2024 Sales Compensation Trends

The biotech and pharmaceutical industry is rapidly evolving with a projected growth rate of 14% in 2024. This growth is propelled novel innovation, R&D, revolutionary therapeutics and an increased demand for healthcare products and services. As leaders in this dynamic sector, it’s crucial to understand the implications of sales compensation trends on your organization.

Key Findings

Based on the 2024 Alexander Group Sales Compensation Trends Survey, which collected data from over 25 Biotech & Pharmaceutical companies, we present the following key findings:

• Employee Retention: Employee turnover is expected to fall from 14% in 2022 to 10% in 2024. Lowered employee turnover suggests that companies can retain their top performers and offer competitive compensation packages.
• Compensation Cost: Total compensation cost is expected to increase by 4.5% in 2024, rising at a faster pace than previous years. This reflects the market pressure to offer attractive pay levels and the impact of plan changes that may increase payouts.
• Plan Effectiveness: Only 19% of companies rate their plans as highly effective, and 89% are making changes to their plans in 2024. This indicates a need for improvement in the design and execution of sales compensation plans.
• Sales Effectiveness: Over half of sellers achieved their quota and target incentive in 2023, and more are predicted to do so in 2024. This indicates a prominent level of sales effectiveness and alignment between pay and performance.
• Plan Changes: The most common plan changes include measures, measure weights, ramps, accelerators, payout curves and crediting rules. This shows that companies are adjusting the key levers of sales compensation plans to drive desired behaviors and outcomes.
• Relocation Adjustments: More than half of companies offer relocation adjustments and vary pay by location. This reflects the geographic diversity and complexity of the biotech and pharmaceutical industry.
• AI Uptake: More than a quarter of companies are adopting AI solutions to transform sales compensation processes, drive efficiencies and deliver insights.

These findings show the trends that are impacting the industry today. But what should you do next?

Action Items

To navigate these trends and their implications, we recommend the following action items:

• Design Pay-for-Performance Plans: Align the plan measures and weights with the sales strategy and objectives. Set realistic and challenging quotas that reflect the market potential and sales capacity.
• Update Job and Pay Architecture: Provide career path transparency, provide market competitive pay, align to workplace policies, and avoid legal risks related to pay and equity transparency laws.
• Set Goals: Set stretch, achievable, believable and transparent goals that are customized by deployment type (e.g., opportunity, account, territory, and overlay).
• Implement Updates: Use a robust change management methodology as sales compensation programs impact your people’s livelihood.
• Establish a Governance Team: Set up a team to monitor the program design and cost. Additionally, make sure they’re prepared to manage uncontrollable external factors.
• Create a Sales Compensation Dashboard: Leverage technology and data to create and maintain a dashboard that provides timely and accurate information and analysis on the sales compensation program.

By understanding and acting on these trends, you can design and manage effective and efficient sales compensation programs that support your growth and profitability goals.

Next Steps

Based on the findings and implications of the 2024 Alexander Group Sales Compensation Trends Survey, we recommend biotech and pharmaceutical companies to re-evaluate their sales compensation plan design and management. Alexander Group can help you assess your current plan, identify gaps and opportunities, and design and implement effective and efficient sales compensation programs that support your growth and profitability goals.