Three Steps to Check How Accurate Your Goals are Before Implementation
Accurate and equitable biopharma territory-level goal setting is critical to the success of a goal-based sales incentive compensation plan and ensuring its ability to drive sales. However, a number of factors complicate the territory-level goal setting process, and this is especially true in the complex life sciences industry, where differences in territory opportunity, data availability, managed care, seasonality, etc. make it difficult to not only set goals but measure their accuracy. Nevertheless, there is a three-step analysis that pharma, biotech and medical device companies can take to examine the accuracy of their goals before they are implemented so that any inaccuracies can be caught and remedied before they have the chance to undermine sales force motivation.
Three Steps to Measure Goal Accuracy
So what is the three-step analysis life sciences companies can take to measure pharma sales goal accuracy?
Calculate the percent change the goal represents versus sales from the most recent plan period.
Calculate the percent change the goal represents versus sales from the same plan period one year ago.
Locate territories with a percent change on both step 1 and step 2 that is too high or too low relative to other territories in the sales force.
If only a few of these outliers exist, then these outliers can be taken on a case by case basis and adjusted accordingly to increase accuracy and equity. However, if these outliers are numerous, then that is an indication there is something wrong with the goal-setting methodology and a different biopharma territory-level goal setting methodology should be adopted. The outlier threshold at which the goal setting methodology should be changed varies from product to product based on a number of attributes; for example, launch products are allowed more outliers than mature products. Make sure you conduct and interpret the results of this analysis according to the attributes of your product and sales force.
Note that though this three-step analysis can identify inaccuracies in the goal setting process, a goal setting methodology that possesses few outliers can unfortunately still produce inaccurate and inequitable goals. Goal setting methodologies are intricate and complex, and this three-step analysis provides one angle with which to examine goals. Though there are ways in which to examine the other angles of goals, oftentimes they are either time consuming or take sophisticated analytics and modeling. Until now.
Driving Accuracy Further: Momentum™ Expert System Goal Examination
This three-step comparison analysis is just one of four analyses conducted by our Momentum™ sales compensation software system to help users reach the optimal goal setting methodology for their sales force and product portfolio. Not only does Momentum™ make available our rich library of exclusive goal setting methodologies, but it is powered by an expert system built on our over 30 years of experience in life sciences sales compensation and sales optimization that statistically selects which of these methodologies would work best for the user’s sales force and product.
How does Momentum statistically choose which goal setting methodology would work best? That’s where the four analyses mentioned earlier come in. Momentum™ runs four tests to ensure that the best goal setting methodology for the user’s sales force and product is adopted:
Compare percent change that the goal represents versus most recent & year ago sales to find any outliers.
Create a simulation to see how accurate goals would be for the coming plan period.
Apply goal setting methodology to past data to see how close goals are to actual sales.
Test against six SCOR³ES® criteria of sales compensation effectiveness and tests of equity.
Thus, the comparison analysis discussed in the previous section is just one of four analyses Momentum™ conducts so that goals receive a more comprehensive examination from multiple angles. With these four analyses, users can have the confidence that the goals they are releasing are as accurate and equitable as possible.
Furthermore, recall from the previous section that the outlier threshold for the comparison analysis varies depending on a number of product and sales force attributes. Momentum™ takes the guesswork out of determining where this threshold is for your particular sales force and product portfolio, further driving goal accuracy and equity.
Conclusion
Accurate and equitable territory-level goals are critical to driving sales force motivation and sales, but ensuring their accuracy and equity before they have the chance to undermine the sales incentive compensation plan can be quite difficult, especially in the complex pharma, biotech and medical device landscape. In this post, we explored a three-step comparison analysis sales compensation plan designers can conduct to examine the accuracy of their goals as well as a more comprehensive set of analyses available in our Momentum™ software system to maximize goal accuracy and equity. Never again wonder if the goals you’re setting are accurate—empower yourself with Momentum™.
