Life Sciences Roundtable Recap: Aligning Sales Comp Plans
The Alexander Group recently hosted a virtual roundtable for Life Sciences & Analytical Instruments commercial leaders to discuss the topic of investing for growth post the COVID-19 crisis.
The conversation explored three key topics:
- Second-Half Changes–managing sales compensation and quotas in light of market disruption
- Growth Strategy–aligning sales compensation with growth strategy
- Job Execution–designing plans for new motions and to reinforce critical behaviors
In a healthy dialogue, commercial leaders shared their perspectives and Alexander Group practice leads provided context from recent client work and research. After opening comments by the Alexander Group, we dove into these three topics with commercial leaders from Agilent, Waters, MilliporeSigma, Guardant, Bio-Techne, Thermo Fisher, and others.
TOPIC 1: Second-Half Changes
The group shared how they were adapting to changes in the second half priorities amid a disrupted market. Many participants sited shifting marketing investments from live events to virtual events with good impact, but qualified these successes: “There are definite growing pains and lessons learned–you can’t just set up an online meeting.” Additionally, while these events were successful, they were unsure how to drive and reward rep behavior based on these events.
All participants were concerned with how uneven market disruption was blunting sales incentive program impact. For example, while March through May stopgap pay guarantees were working, they were also expensive and not sustainable given inconsistent business performance. Some reps were earning large windfall payments (such as those that sell assays, kits and diagnostic support products), while those in other end markets like energy and environmental were completely shut down. And business must still continue amidst all of this uncertainty, such as new product launches and M&A activities, which also must be supported by sales compensation programs.
As a result, leaders are making changes to goals and incentives to align pay and performance. 46% of the roundtable participants are changing second-half quotas for all sales reps and 38% are currently considering the best path forward. And plans are changing too–55% are making plan changes, with just 9% making no changes in the second-half of 2020. The most common changes were to drive above goal growth–changes to measures, mechanics and new add-on bonuses and special incentives. The group voiced concerned about the addition of all of this complexity to comp administration, but the general consensus was well stated by a participant: “We have bigger problems now–we’ll just need to clean it up later.”
TOPIC 2: Growth Strategy
Participants are using complex hybrid commercial models to capture growth across customer segments, product lines, and geographies. 82% of participants were deploying these complex hybrid models (e.g., combination of geographic, customer and product segment-based models). While the participants shared that customers preferred these models, they also shared concerns that these models might seem good in theory, but the practice was much more challenging and required careful planning, piloting and scaling support: “Developing these new models without creating even more disruption is the real trick.”
The group agreed customer preferences will guide the future of commercial engagement and admitted to feeling underprepared for an increasingly “digital” world. Several participants are also piloting new models in order to rapidly find what works and discard what doesn’t. This included investment in digital, with 80% of participants piloting or deploying digital models. Additionally, half of participants were making forays into lead generation programs and automation, e-commerce platforms and digital channels, and digital customer success teams. The group voiced concerns that these models created significant challenges for setting goals and designing incentives: “…you can put a new model in place but if you don’t have the right capabilities it doesn’t matter what the compensation plan says.”
TOPIC 3: Job Execution
Uncertainty and new motions present commercial leaders with challenges (and opportunities) few have faced before. The roundtable concluded with a discussion about where investments were being made to sustain a growth culture. The group shared that core sellers were being asked to balance across new and current customers – the two most important revenue motions were winning new business (50%) and upsell/cross-sell (33%). Participants acknowledged that this is a challenging skillset in normal times – but with additional new virtual selling motions added to the mix – nearly impossible without support from the organization, aligned incentive programs and strong leadership. Commercial leaders, like their organizations, will be challenged to build new muscle to help their teams adapt and compete in a disrupted and evolving world.
To learn more and join the conversation, please contact Alexander Group to schedule a complimentary briefing or register for one of our upcoming virtual roundtable series.
