Historically, incentive compensation has been synonymous with sales teams— commissions, bonuses, and performance-based pay structures designed to close deals. But in today’s business landscape, performance is no longer just about closing deals. Companies are increasingly extending incentive compensation beyond sales to teams like finance, HR, and marketing, recognizing that everything from talent acquisition to lead generation to customer success are critical to growth.
In fact, according to CaptivateIQ’s 2025 State of Incentive Compensation Management Report, 72% of organizations plan to expand incentive compensation programs to new departments.This shift is more than a trend; it’s a strategic move toward a more results-driven workforce. Thanks to advancements in data and automation, businesses can now measure performance across all functions with greater accuracy, making it possible to tie incentives directly to key outcomes.
The result? More engaged employees, improved accountability, and stronger alignment between business goals and employee motivation.
Focus on Demand Gen Teams
Demand generation teams sit at the intersection of marketing and sales, responsible for driving pipeline growth, optimizing campaign performance, and ensuring revenue targets are met. Despite their crucial role, many demand gen professionals still operate under static salary structures that don’t directly reward their contributions to pipeline acceleration. And when this is missing, it often negatively impacts engagement, motivation and retention.
Incentive compensation gives demand gen teams the motivation and the recognition they deserve for their impact on revenue. Whether through performance-based bonuses, tiered rewards for hitting lead conversion goals, or compensation tied to marketing-sourced pipeline, there are numerous benefits of structured incentives.
Why Incentive Compensation Makes Sense
One of the biggest benefits of incentive compensation is that it encourages data-driven decision-making. When pay is directly tied to measurable outcomes, such as MQL-to-SQL conversion rates, cost per lead, and marketing-attributed revenue, teams naturally become more focused on optimizing performance. Rather than just executing campaigns, demand gen professionals start thinking strategically about how to improve efficiency, maximize ROI, and drive real business impact.
Incentives also help strengthen collaboration between marketing and sales. One of the biggest challenges in demand gen is ensuring that marketing-sourced leads actually convert into revenue. When incentives are aligned with shared success metrics (e.g. pipeline contribution, lead acceptance rates, or sales-qualified conversions), it creates stronger alignment between teams. Demand gen professionals are more likely to work closely with sales counterparts to refine lead quality, improve handoffs, and ensure marketing efforts translate into closed deals.
Finally, incentive compensation boosts creativity and experimentation by rewarding innovative demand gen strategies that drive pipeline growth. When teams know they will be recognized and rewarded for exceeding performance expectations, they are more likely to take calculated risks, explore new channels, and test unconventional tactics. This culture of experimentation leads to higher-impact campaigns and a demand gen function that continuously evolves to meet changing market dynamics.
Structuring Incentive Compensation
Unlike sales teams, where commissions are standard, demand gen incentives require more nuanced structures. The key is tying incentives to metrics that are within the team’s control, while also driving broader business goals. Here are some common approaches:
- Pipeline contribution bonuses: Rewarding teams based on the percentage of pipeline directly sourced or influenced by demand generation efforts
- Lead quality incentives: Rewarding teams for sourcing high-quality leads that support higher conversion rates further down the funnel, ensuring incentives align with long-term revenue impact.
- Performance-based incentives: Offering bonuses or tiered compensation based on improvements in lead quality, MQL-to-SQL conversion rates, or pipeline velocity
- Campaign-specific rewards: Tying incentives to high-performing campaigns that exceed engagement or revenue expectations
- Cross-functional compensation models: Creating shared incentives with sales teams to encourage stronger alignment and collaboration
Best Practices for Implementing Incentive Compensation
For incentive compensation to work effectively, it must be designed with transparency, fairness, and alignment in mind, and reward the pipeline and revenue-driving behaviors that support the company’s growth objectives. Here’s how organizations can get it right:
- Define clear, measurable KPIs. Incentive compensation should be tied to quantifiable results that directly impact revenue. Metrics like pipeline contribution, lead conversion rates, and marketing-sourced revenue ensure that incentives reward performance that truly matters. Vague or overly-broad goals can create confusion and misalignment, so it’s essential to define KPIs that are specific, trackable, and aligned with the company’s broader growth strategy.
- Use technology to track performance. Compensation programs should be automated to provide real-time reporting and eliminate ambiguity. Relying on manual tracking or spreadsheets can lead to errors, delays, and disputes over payouts. By leveraging technology to integrate performance tracking with CRM and marketing automation systems, organizations can ensure transparency, accuracy, and fairness in how incentives are calculated and distributed.
- Ensure cross-functional buy-in. Incentive structures should not be designed in a vacuum. Collaboration between marketing / demand gen, sales, and finance teams is critical to ensuring that compensation plans align with overall revenue goals. When incentives are structured in tandem, it strengthens alignment, improves lead handoffs, and drives better outcomes for the business as a whole. For example, my team has shared OKRs with sales and CSR, which adds another layer of motivational firepower to help push performance to the next level.
- Build a performance-driven culture. Incentives should inspire motivation, not unhealthy competition. While individual performance should be recognized, it’s equally important to reward team contributions. A strong incentive program balances individual accountability with collective success, fostering a culture where collaboration, creativity, and strategic thinking are just as valuable as hitting specific targets.
Key is Adaptability in Demand Gen
Demand generation success isn’t just about launching campaigns—it’s about driving measurable business outcomes. Incentive compensation ensures that teams are recognized and rewarded for doing just that.
Just remember: compensation plans should be dynamic and adaptable to market shifts and business changes. Every new product line and every shift in go-to-market strategy begs the question: Do our goals align with overall company objectives? If the answer is no, it’s time to go back to the drawing board and find ways to drive performance and motivate behaviors that are right for the business, right now.
Katie Foote is the Chief Marketing Officer of CaptivateIQ. With over 15 years of experience across all marketing disciplines at the world’s leading SaaS companies, Katie has built her career on driving transformational change through an emphasis on relationships, momentum, and impact.
