Replacing Goal-Based Plan with Variable Commission Plan for Rare Disease Brand
Background
The company was a small to medium-sized biopharma company promoting a new revolutionary orphan drug that had no competitive data available.
Old Sales Compensation Plan
The old sales compensation plan had three components: a national goal component, a territory-level goal on units, and a territory-level goal on new-to-brand prescriptions (NBRx). Territory-level goals were set based on history and trends, and payout on both goals began to be paid at a high level of attainment. Not only did the poor goal setting methodology result in goals that were not fair, but the payout curve led to a large portion of the sales force making little to no bonus while a small portion of the sales force made very large bonuses. This weakened sales force morale and resulted in over 30% of the sales force leaving the company within the first year. Although sales did grow, growth was not nearly as high as expected. This plan received an overall rating on our SCOR³ES® diagnostic assessment for sales compensation plans of 1.6, or very poor.
New Sales Compensation Plan
The new sales compensation plan designed by The Marketing Advantage eliminated the national goal component, converted the unit goal to a variable tiered commission, and replaced the new-to-brand prescriptions (NBRx) component with a multiplier on the first script written by a new prescriber (making it worth three scripts). The variable commission for the unit component was based on territory-level goals set according to TMA’s account profiling-based goal setting methodology, resulting in increased goal accuracy. The payout curve was altered to three tiers, with the first tier starting at 50% of past sales, the second tier accelerating around 100% attainment, and the third tier slowing down after 150% attainment. This new plan received an overall rating on our SCOR³ES® diagnostic assessment of 4.0, or very good.
Sales Results
Sales improved an incremental 18% above the prior growth rate that the product had been experiencing. All sales representatives were making bonus and turnover decreased dramatically.
