Incentive Compensation Solution for the Pharmaceutical & Biotech Industries
Brand objectives evolve with the lifecycle of the product and associated incentive plan design should align with that as well. Whenever, a new product is launched there are additional factors that needs to be considered while designing an incentive plan.
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During launch period, generally combination of commission type and MBO type incentive plans are generally used. It allows to account for uncertainty in national forecast, territory potential and adoption rates.
Design incentives more effeciently!
Phase
Business Need
Period
Pre Launch
Build Awareness with High Value Targets and KOLs
0 to 6 months
Launch
Spend Sufficient Time in Detailing to New Prescribers, Expand Target Universe and Generate Trial
6 to 12 months
Growth
Anchor Key Messages and Focus on Maximizing Revenue Growth
1 to 2 years
Maturity
Protect Relationships and Protect Against Potential Competitor Launches
>2 years
During launch period, generally combination of commission type and MBO type incentive plans are generally used. It allows to account for uncertainty in national forecast, territory potential and adoption rates.
Each incentive plan have its individual pros and cons that influence behavior in a unique way
Overview |
Pros |
Cons |
| IC earned based on performance against a target based on historical sales performance and future target | Perceived to be fair as it accounts for the size of the territory and potential | It can be perceived to be unfair and demotivating if goals are inaccurate or the goal-setting methodology is too complex |
| Requires accurate national forecast | Target is easy to communicate | Potential for reps to game the system |
| Works best for mature products | IC is fiscally responsible | |
| Does not hamper collaboration |
Overview |
Pros |
Cons |
| Each unit or dollar sold earns a certain % of total sales | Easy to understand and communicate | Perceived to be unfair if territories have unbalanced potential |
| Flexibility to apply different commission rates for different performance levels | Perceived to be highly rewarding and engages reps from the first prescription sold | May not always be fiscally responsible due to lack of built-in controls |
| Appropriate for new products | Does not hamper collaboration |
Overview |
Pros |
Cons |
|
Reps get paid based on their overall rank with their peers |
Easy to communicate and implement |
Perceived to be unfair if territories have unbalanced potential |
|
Ranks can be based on sales, growth, or achievement metrics |
Fiscally responsible as total incentive outflow is fixed |
Payouts are not always aligned with national performance |
|
Used when historical data/forecasts are unreliable |
Hampers collaboration can create unhealthy competition |
Overview |
Pros |
Cons |
|
Pays on a combination of performance across two metrics |
Easy to communicate and implement |
Difficult to account for individual territory characteristics |
|
Best for growing products with predictable share growth and |
Can be aligned to a specific brand strategy |
|
|
Does not hamper collaboration |
||
|
Rewards for performance |
Overview |
Pros |
Cons |
|
Paid on rating by manager of pre-defined objectives(SMART) |
Easy to communicate |
Perceived to be subjective at times |
|
Mostly, non-sales-based performance or behavior measure |
Better control over incentive outflow |
Less differentiation based on performance. People often paid similar amounts |
|
Sales data is not used |
Does not hamper collaboration |
Higher administration burden |
|
Used for a management position |
Rewards for performance |
Strong process governance |
Selection of metrics should depend on the sales strategy
Goal: Maximizing Sales
- Total Revenue
- Total Units
Goal: Create awareness/ acceptance
- Writers vs non-writers
- Influencers/KOLs
Goal: Increase loyalty and improve ROI on sales investments
- # of customers above threshold units
- Sticky customers
Goal: Capture market share from competitors
- Market Share
- Share growth
Goal: Convert key prescribers/ accounts to your therapy/product
- # of targets converted from competitors
Goal: Maximize margins
- Net Sales or margins
- % of profitable variant vs unprofitable
Goal: Drive specific pre-launch and launch activities
- MBO
- Call Metrics
- Events Participation
Goal: Maximizing Sales
- Total Revenue
- Total Units
Goal: Create awareness/ acceptance
- Writers vs non-writers
- Influencers/KOLs
Goal: Increase loyalty and improve ROI on sales investments
- # of customers above threshold units
- Sticky customers
Goal: Capture market share from competitors
- Market Share
- Share growth
Goal: Convert key prescribers/ accounts to your therapy/product
- # of targets converted from competitors
Goal: Maximize margins
- Net Sales or margins
- % of profitable variant vs unprofitable
Goal: Drive specific pre-launch and launch activities
- MBO
- Call Metrics
- Events Participation
Factors affecting levels of measurement
Territory Level
- Data available that is clearly attributable to the territory
- Salespeople can convert mostly on their own
District, regional, national level
- Granular data at the territory level is not available or not clearly attributable
- The sales team’s combined effort is required to convert
Combined levels of measurement
- Promote both individual effort as well as team effort
- Managers influence the selling process and customers
- Sharing national success and failures across all levels
Factors affecting levels of measurement
Territory Level
- Data available that is clearly attributable to the territory
- Salespeople can convert mostly on their own
District, regional, national level
- Granular data at the territory level is not available or not clearly attributable
- The sales team’s combined effort is required to convert
Combined levels of measurement
- Promote both individual effort as well as team effort
- Managers influence the selling process and customers
- Sharing national success and failures across all levels
Client’s Say
“Working with Aurochs team has been a pleasure as they know the business very well and there was no need of long explanations on processes/calculations. They were very responsive, came up with suggestions for improvement where needed and showed a lot of operational readiness and can-do attitude if desired features weren’t part of the tool yet.”
Hear from our Clients
Working with the Aurochs team has been a pleasure as they know the business very well and there was no need for long explanations on processes/calculations. They were very responsive, came up with suggestions for improvement where needed, and showed a lot of operational readiness and can-do attitude.
I commissioned Aurochs for a research piece on sales incentives in rare disease therapy. Their insights helped attract and retain top talent of KAM for our EU launch. Aurochs delivered, iterated based on feedback, and influenced incentive schemes in launch countries. The project was valuable and met expectations.
Aurochs team is very responsive, they deliver high quality in design and calculating payout schemes. They always run checks and throughout the project, they informed me in case of any discrepancy they found in legacy SIP calculations. Aurochs were able to implement our requirements in a short time.
Aurochs impressed us with their adaptability, attentiveness, and innovative thinking. They tailored their services to our needs, balancing expertise and flexibility. A reliable partner, Aurochs delivers exceptional solutions while understanding and adapting to evolving client needs. Highly recommended for lasting partnerships.