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In our previous series, we discussed the benefits of deploying a closed loop strategy to ensure that every dollar spent is optimized to result in bottom-line impact. But there is another benefit that comes with the advent of a closed loop approach—the ability to enable performance-based compensation models for your business and/or partners.
As we all know and live, digital marketing has dramatically changed the way businesses and consumers interact today. And the data created by digital interactions allows businesses and their partners to track, analyze and value each of these interactions.
Of course, if you can measure in detail what’s working in digital, you can also measure what’s not. Fear of the latter is what is holding back many partners, and some businesses, from embracing a highly aligned compensation model: pay-for-performance.
But pay-for-performance is also about much more than compensation. It’s about how marketers and their partners use the incredibly high level of data and insights that marketers now have available to drive relevant consumer experiences and measurable impact. For Leapfrog, a performance-based model demands more accountability in the programs we develop for our clients to directly grow our clients’ business. That accountability shouldn’t be feared. It’s a revolutionary shift from soft metrics that have long left marketers grasping for ways to prove value, which ultimately hinders trust between a business/client and partner.
Especially given the economic environment, businesses are being more focused than ever on the bottom-line. This focus is naturally being driven into a client/partner relationship, where outcomes are becoming the focus of compensation, rather than just services. In the marketing world in which Leapfrog plays, our CMO clients are being driven by CEOs and CFOs to ensure their agency partners have skin in the game. As a marketer, there will logically be higher confidence in the partner whose focus and compensation is directly aligned with ensuring business grows.
Digital evolves at an incredible pace, and that means digital marketers must keep up or risk extinction. We believe that it’s not the pay-for-performance model that businesses and partners should fear; it’s failing to adapt to this major industry shift. Truly aligning goals and compensation is just one more benefit of digital closed loop. Make sure you and your business benefit as well.
In our next series, we’ll take a look at how lessons from the closed loop can be applied to the mobile channel, the fastest-growing channel in the market.
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