Insights

Have We Reached the Medtech ‘Tipping Point’?

Chad Albrecht, Russell Schubert



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Four Steps to Align Sales Compensation to the Changing Industry

 

Multiple changes in the medtech industry are impacting how medtech companies sell. By ZS’s estimates, about 50% of all hospital admissions will pass through just the top 50 IDNs by 2022. This has a significant effect on how customers buy, how medtech companies must sell, and the number and type of selling resources that they employ.

These IDNs have different buying processes. Some have a highly controlled, centralized decision maker with greater pricing leverage. Others are highly decentralized, leaving the purchasing decision to the local hospitals. We also see the payer landscape consolidating, giving them greater pricing leverage while negotiating with the medtech industry. All of these factors generate a high degree of heterogeneity in the buying process across IDNs, which then requires a flexible sales force deployment strategy to adapt to the local needs.

One net result of all of these dynamics is that the traditional sales reps generally have less influence on the final purchasing decision leading the companies to reduce their traditional field sales headcount and invest in lower-cost inside salespeople. Companies are also adding strategic account managers (SAMs) and many are starting to adopt localized deployment strategies.

Given that sales compensation is dependent on all of the aforementioned changes to the selling model and sales roles, how well have you adapted your sales compensation program to support these changes? Here are four questions to ask of your organization:

  • Are SAM compensation programs appropriately tailored to the unique demands of the role, or are they the “standard” sales incentive plan with only minor modifications?
  • How closely does the sales incentive plan for your inside sales organization mirror (or differ from) the field sales incentive plan? Are you prepared to adapt your incentive plan to potential changes in how you define exempt employees?
  • Is your compensation program designed to enable sales leadership to achieve a lower compensation cost of sales without risking losing some of your best salespeople?
  • Is your program agile to support heterogeneous sales force models? Do you have the necessary systems and tools to effectively support a sales incentive design that more accurately reflects the needs of the local market?

The medtech world is changing. As field sales models face increasing pressure to adapt, compensation programs need to be enablers of growth, not reasons for delayed change. Furthermore, compensation plans need to evolve to support the continued engagement and performance of top talent within the sales force while simultaneously doing what’s right for the evolution of the business.

Download this article to learn how to adapt your sales compensation in a changing medtech landscape.

About the Experts




Chad Albrecht is a principal based in ZS’s Chicago, Ill., office and leads the company’s B-to-B sales compensation practice. Chad has helped numerous clients create and implement motivational sales incentive plans and set fair and challenging sales quotas. His clients include companies in the medical device, pharmaceutical, high-tech, manufacturing and business services industries.




Russell Schubert is a manager in ZS’s Evanston, Ill., office and has worked with numerous medical device, products and services companies to find solutions for a variety of issues related to incentive compensation, helping to design and implement incentive compensation plans and quota-setting processes.