How to Compensate a Growth Marketer
As you set out on a search for a growth marketer, compensation is one of the things you need to consider early on.
It is true that compensation should not be the most important factor for a growth marketer evaluating your role. Primary motivation for the right candidate will be around your team, your culture, and your mission.
But you can be sure there are other exciting companies vying for your ideal candidate’s services, so you need to be prepared to put forth a competitive offer. What does it mean in practice?
Here, we review the most important considerations for structuring a compensation package for a growth marketing hire.
If you are an early-stage team hiring your first growth marketer, there is understandably a startup discount on what a person would otherwise expect in a larger company.
Sure, it’s going to be more fun, more exciting, and more fulfilling. You are offering them more ownership, as well as opportunity to learn at a faster pace and be part of something great at the very beginning, and that’s worth something.
Growth marketers are often willing to take a meaningful haircut on salary to join the right team with the right mission.
But don’t make the mistake of trying to pay too little. You must allocate appropriate funding to hire someone who has a proven track record and can deliver for your company. If you think you can find an expert who will work for a minimum or no salary and a big bonus or equity promise, you are setting yourself up for a failure.
Lower salary early on is acceptable, but as the company grows and raises real money or becomes profitable, you should bring the salary up to the market level. It’s important to have these conversations as part of your compensation discussion, so that both sides are on the same page.
Growth marketers are charged with achieving growth targets, and it would make sense that their compensation needs to be aligned with these goals.
Many founders are tempted to offer growth marketers a basic level of salary and a high performance bonus tied to reaching the relevant KPI targets. A growth marketer, they say, must prove his worth.
Sure, lower base and higher variable compensation plan sounds good if yours is a cash-strapped startup, but here are a few issues with giving too much weight to the variable cash component.
A bonus-heavy arrangement tends to be contentious because of the unclear attribution. How do you measure what the growth marketer gets credit for, if growth, or lack thereof, can be driven by a number of factors that may or may not be associated with what the growth marketer is doing?
How do you measure success – number of paying customers acquired, change in customer LTV, renewals achieved? Most of the time, changes in these metrics cannot be reliably attributed to any one person.
What’s more, a compensation scheme with a large variable component provides distorted incentives. It incentivizes a growth marketer to sacrifice long-term growth potential in favor of quick wins.
Finally, as Dan Pink points out, scientific research has proven time and time again that the more complicated, thoughtful, and reasoned the task, the less you are able to affect it with performance-based pay.
The Puzzle of Motivation|Dan Pink
If you want high performance, provide your growth marketer with autonomy, mastery, and purpose.
Growth marketer compensation should certainly be a function of results that the person delivers and specifically revenue growth and customer success. We believe equity is a better financial instrument for that than a performance bonus.
Why? Because startup equity, typically granted in the form of options, has a different payout profile and directly incentivizes long-term thinking.
Source: Stock Option Counsel
If you are a small team, you are typically looking for a growth marketer with an entrepreneurial profile – a gritty self-starter with strong motivation and work ethic. These people are awfully hard to hold on to, so empowering them with ownership, tying them to long-term results, and making sure there is something meaningful at stake is a good way to retain them.
In addition to aligning incentives, options have the benefit of attracting more confident candidates. Since the options will be in the money if a lot of things go well, the people who value them the most will be those who have greater confidence in the company’s prospects.
For a growth marketer, equity can compensate the risk he is taking by joining an early-stage venture by providing significant upside in case long-term growth targets are met.
A solid benefit package can also help you compete with higher cash offers from other companies. According to Glassdoor, about 60% of people consider benefits and perks a major factor when evaluating a job offer.
What exactly should you offer to attract top talent?
A recent survey conducted by Fractl found that after health insurance, employees place the most value on benefits that many higher-paying jobs don’t offer, such as flexible hours, unlimited vacation time, and work-from-home options.
These benefits are low-cost to you as an employer, but can give you an edge when competing with higher-paying offers that come with fewer additional advantages.
Putting together an offer that converts
When working with companies that are hiring a growth marketer, we help them benchmark compensation at the outset, so they have the right expectations and don’t waste candidates’ time.
But we generally advise clients against bringing up the compensation topic early on in their discussions with a growth marketer because it can derail the whole process. The compensation you will end up offering will vary based on the individual needs of your candidate.
Your screening process should be focused on getting to know the candidate and calibrating the skills and the fit. Once you’ve done that and made a decision to extend an offer, you should have a separate compensation discussion.
How do you approach putting together an offer that makes sense?
It boils down to being fair and having an honest, transparent conversation about their specific situation, motivation, and trade-offs they are willing to make. Tell the candidate you want to understand what they need and value most so that you can put together the best offer possible.
One of the tactics you can use with a growth marketer to understand cash/equity preferences is to offer a few options in terms of salary levels and equity points that come with each level.
To make an informed decision, a growth marketer actually needs to understand the value of your equity offer, so you need to be prepared to walk the candidate through the rationale and assumptions behind your valuation.
There are also tools like this one from Long-Term Stock Exchange that can help candidates estimate the value of their equity stake when considering an offer.
When you know what the expectations and preferences are, you can put together a compelling offer that is likely going to work.
Compensation is an important part of your offer to a growth marketer candidate. While you don’t need to match the most attractive package in the market to land top-notch growth marketing talent, don’t expect to fetch an awesome hire if you are lowballing them with a mediocre offer.
The candidate you would like to bring on board may be considering offers from larger cash-rich companies as well as smaller startups offering greater equity ownership. You need to be prepared to be flexible in constructing your compensation package in order to get the person you want.
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