How to Design an Effective Sales Compensation Plan in the Midst of COVID-19
COVID-19 is so unprecedented that a number of the sales incentive compensation strategies adopted in the past—even those designed to address unanticipated marketplace conditions—will unfortunately not be enough to mitigate its impact. Instead, pharma, biotech and medical device companies must adopt a completely new sales compensation plan designed exclusively for COVID-19 that is unlike anything they have ever done before. But within these uncharted waters, how is a life sciences company to know what a sales incentive compensation plan for COVID-19 should look like? Below are five recommendations in designing a COVID-19 sales incentive compensation plan.
Recommendation 1: Extend the Plan Period
Rather than setting the sales compensation plan for a typical quarter or trimester, the sales compensation strategy should instead be set for an extended plan period. The exact length of the extended plan period should depend on the type of product(s), but most often the compensation plan should be set for either a five or six-month plan period.
Recommendation 2: Reward Behavior Monthly
Because conditions during COVID-19 have and will continue to change so rapidly, the COVID-19 sales incentive plan should be designed so as to drive behavior each month. This does not mean that the compensation plan design should change month-to-month, but instead that the compensation plan design should motivate and reward behavior monthly.
Recommendation 3: Adjust Components to Adapt
The published sales incentive compensation plan should incorporate components that can be adjusted to account for rapidly changing conditions. Again, the core design does not need to change, but there are creative ways to ensure the compensation plan adapts as conditions change.
Recommendation 4: Calculate Payouts Monthly
Payouts for each representative under the sales incentive compensation plan should be calculated monthly rather than waiting until the end of the plan period. Although payouts should be calculated monthly, they should still be given out in accordance with a standard plan period (i.e., quarter or trimester).
Recommendation 5: Ensure Sales Compensation Plan is Simple
Although this is true of every sales incentive compensation plan, it is imperative for a sales compensation plan during this time of fear and uncertainty be simple. The sales representative should understand what is expected of him/her in terms of performance as well as how he/she is to earn payout.
Conclusion
During these difficult times, it is necessary to continue to motivate and reward your sales force not just for the short-term, but the long-term as well. As the above recommendations suggest, the sales incentive compensation plan implemented during these uncertain times should be unlike anything ever adopted before; COVID-19 is so unprecedented that a number of the strategies for standard and non-standard sales compensation design alike will unfortunately not work. Although this may sound challenging, we at The Marketing Advantage are here to help; not only have we been designing sales incentive compensation plans exclusively for the pharma, biotech and medical device industries for over 25 years, but are also continually developing new compensation innovations, including those to support our customers in times of crisis and uncertainty.
