DFP11567.jpgAs the U.S. healthcare ecosystem continues to undergo a significant evolution, and the focus for many life sciences companies shifts from physicians to patients, payers, integrated delivery networks and a host of other stakeholders, pharmaceutical companies are working to keep pace with these changes. ZS recently welcomed more than 60 forward-looking pharmaceutical sales compensation professionals to Boston for a two-day conference to exchange ideas, network with industry leaders and learn from experts in the field. Here, we’ve highlighted three takeaways.   

Motivation 

The expectancy theory of motivation breaks down in the pharmaceutical industry when factors that affect sales effectiveness, like formulary status, generic entry and physician access, are out of the reps’ control. But there are other ways to keep your sales force motivated, says ZS’s Steve Marley. For example, instead of looking at reps as part of a homogeneous group, consider your salespeople as unique individuals who can be motivated best by tapping into different preferences. 

  • Many companies’ sales comp plans now offer non-monetary incentives, including recognition programs, time off or management training.
  • Companies might want to consider a “pick your own plan” model that gives reps a choice of plans tailored to their particular motivations. Comp designers might love such an approach, but administrators likely would hate it, so it’s best to keep the choices simple.
  • An innovative—and potentially effective—approach might be to let reps set their own quotas or goals, Marley says. A rep could set a target that’s realistically achievable and would make more money than if he were to set an easy target and surpass it, for example. Some companies are starting to test an approach like this in their contests. 

We’re not facing a revolutionary paradigm shift in how we process payouts for performance, but—thanks to technology, analytics and an understanding of different motivational preferences—we are seeing an evolution in how we can motivate, engage and reward our sales teams, Marley says. 

MBOs

MBOs aren’t anyone’s first choice. They’re usually a fallback option if the available data isn’t good, but with the increasing proliferation of roles and the increasing complexity of sales compensation planning, it’s likely that the pendulum will swing back toward MBOs as we move forward, says ZS’s Mike Martin. 

To design an effective MBO, you need to ensure that it drives results, measures quality or quantity, is easy to administer, differentiates top performers, communicates expectations clearly and results in consistent ratings. Consider using the “SMART” framework—specific, measurable, attainable, results-oriented, time-bound—when designing MBOs, Martin suggests. And when communicating the MBO, make sure that the rep has a clear view into: 

  • The required activity, or what the rep needs to do to meet the objective
  • The expected level of quality, or what “good” looks like
  • The expected impact, or the effect of the rep’s effort on sales, access, etc. 

Activity gets you in the door and allows you to start earning a payout, and quality gets you across an earnings threshold. Meanwhile, impact is the ultimate qualifier, Martin says.

Plan Rollout 

Teams place a lot of focus on designing the perfect plan, making sure that it’s aligned with strategy, and that it’s fair, rewarding and fiscally responsible. But the best-designed plan is only good if it’s understood and embraced by the recipient.

Sales comp plans too often overlook the recipient’s experience, with rollouts focused on explaining how recipients will get comped, not on engaging them in ways that will make them successful. “Recipients are often engaged too late, too little and with no follow-through,” says ZS’s Jerome Chabrillat. 

Genentech worked on its approach to comp plan rollouts to increase their success. The comp designers and sales leaders worked together to identify tactics and capabilities to apply to different situations. Here’s what they found: 

  • A simple plan with little change from previous cycles likely doesn’t require more than updated plan books and scorecards.
  • Adding complexity to the design or change to previous plans will require support for first-line managers and early communications. Adding calculators will help bridge the gap between plan launch and the first scorecard.
  • New and innovative plans are great candidates for a full “multichannel blitz,” reaching recipients in many different ways. 

The key to a successful sales comp plan rollout, Chabrillat says, is to follow the “four do’s”: “Do it early, do it multiple ways, do it together and keep doing it.” In other words, roll out the plan as early as you can in the sales period; communicate it via as many messaging forms and channels as you can to ensure that reps fully understand it; work to engage reps in the process; and maintain the momentum of your communications as the plan progresses. 


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Stay tuned for more insights from ZS’s 2016 Pharma Sales Comp Conference, including a Q&A with keynote speaker and generations expert Hannah Ubl.

Topics: Steve Marley, 2016 Pharma Sales Comp Conference, Jerome Chabrillat