successful.
• And if you hire a lead generation firm to generate leads, and the program is nets you $500,000, they're successful.

"Measuring by your results" assumes that the vendor has some involvement in and control over the broader marketing and sales processes into which their solutions fits. And it assumes that that involvement or control increases the probability that their solution will have a positive impact on your sales.

One irony in all this, of course, is that many companies hold their vendors accountable for sales impact without actually involving them in the broader marketing and sales processes that would enable the programs to have a positive impact. If it's "fee paid," the vendor generally doesn't care. But too often companies simply try to offset their risk without giving up the control.

But the greater tragedy occurs when the company insists on "paying for performance," but without giving the vendor the resources and tools to do the job. In our experience, failure under a "pay for performance" is rarely a matter of inadequate incentives. Rather, it is almost always a management problem.