Do you constantly worry about managing incentive process exceptions? (Part 1)


Are IC exceptions slowing down and complicating your IC process? Is your current IC system only meeting the basic needs while exceptions usually are managed with the help of manual processes and adjustments? This blogpost talks about some of the commonly seen exceptions in incentive compensation in the pharmaceutical sales that your IC system should be able to handle out-of-the-box.

Are IC exceptions slowing down and complicating your IC process? A majority of small and medium-sized pharmaceutical companies manage their incentive compensation administration using excel spreadsheets or in-house data management scripts. These systems usually meet the basic needs of the company and help them successfully manage some of the simpler plan design components. However over time these systems become highly unorganized and complex due to ongoing changes and exception handling. As a result companies end up managing them with the help of a large number of manual processes. Multiple problems start to creep in such as over/under payments, higher shadow accounting and dispute resolution time and higher administration costs. All these issues result in distrust of the existing ICM system and also lowers the motivation of the salesforce.

In this first part of our two part blogpost series, we will talk about common exception scenarios in the pharmaceutical industry that your IC system should be able to manage out-of-the-box.

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Sales mapping

A good IC system should have the ability to map sales and goals from one or multiple territories to a mapped territory. Some of the scenarios where this can be used are:

To support mirror teams with mapped sales from lead teams for brands in the portfolio. The mirrored sales force provides pharmaceutical companies with the option to increase the call frequency to individual physicians with a focus on targeted messaging. This practice used to be more prevalent in the larger pharmaceutical companies but with reduced physician access the use of this approach has gone down significantly in recent times. Map extra sales reps or CSO resources to existing territories to provide additional sales support due to external market events. Pharmaceutical companies which lack appropriate sales management capability or need temporary additional support due to market factors or for vacancy management rely on the CSO approach due to their flexible availability and strong sales management ability. To define and incentivize managed care teams based on their area of influence to ensure coordination between field representatives and managed care teams.

Product focus

An effective IC system should provide you with the capability to allocate different product weights for each plan per territory. This helps to fine-tune your product focus.

A dynamic market environment because of reduced access to physicians and payers control (formulary list adherence) has significantly altered the “one-size-fits-all” sales promotion model across geographies. It is advisable to match sales effort to local business needs and vary brand focus within the product portfolio across different geographies within the same salesforce. Custom product weights by territory can help you define brand focus depending on local business factors and also provides you with the flexibility to make changes frequently if the business requires so without necessarily impacting focus for other geographies.

Longer plan measurement periods with more frequent payouts

Sales channel behaviour (non-retail, LTC) and data volatility (speciality pharmacies) at times require longer measurement periods for IC but the incentive payout needs to be at more frequent intervals to keep the salesforce engaged. This data volatility stems from some very unique buying patterns or bulk returns at times which forces pharmaceutical companies to reconcile data at the end of the longer measurement period to avoid overpayments.

You should also have the flexibility to cap payments for interim payout periods to manage overpayments from seasonal spikes and is also desirable from an ongoing budget management perspective.

Custom Ranking clusters

A good IC system should also allow you to define custom ranking clusters to pool territories based on non-geographic classifications.

At times due to different market potential across geographies within the same sales force, it is desired to create different custom ranking clusters based on market potential. For e.g., the company may want to cluster the sales force into 3 groups depending on the starting market share or product volume ranges.

Are some of these exceptions the cause for manual processes in your IC operations? Do you expect urgent future change requests for some of these coming your way? It’s better to be prepared to handle these than patch your IC system at that point.

The good news is Aurochs software handles all of these exceptions straight out of the box and can go a long way in helping you streamline your IC operations and reduce the overall cost of ownership. Let us show you how. Drop us a mail at info@aurochssoftware.com to request for a demo.

Watch out for the second post in this series to learn about more such exceptions that Aurochs handles.

Post Author
Amit Jain
Co-founder & Director of Customer Success

Amit has more than 15 years of experience engaging with several healthcare companies in consulting projects. His expertise lies primarily in the areas of incentive compensation, salesforce effectiveness, business intelligence and analytics. Prior to co-founding Aurochs Software, he worked with several leaders in the incentive compensation space such as ZS Associates, Optymyze (former Synygy) for almost 10 years in several leadership positions leading several product and service initiatives. He was part of IC leadership team at ZS Associates and led the formation of offshore center of excellence for incentive compensation design and delivered several key client projects.