The Real Reason Your Sales Force is Leaving and How to Fix It
Pharmaceutical, biotech and medical device companies invest significant resources in their sales representatives, making sales force retention crucial. However, aside from these resources, sales force retention is also crucial due to the relationships sales representatives have fostered with stakeholders in their territory. Even in a poor job market, demand for top sales representatives is very high. In this blog post, we will explore the primary reasons biopharma sales representatives leave their job and what companies can do to reduce turnover and encourage pharma sales force retention.
Primary Reasons Sales Representatives Leave
Through exit interviews, we know that the three main reasons why biopharma sales representatives leave their job are:
The sales representative receives a better opportunity or sees the potential for more growth elsewhere
The sales compensation plan is inequitable and not properly recognizing/rewarding the representative’s performance
The sales representative does not like his/her direct supervisor or the way management runs the business
While sales representatives most frequently cite the first reason above as their reason for leaving—better opportunity elsewhere—too often, they are actually hiding the true reason in an effort to not look like a disgruntled or demanding employee. Thus, all too frequently, companies don’t know which of these reasons truly contributed most to a sales representative’s decision to leave, and not knowing why sales representatives are leaving makes it very difficult to determine what can be done to minimize biotech commercial team turnover.
However, we can gain insight as to which of these reasons is causing turnover just by investigating patterns in which sales representatives are leaving.
Turnover Patterns and What They Mean
Investigating patterns in which sales representatives are leaving sheds light onto which of the reasons explored in the previous section is causing turnover, enabling companies to remedy the issue and drive pharma sales force retention.
In the table below, we explore various patterns in turnover and pinpoint the reason behind the turnover as well as what causes it:
|
Which representatives are leaving? |
Turnover Reason |
What’s causing the turnover? |
||
|---|---|---|---|---|
|
A: |
B: |
C: |
||
|
Sales representatives within a single district/region |
|
|
⬤ |
The district or regional manager is not effective or pleasant to work with |
|
Over time, sales representatives from the same territory |
|
⬤ |
|
The plan does not reflect the difficulty of selling in that territory, continuously putting reps hired in that territory at a disadvantage |
|
Sales representatives who receive low payouts |
|
⬤ |
|
Though often perceived as good because the “bad” representatives are leaving, it more often indicates that something in the plan is biasing results, such as territory volume or managed care |
|
Sales representatives from low volume territories |
|
⬤ |
|
The plan is biased against territories with low volume, making it very difficult to earn motivating payouts |
|
Young sales representatives |
⬤ |
|
|
These sales representatives do not see an upward career path with the company and see better opportunity with a different company |
|
Sales representatives who have been with the company for a long time |
⬤ |
|
⬤ |
Either these established representatives are unhappy with the company/bureaucracy or are being recruited by another company |
|
Newly hired sales representatives |
|
⬤ |
|
The plan is biased in favor of certain territories, so representatives in those territories stay, leaving openings in the territories that are disadvantaged |
Therefore, just by analyzing which types of sales representatives are leaving, we can identify the reason for the turnover and, more specifically, what is causing the turnover.
As we can see in the table above, the sales compensation plan is to blame for turnover in over half of the cases in the table above, demonstrating how important it is for the sales compensation plan to properly and equitably recognize and reward performance. So then, how can companies ensure their sales compensation plan is driving retention rather than causing turnover?
How to Minimize and/or Fix Turnover due to Sales Compensation
There are two primary ways for pharma, biotech and medical device companies to ensure that their sales compensation plan is not contributing to turnover:
Sales Compensation Diagnostics
Run diagnostics on the sales compensation plan to identify areas of improvement<
In order to determine which areas of the sales compensation plan are causing turnover—or which ones could lead to turnover if not remedied—a diagnostic evaluation of the plan should be run.
Our SCOR³ES® evaluation statistically rates sales compensation plans on the six criteria of sales compensation plan effectiveness, including four patent-pending tests of equity, to pinpoint precise areas of the plan in which there is room for improvement. In fact, improvements in SCOR³ES® ratings have been statistically shown to be correlated with increases in sales!
Retention Strategies
Incorporate retention strategies into the overall sales compensation program
Retention strategies should be introduced into the overall sales compensation program in order to encourage representatives to stay with the company. Note, however, that although the most common retention strategies companies typically adopt—such as stock options, hold-back dollars, or non-compete clauses—may compel employees to stay with the company, they oftentimes do not result in employees feeling empowered and may even cause resentment.
For this reason, companies should utilize creative retention strategies that motivate representatives to stay with the company without alienating them. Over the years, we’ve developed a number of innovative retention strategies that not only drive retention and empowerment, but also instill within representatives a personal interest in the company’s immediate future and incentivize them to assist their peers. Thus, it is not just the top representatives who benefit from these types of retention strategies, but also other sales representatives and the company as a whole.
Running diagnostics on the sales compensation plan as well as implementing creative retention strategies can help pharma, biotech and medical device companies ensure their overall sales compensation program drives retention and minimizes turnover.
Conclusion
Sales force retention is critical not only due to the significant resources companies invest in their sales representatives, but also due to the relationships these sales representatives have built with stakeholders in the industry. However, in order to reduce turnover, companies must understand why their sales representatives are leaving so that they know how to remedy the cause. In this post, we explored how companies can pinpoint why their sales representatives are leaving and how to fix it.
