Sales Compensation

Sales compensation design to drive new go-to-market strategies

By Amey Deorukhkar, and Jason Huhn

May 19, 2021 | Article | 4-minute read

Sales compensation design to drive new go-to-market strategies

The competitive U.S. pharma marketplace has forced organizations to re-evaluate their current competitive selling models. Restrictive customer access that was amplified by a global pandemic has forced the industry to adopt new omnichannel approaches for customer engagement and fueled this transformation. As the pharma industry pivots to implement new go-to-market strategies, sales compensation practices will need to adapt to support this change.

How new go-to-market strategies will transform pharma reps of the future

Traditionally, clinical sales reps tend to be goal-oriented individual achievers focused on delivering key brand messages through access to target customers to drive sales and meet quotas. While this model worked successfully before, customers now want to engage differently—a recent ZS voice of provider survey showed that providers plan on keeping half of all rep visits virtual in the new normal. In light of these changes, pharma organizations must employ more collaborative and empathetic customer-centric strategies as opposed simply to direct selling. Successful implementation of this model will require clinical reps to engage HCPs when and how they want to be engaged. The pharma-centric model of delivering key messages to HCPs via face-to-face interactions must now transform into a customer-centric model driven by the objective to provide value and services the meet the specific needs of each HCP.

“Successful implementation of this model will require clinical reps to engage HCPs when and how they want to be engaged.”

As pharma organizations transition their go-to-market strategies, the following characteristics will define the sales team of the future:

  1. Cross-functional: The team balance shifts from being heavily weighted on the sales function to including greater involvement from the service, medical, inside sales and key account management (KAM) functions of the organization to meet ever-changing customer needs. This will create a more localized deployment that tailors to a customer’s specialized needs, as opposed to the traditional uniform deployment in current structures.
  2. Collaborative: Every team member works together towards a common definition of success. Their goals and incentives also reflect this and place special emphasis on collaboration. Additionally, nonsales personnel will need to participate in customer-facing activities by collaborating with commercial roles in the organization.
  3. Empathy-based selling: Reps must place the customer before the hard sell each time. This involves prompting conversations around customer questions and pulling in other team members to respond more effectively. This combination of collaboration and empathy-based selling translates to a customer-first approach. Training existing reps on this fundamentally new method of selling will require time and more importantly, investment. As a result, pharma organizations must be prepared to measure the impact of these investments over the long term to see the long-term effects.
  4. Technology-forward: Reps must be savvy with new and emerging technologies that will help them succeed in the digital and virtual engagement channels, especially with continuing access restrictions and customers changing their preferences.
  5. Driven by insights: The sales team must accept and act on recommendations developed by the analytics groups and actively participate in the data execution loop by sharing feedback from each interaction, making predictions even more robust over time. Data-driven decisions, value-based business models and deployment of more service roles will enable a concentrated focus on patient management, bringing medical and commercial teams closer and empowering KAMs to steward population health programs.

As pharma organizations change their go-to-market strategies, different organizations may place varying levels of emphasis on the dimensions mentioned above, imposing implications on their current compensation models. 

Implications on sales compensation and total rewards

Even with the evolution of the go-to-market strategies, the guiding principles of sales compensation such as fairness, ability to implement, motivation and financial responsibility will continue to be relevant. It is the design of the sales incentive plan that will change along the following dimensions.

  1. Measurement of success: Companies will need to design plans around metrics that align with how future sales teams drive value. To compensate on how well the needs of the customer are met, companies will need to move away from measuring only dollar-to-dollar performance. Metrics such as satisfaction scores have been considered recently—but they are currently too difficult or expensive to measure at the individual customer or territory level. If enough companies start measuring such metrics, the demand could drive efficiencies in aggregation, similar to how prescription data is collected and used now.

    It is important to note that demand-based components in incentive compensation cannot go away entirely. Accountability is needed to ensure the organization meets its top-line revenue requirements.
  2. Supplemental reward mechanisms: It will be equally important to provide an incentive for long-term performance, as many activities will not give instant results. Companies can consider supplemental incentives with vesting schedules similar to 401k and stock option plans. Such mechanisms will not only ensure the reps are invested in the long-term success of the organization but will also provide a more guaranteed return on the investment needed to train the sales team on the new sales methods. This incentive needs to be on top of the current incentive compensation plan—or else companies may lose their top talent to the organizations that are willing to pay “now."
  3. Team and collaboration components: Leaders will need to coach and motivate a broader group of people with different backgrounds who will now be a part of the same team, working toward common objectives. An example of this would be a clinical rep, a KAM and a thought leader liaison working together to convert a key account. Management by objectives (MBOs) based on coaching, teamwork and driving collaboration can become more common as sales teams shift to a more varied and cross-functional approach.
  4. MBOs: Although sales teams prefer MBOs when a commission or goal-based plan is not possible due to lack of availability or stability of data, teams may need to shift away from sales-based metrics to a purely MBO-based plan. For roles such as medical science liaisons (MSLs), demand-based metrics can be entirely noncompliant. And for others, they increasingly become hurdles in conversations with customers who question motives.

    MBOs can include result-oriented metrics such as average net promoter score, as well as execution-based metrics such as account servicing stats. When designed well, MBOs can be very impactful. And rebranding successful MBOs to integrate them better in the incentive compensation plan can increase their effectiveness.
  5. Sales rep profile: With analytical insights gaining importance, the role of the traditional sales rep is rapidly evolving. As AI-based targeting and messaging becomes more widespread, the rep might well prove to be the key differentiator for a provider to choose one pathway of care over another. This could require significant retraining for current reps. The future hiring profile will be drastically different, as well. Recruiting will have to look past the sales pitch and assess skill sets such as empathy, communication and customer-centricity.

    The rep of the future will be expected to adhere to the suggestions provided by the central analytical insights team. Although it may feel like an obvious plan component, adherence to the suggestions made by the analytics group should not be part of the incentive compensation plan. Organizations should lean on total motivation concepts to drive this adherence, rather than depending on incentives, as this could drive inappropriate behavior. We expect HR to play a larger role in retaining valuable reps by rethinking their overall motivation and a comprehensive compensation program, rather than depending on incentive compensation as the sole motivator.

While there is no one-size-fits-all solution, organizations can find the right approach by pulling on the levers we have mentioned in this article based on their own organization's culture, sales force dynamics and market landscape.

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