Keep the Plan Simple and Focused
Sanofi’s Marc Bacon explains how to structure incentives effectively to drive the right behaviors.
Incentive plans can be “incredibly effective” in shaping field force behavior but the golden rule is to keep them simple if you want them to be motivational. “A plan that is not simple is not motivating,” argues Marc Bacon, Director of Incentive Compensation at Sanofi, who is responsible for designing the compensation plans for some 3,000 sales associates across pharma, surgery, bio-surgery, US managed markets and oncology.
“That’s a wide range of strategic imperatives we are trying to design incentives around,” he tells eyeforpharma ahead of his appearance at eyeforpharma Philadelphia. “My primary role is to make sure incentive design work is aligned to our overall incentive philosophy and of course aligned to the strategy of each the brands that we work with.”
So how are the incentive plans structured? Some are revenue-based – some of the specialty field forces will have revenue goals assigned to the sales associates; however, the vast majority of the plans are goal-based around metrics like the product’s history and growth rate. “On the whole, we employ goal-based plans for the majority of our sales associates.”
And are they financial? “Primarily yes, the vast majority are financial rewards associated with their performance, although we do also mix in some peer recognition as well.” Such rewards tend to take the form of trips as part of a three-tiered annual rewards program: Sanofi recognizes the top 1%, then the next 7 %, and the next 5% after that with varying levels of recognition and rewards. “The top 1% of the field force would go on a trip to Paris, and then usually an excursion beyond that – this year it’s Paris with an additional trip to Switzerland; the next 7% have a regional trip, usually in the Caribbean, Mexico or the Dominican Republic.”
Beyond the financial rewards and incentive trips, the company also aims to layer on additional recognition such as spot recognition from sales leaders, perhaps in the form of emails or, as in a recent quarter, when the company recognized the achievements of 700 associates by sending an Apple watch as a surprise to their home. Sales leaders are asked to recognize sales associates who have performed well against a certain metric with a “token of our appreciation”.
How does training interact with the incentives program to help drive behavior? Bacon responds: “I wouldn’t describe the training as part of our incentive program, but we do rely on training to help determine eligibility for our incentive programs. Individuals have to be appropriately trained before they are eligible for the incentive program.”
Focusing on market segments
Can incentives be used to focus behavior on particular market segments? They can, but this is a very headquarters-centric approach offering little autonomy at the local level, according to Bacon. “There’s always a natural tension between what headquarters determines is the segmentation and what the folks in the field say: ‘But yes, here are the customers that I believe are important based on my relationships.’”
He suggests ways to tackle this. Occasionally, Sanofi has paid people only on segmented customers and then paid a smaller amount on a total universe view – forcing the incentives on what headquarters believes are the important paying customers. That is a strategy enjoyed by brand managers and headquarters; however, it causes a lot of frustration among associates who rightly or wrongly believe they have a better view of what’s important – or maybe more realistic – at ground level.
“The challenge is finding the incentive scheme that balances the imperative of focusing on the right customers with the correct amount of flexibility that allows for a local sales rep to say: ‘These are our very important customers over here but, if I look over here, I can see some potential customers that I can work on as well.’ Not to be left out of the mix also is a strong field leader to say: ‘Yes, these are non-targeted calls or non-segmented customers that you are spending time with; at the end of the day, we really need to drive our energies here towards what we know are these valuable customers here while spending a small, more appropriate time prospecting these customers over there.’ So from an incentive standpoint, there are myriads of choices between paying only on segmented customers and the universe.”
But what about those salespeople who call on the “easy” accounts rather than those we know need what we offer? Bacon argues that this depends on how much confidence you have in your first-line managers, and whether they can manage appropriately at the local level. If that works well, then you are less concerned about this from an incentive standpoint. “However, if you need more of a command and control aspect then incentives can be a very effective way of driving that appropriate behavior.”
Bacon suggests that if you have effective first-line managers you can pay on all customers. However, if you are in a position where you have a new field force or new managers and you want to provide more direction, then you can design an incentive scheme that only pays on the customers that headquarters feels are important.
The short answer is putting the patient first. You can’t have a strategy or incentive compensation plan that is not mirrored to the needs of our customers and their patients.
He returns to the theme of simplicity stressing that when designing incentive programs, simplicity rules; indeed, a plan can easily become overloaded with attempts to drive behavior such as targeting specific segments. “One of the challenges we have is marrying the idea of simplicity and then driving every behavior that we may need those sales associates to achieve. When we’re working with the brand, working with the directors, we really do challenge folks to pick one or two metrics that would signal success for the sales associate and the brand.
“I’m not doubting the importance of focusing on that segment of customers,” Bacon declares. However, he suggests that it is more fruitful to focus the incentive plan on the outcomes of targeting a specific segment, with this working alongside appropriate communications and sales leadership aligned around the communication of how to achieve success with the incentive plan.
So are incentives more of a broad-brush tool rather than a micromanagement tool? “Yes, we try. You really want to pick a handful of metrics that would equate with success for the brand and the sales associates. It’s the constant battle of finding those two or three metrics. Sometimes you have to walk away from those that are more micromanagement based.”
Large field forces
In the context of large salesforces the idea of designing an incentive program that is universally motivating for everyone is a massive challenge. “What the incentive plan does is announce to the field force: ‘Here are the things that we need to be successful at the company; here are the strategic imperatives; here are the things we need you to achieve for us all to be successful.’ You’re not going to appeal to 100% of the field force but, if you can grab the majority of them and point them in the right direction with the right incentive plan, then I think it can be incredibly effective.”
Then in your back-end design, you can try to control for some of the geographical differences. The harder factors to control for are the personality differences in the field. “You’re basically shooting for the broad base here of engaging 80-85%, knowing that 50% of the field force is probably going to work and do their best no matter what you put in the incentive plan; there’ll be 10% who are just not going to resonate with anything you are doing 100% of the time – can you move the majority of that giant sales force in the right direction by announcing that this is what we need to achieve from our prescription standpoint, our customer standpoint, for the vast majority of the field force?”
So, what does the shift towards individual accounts mean for incentives and compensation and other aspects of the sales model? According to Bacon, the short answer is: “We need better data. As the landscape shifts towards more account-based, more ACOs (accountable care organizations), we need better data to align our incentive compensation strategies and results around that.”
The lack of data is a problem caused both by systems issues and sourcing, although there is no shortage of great data in the US, both in terms of quality and quantity. It’s more of a systems issue in terms of taking the data and integrating it in Bacon’s view.
Putting the patient first
How does the industry build a field force that drives sales, while also building on meaningful engagement with physicians (in the context of declining face time)? “The short answer is putting the patient first. You can’t have a strategy or incentive compensation plan that is not mirrored to the needs of our customers and their patients.”
Of course, this hasn’t always been the case, so is patient centricity one of the metrics Sanofi uses for the plan? “It should be. I’ve certainly been around long enough to see incentive strategies that were not aligned to that. In the end, what we did is end up frustrating our customers,” he acknowledges.
How do effective incentives help achieve longer-term strategic objectives (rather than short-term tactical objectives)? “The quickest answer is to have a longer incentive plan. This depends on the role of the sales associate.” There is a significant difference between the length of the sales cycle and timeline for an associate calling on a primary-care HCP and an account manager calling on a national payer. “The easiest thing you can do is to make sure you are measuring at the right time and the right objectives,” he concludes.
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