Pharma Analytics

SFE (Sales Force Effectiveness)

Sales analytics, incentive compensation
& reporting capabilities
Objective of the training

• Overview of different areas of SFE (Sales Force Effectiveness)

• High level conceptual understanding

• Real project case studies will be discussed during the training

• Open for Questions at any time during the training

2
Agenda: (Sections to be covered)

Introduction: Why sales force effectiveness is required Duration: 10 min.

2
SF Sizing & Targeting Duration: 60 min.

3 Alignment & Call Planning Duration: 30 min.

Incentive Compensation design & Operations Duration: 60 min.

4
Reporting Duration: 30 min.

3
Module 1
➢ Introduction: Why sales force effectiveness is
required

4
How does a day of a sales rep start?

5
The Wolf of Wall Street 2013 selling through phone

6
Examples of unprofessional conduct in promoting drug by Pharma
companies

Serono: Off-label Johnson & Johnson offlabel Insys Pharmaceutical: Off-label

Abbott Labs and promotion of Subsys for non-
promotion of Serostim, promotion of Risperdal, Nov
Depakote, May 2012 cancer uses that were not
October 2005 2013
approved by the FDA., Aug 2015

Serono ultimately agreed to
pay $704 million. The
whistleblowers shared in a
$51 million reward from the
settlement.
Abbott Labs paid $1.5 Johnson & Johnson paid a
billion and whistleblowers fine of $2.2 billion. Insys Therapeutics reached a $4
received $84 million Whistleblowers were awarded million settlement
reward. $167 million.

7
Sales Force (SF) effectiveness offerings to operationalize
commercial strategy with data driven decision making

Sales Force Effectiveness Offerings

SF Sizing & Alignment & Call

IC design IC Operations Reporting
Targeting Planning

Fair & simple Incentive

Recommend Optimized sales Goal setting, sales
Compensation plan Sales reporting, IC
appropriate number of territories for better crediting, IC plan
design and simulation score card, goal card
salespeople to customer coverage, administration along
to motivate sales force reporting on various
profitably cover increase sales, lower with Home office
and drive behavior platforms like Tableau,
existing customers and travel costs, and fair reports to enable
towards company Qlik sense, excel
new targets incentive compensation tracking performance
objective

▪ End to end sales force effectiveness including sizing, alignment & IC design managed for US based pharma clients
Experience

▪ Incentive compensation operation along with goal setting, reporting and quarterly IC processing
▪ Performance tracking & Reporting, Sales operations analytics, Data analytics solution

8
Module 2
➢ SF Sizing & Targeting

9
Multiple sizing approaches can be used to validate the SF size

Input Output
Data &
Sl No Approach Best when to use Time & Cost Estimate of sales Effectiveness
(click on link to see Pros & Cons) Complexity

1 Same as last year Market & products are relatively stable • • - •

Heuristic to diagnose under / over
2 Cost of sales investment • • - •
Competition is brilliant and products are
3 Share of voice identical •• •• - ••
Starting point to the journey. Historical
4 Workload buildup sales & efforts data is unavailable •• •• • ••
Complex buying behavior. Unable to link
5 Affordable coverage sales to historical effort. •• ••• - •••
Sales forecasting is desired. CXO requires
6 Sales response ROI ••• ••• ••• •••

Source: https://insights.axtria.com/blog/pharma-sales-force-sizing-strategy-part-1-classic-approaches 10
Case Study: Sizing of Sales Force

Case Study – A global pharmaceutical company wanted to expand Sales Force (SF) size to fuel revenue &
profit growth for their pain management product. It included industry benchmarks, multiple approaches, target
customer based analysis and restructuring the existing sales force to get size right for the sales force

Objective Approach Outcome Client Benefits

• We analyzed the existing We provided sales force

SF structure and estimate in terms of:
recommended merging • # of sales rep based on on
Increase in profits: 5% of net revenue
• To restructuring the existing sales force three different types of convergence of various
savings due to merging of the three different
and provide sales force size number for sales reps for optimized approaches
types of sales force
the promoting the new & growing performance • # of Managers
business of a non-opioid pain • Call points
• Time saving of C-level leadership and
management drug in US market We developed multiple • Target Audience
methodologies based on additional lead time for hiring: Client
“Cost of sales”, “Same immediately approved the SF size
• Recommending the $ investment in As a value add, we
as last year”, “Workload recommended by us as it was cross
sales force along with industry suggested to consider
buildup” & “Target validated by multiple sizing approaches and
benchmark kicker, contests in reps
customer focused” industry benchmarks
incentive compensation as
approaches to estimate the there was budget based on
sales force size sales spend as % of revenue

11
Exercise: What is the method and then the right size for the sales
force
• 2020 sales revenue is $500M with 150 reps Industry benchmark
• 30% growth is expected in 2021

Sales reps
Method every $1 spent on
Sl No Approach Best when to use Rep size
(click on link to see Pros & Cons) applicable rep should return
$10x in return
1 Same as last year Market & products are relatively stable

Heuristic to diagnose under / over

2 Cost of sales investment

Competition is brilliant and products are

3 Share of voice identical

Starting point to the journey. Historical 8-10% is ideal

4 Workload buildup
5 Affordable coverage
6 Sales response
sales & efforts data is unavailable
cost of sales as a
Complex buying behavior. Unable to link % of revenue
sales to historical effort.
Source: Partner.Microsoft
Sales forecasting is desired. CXO requires
ROI

12
Before targeting, we should consider the nature of US healthcare
ecosystem which is evolving and becoming complex

Traditional view Evolving view

ACO Payer Policy makers
Payers

Physician Treatment Hospital

Hospitals
groups team systems

Medical
PCPs Specialists IDNs
groups

Outpatient
KOLs
Prescribers Hospitals clinics

KOL: Key Opinion Leaders

PCP: Primary Care Physicians
A health care provider is a person or company that provides a health care service to you IDN: Integrated Delivery Network
13
US healthcare ecosystem

14
Targeting & segmentation of customers enables rep to focus on high
value customers while nurturing low value prospects for future
Refer details in Annexure

Organized
Critically evaluate your PCPs Specialists KOLs Treatment team
customers
customer definition —
increasingly it is becoming
Identify broader than just prescribers
customers

Based on brand lifecycle, Potential: Market, Preferences: Attitude, Influence: KOLs, Access: Rep access,
incorporate appropriate metrics brand usage perceptions influencers payer access
Assign to develop overall customer
priority
priority

Reps Samples Mail Tele-reps Email Social media

Consider non-personal
channels – increase reach &
Is rep visit the only access by engaging customers
channel as they like to be engaged

Detailing / Reimbursement
MSL support Patient services Nurse education
Consider the desired customer
messaging support
experience & activities needed
Other channels for to deliver on the experience
targeting

15
Exercise: What is the method and then the right size for the sales
force
• Each rep can have 1500 hours in a year for call. There are 10,000 target Industry benchmark
physicians in USA and they are segmentation into High (10%), Medium (40%),
Low(50%) categories based on sales. Calculate the number of reps required
based on above information

every $1 spent on
rep should return
$10x in return

Sl Method
Approach Rep size Comments
No applicable
4 Workload buildup Y ? ?

Affordable
5 - - -
coverage
8-10% is ideal
6 Sales response - - - cost of sales as a
% of revenue

Source: Partner.Microsoft

16
Match the following sizing approaches

Sl No Approach Sl No Best when to use Sl No

Complex buying behavior. Unable to link

1 Same as last year A sales to historical effort.

Heuristic to diagnose under / over

2 Cost of sales B investment

Sales forecasting is desired. CXO requires

3 Share of voice C ROI

4 Workload buildup D Market & products are relatively stable

Starting point to the journey. Historical

5 Affordable coverage E sales & efforts data is unavailable

Competition is brilliant and products are

6 Sales response F identical

17
Module 3
➢ Alignment & Call Planning

18
2020 US Presidential Election

19
Effective territory alignment methodology is dependent on three
factors
Strategy and Structure Technological Capabilities
• How many unique sales channels, teams and roles are we • How many customers and products need to be managed?
deploying? • Do our systems support account parent-child relationships?
• How do we segment the market? How do we segment our • How common are account-level exceptions? Is there a need for manual
customers? overrides?
• What level of coverage do our customers want? • Do we have a geographic territory design software tool?

1 2 3

Roles and Responsibilities

• What is the strategic focus of our sellers (e.g., retain customers, grow existing accounts,
acquire new customers, drive specific product offerings)?
• What territory planning and management behaviors do we want to promote?
• How many unique sales individuals will call on a single account?
• How do we want our sales teams to interact

20
Choosing a Territory Design and Alignment Methodology to “do
more with less”
• Need to manage two sales forces
• Any size rep organization
• Small rep organizations with small • Core geographic alignment with specialty
• Reps call on all the prospects and
Use cases numbers of individual account locations sales force "overlay“(e.g., Terr. “A”
customers in their geography
• Team covers only one product consists of Florida & Georgia with
• Companies need local sales presence
the exception of accounts #112 and #214)

Approach Geography based Account based Geography-Account based hybrid

Manage & administer • Easy • Complex • Most complex

Requirement of • Master account list with clear parent-child

• No • Both territories and account alignments
account mapping relationships

• Accountability over all customers in the • Requires development and maintenance

Role for rep • Reps target specific accounts
geography of both territories and account alignments

• Facilitates ability to drive focus on a

• Encouraged to find new leads in the • Offers benefits of both methodologies
Focus area for rep vertical market or specific customer
geography
segment

• Local presence is the focus and hence • Provides ability to better address
Travel • May lead to travel inefficiencies
travel is optimized undesired account disruption

• Easier to develop holistic view of each

• Difficult to minimize disruption to
Realignment account and minimizes disruptions during • Disruption is lesser than Geography based
customer-rep relation during redesign
realignment

• Require clear communication of territory vs

Account division • Accounts within a territory cannot be • Multiple reps can split the same territory
account ownership. Zip codes can be split
across reps split among 2 reps or even postal code
across multiple reps

21
Choosing a Territory Design and Alignment Methodology
Geography based Account based Geography-Account based hybrid

22
Territory design criteria & guidelines

While aligning territories, many factors need to be considered for a balanced territory size
• Level 1: Resource utilization, focusing on high value customers, and travel optimization
• Level 2: Minimal disruption to customer relationships, and market area integrity, Field Coordination Expectations
• Level 3: Customer product mix, and state boundaries
• Level 4: Sales potential

Territory design guidelines are followed for an optimized territory creation

Territory shape Geographical Accessibility for

considerations reps

▪ Keep territories contiguous. Reps should not
have to drive through other reps’ territories
to call on their customers.
▪ Avoid territory boundaries extending deep
within other territory
▪ Avoid crossing mountain ranges or large
bodies of water that lack good road access
▪ Avoid creating territories with vast
geographies – if this cannot be avoided,
these large territories should have lower
index points than smaller territories to make
up for travel time
▪ Avoid combining metropolitan areas with
rural areas
▪ Keep major highways & roads in mind when
designing territories
▪ Check that direct flights are available
between cities for reps with large territories
▪ Maintain state boundary integrity whenever
possible, considering managed care

SF Sizing & Alignment &

Targeting Call Planning
IC design IC Operations Reporting 23
Our approach for alignment consists of 8 different steps to ensure a
balanced and optimized territory design

Process step Process step Deliverable Approval

1 2 3 4
Approval of sales
Key decision Customer & prospect
Sales center suggestion center from
criteria attributes
leadership

Analyze current issues with Create data of customer and

prospect locations & travel Optimal sales territory centers
alignment and number of Territory centers to be audited
time. Analyze alignment (or salesperson locations) is
territories. Decide alignment and finalized by the national
attributes such as market determined centrally, based on
criteria “balance workload” and and Area managers
potential, sales, and workload business needs
“minimize disruption”

Approval Deliverable Approval Process step

8 7 6 5
Approval of regional Suggest regional Approval & refinement Develop territory
alignments alignment of territory alignments alignments

Regional alignments to be Suggest region alignments Territory alignments to be

Develop territory alignments
audited and finalized by the based on the decided criteria audited and finalized by the
based on the decided criteria
national and Area managers regional managers

24
US population distribution

25
Align sales territories to maximize profits – Sample alignment

26
Quiz
Territory method Use cases Answer

1 Account based A • Need to manage two sales forces

• Core geographic alignment with specialty sales force
"overlay“

2 Geography based B • Small rep organizations with small numbers of individual

account locations
• Team covers only one product

3 Geography-Account based C • Any size rep organization

hybrid • Reps call on all the prospects and customers in their
geography
• Companies need local sales presence

27
Quiz
Territory method Use cases Answer

1 Geography based
2 Account based
1. Multiple reps can split the same territory or even postal code
2. Encouraged to find new leads in the geography
3. Require clear communication of territory vs account ownership.
Zip codes can be split across multiple reps
4. Facilitates ability to drive focus on a vertical market or specific
customer segment
5. Accounts within a territory cannot be split among 2 reps
6. Requires development and maintenance of both territories and
account alignments
7. Reps target specific accounts
8. Accountability over all customers in the geography

3 Geography-Account based
hybrid

28
Quiz
Territory method Use cases

1 Geography based A • Accountability over all customers in the geography

• Encouraged to find new leads in the geography
• Accounts within a territory cannot be split among 2 reps

2 Account based B • Reps target specific accounts

• Facilitates ability to drive focus on a vertical market or specific
customer segment
• Multiple reps can split the same territory or even postal code

3 Geography-Account based C • Requires development and maintenance of both territories and

hybrid account alignments
• Require clear communication of territory vs account ownership.
• Zip codes can be split across multiple reps

29
Alignment examples of two territories to show workload balance

Region District # of zips % of sales Workload FTE # of Reps

East New York, NY 2000 6% 9.6 10

East Washington, DC 1000 7% 10.1 10
East Charlotte, NC 1000 7% 10.3 10
East Atlanta, GA 1000 7% 10.1 10
East Miami, FL 1500 7% 10.0 10
East Birmingham, AL 1000 7% 9.8 10
East Nashville, TN 1000 5% 8.1 8
East Pittsburgh, PA 2000 6% 8.7 9
West Houston, TX 3000 6% 9.7 10
West Memphis, TN 1000 6% 9.7 10
West Dallas, TX 3000 6% 9.5 10
West San Francisco, CA 3000 6% 9.8 10
West Indianapolis, IN 1000 6% 9.1 9
West Minneapolis, MN 1000 6% 8.4 8
West Los Angeles, CA 3000 6% 9.5 10
West Great Lakes 1000 6% 8.4 8
TOTAL 26,500 100% ~151 152

30
Call Planning is necessary to focus sales resources to maximize
efficiency

Why call planning: Better allocation of the same call capacity would increase sales force impact by over 30%,
without increasing field force size or costs.

The Old Way: “One Size Fits All” Does Not Fit Anymore: However, each territory is unique, and in today’s
complex market and selling environment, “one size fits all” is an ineffective strategy on several fronts.
• First, these plans are incredibly inefficient: half of product details are made to doctors who are unlikely to
prescribe the product.
• Furthermore, the one-size-fits-all approach can miss high-value doctors because it is not sophisticated
enough to identify those who are truly interested in the brands each representative carries.

Simple plans are not “smart” enough: simple plans frequently ignore geographic constraints, physician access
issues, group practice dynamics and travel opportunity costs. Plans are forced on the field: For reps, such plans
does not “fit” the conditions that they see in their territories. Traditional plans are communicated in a
cumbersome way.

31
Source: The Next Generation of Call Planning
Role Play of a Successful Sales Call

32
Sample alignment & call planning

Indexed Indexed Cumulative

Per week Per year
untapped units index vial
ID Account name Product A units Indexed units Total Market
market (Product A
Rank
(lower the
Segment target for target for Reach Workload Territory Region Area
hours hours
potential + Market) better)

001 A 160 0.0001 10,873 0.0003 0.0002 1,412 0.7807 L 1.00 52 1 3.10 F, TX A,Ok West

002 B 0 0.0000 2,914 0.0001 0.0000 4,588 0.9753 VL3 0.02 1 1 0.05 P, PA B,MD East

003 C 0 0.0000 9,715 0.0003 0.0001 2,683 0.9093 VL2 0.08 4 1 0.23 S, WA N West

004 D 2,340 0.0019 15,413 0.0001 0.0016 66 0.1637 H 8.00 416 1 24.76 D, TX S,TX West

005 E 0 0.0000 0 0.0000 0.0000 14,327 1.0000 VL3 0.02 1 1 0.05 P2, PA B,MD East

006 F 180 0.0001 5,195 0.0001 0.0001 1,552 0.8025 VL1 0.15 8 1 0.46 C, NJ B1,MD East

33
Four most important questions to ask in sales force effectiveness

34
Module 3
➢ IC design & Operations

35
Most companies agree on the guiding principles that they’d like to
see in their IC (Incentive Compensation) programs

• Supports the sales and marketing objectives

Does it drive the
• Focuses on the “right” customers and activities
desired behavior?
• Focuses on the “right” products to sell with the proper emphasis

• Is simple to understand and communicate

Is it motivational? • Rewards substantial effort with significant reward
• Keeps people engaged

• Overall payout is competitive in the marketplace

Is it fair and paying for • Territories with different environmental conditions have similar earning potential
performance? • The plan does not penalize sales force for forecasting uncertainties

• The current infrastructure and resources can support the resulting plan administration
Can it be • The data available can be confidently utilized to measure performance
implemented?

• At multiple corporate performance levels, the total compensation payout is within acceptable
Is it financially range of budget
responsible? • The total compensation payout varies appropriately according to company success

36
Each incentive plan type is appropriate in certain circumstances

Commission Ranking Matrix Goal Based MBO

Plan Plan Plan Plan Plan

Objective 1 5%
Objective 2 10%
Pay 5%
Objective 3 60%

Pay
of sales
Objective 4 25%
------------------------
Goal Attainment
Total 100%

• Often appropriate • Minimizes issues • Easy to understand • Territory-specific • Can be subjective

for new products associated with treatment often
inaccurate • Difficult to account fairest and most • People often paid
• Unfair if territory national forecast for individual territory motivational similar amounts
potential not characteristics
balanced • Can create • Requires accurate • Higher
competition • Best for growing national forecast administration
between reps products with burden for field
predictable share • Tough to set • Does not require
growth accurate goals for
launches sales data

37
Commission plans are suited to maximize impact in the early
part of a product’s life-cycle
Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Commission Mixed

Pay Pay Pay

Sales or Profit Sales or Profit Sales or Profit

▪ Features
– Payout is % of results (e.g., sales)
 Applicable situations
– Highly risky and prominent situations such as
new product launches or start-up
– May or may not have a base salary companies
component
– Sales force “owns” the customers
– Different percentages may apply to
different ranges of results – Commodity selling situations
– Can link commission rate of a new – Want to reward volume
product to success with in-line products

 Issues
– Not appropriate when product potential is
not balanced among territories

38
Ranking plans are popular when sales forecasts are uncertain
but the incentive budget is fixed

Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Forced Ranking Plan

Rank
Top 10%
Next 20%
Annual Payout
$40,000
$20,000
 Applicable
–
Situations
Product forecast unreliable
Next 40% $10,000
– Some level of internal competition is
desirable (e.g. Contests)
Next 20% $ 5,000
Bottom 10% $ 0 – High level of certainty in total payout is
desired
– Data is imperfect but all territories have
▪ Features equally imperfect data
– Payout a function of relative performance
– Can be based on different metrics (e.g. sales,
units, profits) and measures (e.g. absolute, %
attainment, points)
– Usually has a base salary component
– Payout can be function of company
 Issues
– Can create internal competition
performance – Some reps will be poorly paid even if the
product over-performs in all territories
– Link between company and rep
performance is weak

39
Matrix plans are a popular option in growth and maintenance
mode
Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Salesperson Performance (% Objective)

80% 90% 100% 110% 120%
80% 20% 40% 80% 120% 170%
Company 90% 30% 50% 90% 130% 180%
Performance 100% 40% 70% 100% 150% 200%
(% Objective) 110% 60% 80% 110% 160% 210%
120% 70% 90% 120% 170% 220%

▪ Features
– Incorporates two distinct performance
measures
 Applicable
–
Situations
When you want to link two different
measures
– Can use different matrices for different types
of territories or different levels
– Want to clearly specify the relative impact
of the measures

 Issues
– If used to link national and territory
performance, national measures may
not be known to reps in advance
– Can be difficult to understand since
calculations are complex
40
Goal-based plans can be designed to suit a diverse set of
product and market situations
Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Payout curve

Pay  Applicable situations

– It is important to have goals or to meet a national
goal
– Forecast is available and reliable
– Mature products or when goals can be set
Goal Attainment reasonably well (history is available)
– Sales volume from territories vary significantly to
▪ Features render commission plans infeasible
– Incentive payout is a function of goal
attainment
– Motivational since each rep has a single
 Issues
– Forecast uncertainty - If national sales are far
number to hit from forecast, many reps will be impacted
– Goals can be set for different metrics with high or low payouts
such as sales, profit, market share, – Data quality needs to be high, else
number of calls, etc. restatements and distractions can occur
– Easy to communicate and understand

41
MBO plans are suited for situations with high data uncertainty
or to set direction for non-sales goals

Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Objective Weight Example Objectives

A
B
5%
10%
• Formulary
Conversion  Applicable
–
situations
High uncertainty in data quality or in
C 60% • Residency data availability
D 25% Programs – Need to reward non-sales activities or
100% • KOL relationships position is more service oriented
– More likely to be used for management
positions

▪ Features
– Payout can be related to results by an objective
 Issues
– Can be subjective
achievement scale
– Removes worries about data or forecast – Can lead people to “manage the
uncertainty manager, not the territory”
– Increases the administrative workload
for managers

42
We will follow a four-phase approach to design incentive plans
1 Current
Plan Assessment &
Inputs from leadership
Partner with Sales
Leadership
Align on -
▪ Business/brand strategies
▪ Upcoming launches/team
restructuring
Processing Steps
Current Plan Health Check
Analysis
▪ Understand the behavior driven
by current plans
▪ Evaluate plan fairness and ROI
Survey Results Analysis
▪ Understand field perception
▪ Evaluate plan complexity,
transparency, field motivation,
communication and
challenges
Work Plan for client IC
design
Outcomes
▪ Clear understand of –
– What is working well?
– What needs to be fixed?
– What behavior needs to be
driven?
▪ Develop options in line with brand
strategies
2 3
Plan Design
Using outcomes from previous
phase as starting point
Develop Plan Options
▪ Evaluate all plan options based on brand
requirements to finalize a few options
– Goal, flat rate based, growth based,
matrix based, MBOs etc.
▪ Utilize IC design experience to explore
additional innovative and customized
plans
Benchmark studies
▪ Use benchmarks for better analysis
Review Options with Sales
Leadership
▪ Finalize options for simulations &
financial modelling
Plan options for modelling
▪ In accordance with business/brand
needs & incorporating industry
trends/innovative ideas
Plan Modelling
Using outcomes from previous
phase as starting point
Plan Simulation/Financial
Modelling
▪ Based on forecasting / budget inputs /
historical brand information and agreed
upon compensation plan design(s)
Plan Metric(s) Finalization
▪ As per brand requirements/suitability
Review Options with Sales
Leadership
▪ Evaluate the plan models and
financial modeling results
All simulation results
4
Plan Finalization
Using outcomes from previous
phase as starting point
Final Plan Recommendation
The selected plan should meet the following
criteria –
▪ Should be fair and provide equal earning
potential
▪ Should align with client’s business/brand
strategies
▪ Should be simple, transparent and easy to
communicate
▪ Should suits the brands’ maturity and
growth trends
Review with Sales Leadership
▪ Evaluate final recommendation
▪ Follow up meetings, if required
Final IC Plans
43
Pick the Best Plan Type for following scenarios
1. A Tata dealer has introduced new range of accessories in its showroom

2. HDFC wants to increase its book size of premiums by closure of financial year

3. Marriott hotel is preparing for a new fiscal year based on its historic performance

4. Bajaj management want to increase their presence in rural markets

5. McDonalds realizes importance of repeat business

6. IIMjobs.com wants more business from its clients

7. Redmi is planning for a highly aggressive 2021

Multi-
Commissions Goal-based MBO Ranking
parameter

44
We follow a three phase process for IC administration
1 2
Input Gathering & Validation
Input Receipt
Inputs
▪ Territory level data
▪ Eligibility file, etc.
Data Validation
▪ Compare territory/nation totals with
Processing Steps
previous data files
▪ Ensure past adjustments have been
correctly captured in the data
▪ Ensure any IMS data changes are
correctly captured
▪ Evaluate any data risks (E.g. –
handling of key accounts, accounts
with partial/blocked data etc.)
Outcomes / Deliverables
Data Check Summary
▪ Share any potential data disconnects
with the data analytics team
Receipt of Revised Data
3
HQ Reports Creation & Delivery Field Reports Creation & Delivery
Using outcomes from previous Using outcomes from previous
phase as starting point
phase as starting point
Applicable for plan/data
changes
Exception Cases Handling
App Changes
▪ For the exception cases like transfers,
develop options and recommendation ▪ Applicable for plan changes/product
▪ Review with client leadership launches/layout changes etc.
Adjustments Processing Field Reports Testing
▪ Natural disasters, Buy-ins, other
adjustments ▪ Thorough internal testing of the field data
IC /Award Calculations
▪ Internal automated systems (Javelin)
to process all IC & award calculations
Thorough Reports QC
HQ Reports & Payroll Delivery Confirmation on field release
▪ In preferred format (E.g. – Excel)
– Payroll (when applicable)
– Executive Summary Report Field Reports Delivery
– Nightingale Report
– Pinnacle Report ▪ Thorough QC of field data
– Rep – Terr Centric Report ▪ In preferred format (E.g. – mobile
– Forecast Summary Report application)
45
Goal Setting Methods

Simple Moderate Complex

• Equal unit/percent growth • Weighted Index

• Equal share growth
• Trending
• Top-down manager assigned
• Regression
• Maintenance plus growth
• Frontier analysis
• History Plus Untapped
Potential
• Bottom up forecasting

Simple to communicate, More complex to Complex to understand

but often not fair communicate, but more and communicate
flexible to adjust

Commonly used methods

46
Module 4
➢ Reporting

47
“You can't manage what you can't measure.” - Peter Drucker

48
Reporting is accompanied with data strategy & analytics

Analytics
Reporting Strategy
Process

Maintenance of Create new

Data Strategy Access to
reports
reports reports

Data
Data availability
processing & Industry best
/ acquisition
storage practice followed for
reporting, analytics &
insight generation
Providing access to Commercial Identify whether a
standardized reports operations BI portal new report needs to
across various for access, trainings, be built, partner with
functions issue resolution / regional team to
Global data team Single-source for enhancement build the new report
partners with data Commercial content request
providers such as Adivo, to enable knowledge
IQVIA, SHS, Komodo sharing and
Health, Monocl collaboration

49
New dashboards, we follow a four-phased iterative approach
allowing for quick review, feedback, and changes

Ideation Storyboarding & Layouts Mockups Execution

1 2 3 4
Need assessment Development,
Input data & KPI options Dashboard Mockups
& plan preparations Testing & Validation

Partner with client leadership Input data deep dive Brainstorm for finalizing wireframe QC procedures
Inputs

▪ Business/brand strategies ▪ Sales, calls, revenue data ▪ Incorporate feedback & ▪ Along with standard QC,
▪ Hierarchy information develop project specific
▪ Upcoming milestones finalize wireframe
Quality Checks

Current Reporting Health

Data Validation Dashboard modeling Dashboard building
Check Analysis
Processing Steps

▪ Check data for ▪ Applying best MDM &

▪ Understand the behavior completeness, consistency, Performance testing
to be driven Tableau development
accuracy & validity practices start dashboard
building Data Accuracy testing
Feasibility study & KPI options

▪ Drilldown to prepare the User Acceptance Testing

KPIs options & wireframe

Plan preparation Storyboarding & KPI Options Dashboard finalization Dashboard to stakeholders
Outcomes

▪ Prepare a plan of action for ▪ Wireframe review ▪ Review progress with ▪ Feedback & incorporate
the project ▪ Discuss with stakeholders stakeholders and incorporate changes
and incorporating industry changes on the go
trends / innovative ideas Publish dashboard

50
Sample dashboards

51
Sample dashboards

52
Further reading - Sales Force Effectiveness Techniques for
Pharmaceuticals

53
Annexure

54
 55

Sizing approaches
Same as last year estimates based on historical SF size

Approach Best when to use Time & Cost Data & Complexity Estimate of sales Effectiveness

Same as last year Market & products are relatively stable • • - •

Based on the number of sales force last year, requirement for this year is decided

Pros Cons

• Very quick • Internally focused approach with no consideration

• Simple for customers or future events
• Inexpensive • Does not give ROI or financial forecast

56
Cost of sales considers sales cost as % of revenue

Approach Best when to use Time & Cost Data & Complexity Estimate of sales Effectiveness

Cost of sales Heuristic to diagnose under / over investment • • - •

Sales force cost as percent of revenue generated, this number can be based on historical data or industry benchmark can be used

Pros Cons

• Very quick • Internally focused approach with no consideration

• Simple for customers or future events
• Inexpensive • Reverse application for causal relationship, “Sales
• Provides an idea of financial spend should drive sales force investment”

57
Share of voice is based on competitive SF (Sales Force) size

Approach Best when to use Time & Cost Data & Complexity Estimate of sales Effectiveness

Competition is brilliant and products are

Share of voice identical •• •• - ••

If there is a similar competitive product, then sales force sizing can be benchmarked against competitor to match
“share of voice” with the competitor

Pros Cons

• Assumption is competitor has sized the sales force

• Quick
rightly
• Simple
• No consideration for customers or future events
• Data is often available from 3rd party vendors,
• Does not provide financial forecast or ROI insights
• Externally focused approach
or what is best for your organization

58
Workload buildup is based on the potential customers to be covered
by each rep

Approach Best when to use Time & Cost Data & Complexity Estimate of sales Effectiveness

Starting point to the journey. Historical sales

Workload buildup & efforts data is unavailable •• •• • ••

Calculate the workload required to cover potential targets & existing customers. Metric such as calls made by
reps or working time can be leverage to calculate the workload

Pros Cons

• Relatively Quick
• Does not provide financial forecast or ROI insights
• Data is generally available
• Does not distinguish between profitable /
• Customer segment and define essential work for
unprofitable customers
each rep

59
Affordable coverage considers sales forecast, profitability,
investment hurdles to calculate the SF size

Approach Best when to use Time & Cost Data & Complexity Estimate of sales Effectiveness

Complex buying behavior. Unable to link sales

Affordable coverage to historical effort. •• ••• - •••

Calculate how much sales force you can afford, given a sales forecast, profitability, investment hurdles, and other factors

Pros Cons

• Complex relative to the earlier approaches as it

• Benefits of workload build-up plus strong
requires sales attributes like carryover sales
financial fundamentals
• Requires a sales forecast as an input and hence
• Able to quantify “carryover sales” and “sales due
the approach cannot generate a sales forecast or
to rep effort” attributes
an ROI based on varying sales force levels

60
Sales response is based on simulation models for various SF sizes

Approach Best when to use Time & Cost Data & Complexity Estimate of sales Effectiveness

Sales response Sales forecasting is desired. CXO requires ROI ••• ••• ••• •••

Statistical model to estimates sales revenue at various sales force sizes

Pros Cons

• Calculated financial metrics like incremental

revenues, marginal contribution, long-term ROI, • Requires granular, reliable sales activity data,
etc. analysis is relatively difficult and requires time and
• Model insights can be applied in marketing mix, investment.
customer valuation, call planning, etc.

61
 62

Targeting
63
Framework to assign Priority for Physicians

Potential Preferences Influence Access

Customer value Based on MD behavior • National KOLs and • Rep access

based in market and adoption patterns Thought leaders • Payer access
or product usage in the past • Local influencers • GP access

Market Potential KOLs

• # of market TRx / NRx • Clinical trials
• # of market NBRx • Research publications
• # of relevant claims • Speaker
• # of relevant diagnoses
• # of relevant procedures Local Influencer
• # of relevant patients • Referral volume
• # of referring HCPs
Product Potential • Value of referring HCPs
• # of product TRx / NRx • # of support staff
• # of product NBRx • Capabilities – drug
administration, buy / bill,
Growth diagnostics lab, etc.
64
Framework to assign Priority for Hospitals

Potential Preferences Influence Access

Customer value Based on Hospital • National leaders • Policies around

based in market preferences in the past • Affiliations Rep / Formulary
or product usage access

Market Potential Early Adoption Type Rep access

• Market sales • Innovation focus • Academic/research vs. • Account / system
• # of relevant claims • Patient choice Commercial policies
• # of relevant diagnoses • Regional / National
leader
• # of relevant procedures Product / MOA Formulary access
• # of relevant patients Preference
Others • Formulary control
• Cutting edge vs.
• Affiliated KOLs • Account / system
Product Potential conservative approach
policies
to treatment • Formulary / pathways
• Product sales • Speed to approval
• Cost efficiency • Publications
Growth

65
 66

Alignment
The Benefits of Good Territory Alignment

• Good Sales Territory Alignment Enhances Customer Coverage: “balanced” sales territories to fall within a range of 15 percent from the ideal
workload to account for geographic constraints, salesperson differences, trade area considerations, and data imperfections. Because of this
imbalance, many accounts in high-workload territories receive inadequate coverage. By assigning some of these accounts to salespeople who
have insufficient work, overall company sales will increase.
• Good Sales Territory Alignment Can Increase Sales: Relationship between sales and market potential shows diminishing returns, the sales
lost by reducing the size of large territories will be more than offset by sales gained by increasing the size of small territories. Predicted net
incremental gain in sales is typically between two and seven percent.
• Territory Alignment Affects Rewards and Consequently Morale: Salespeople with the high incentive payouts often had high potential sales
territories. They were rewarding the territory and not the salesperson.
• Territory Realignment Can Reduce Travel Time: Realignment of can result in a 13.7% reduction in salesperson travel time. Reduced travel
time enabled the sales force to increase selling time by 2.7%. Other benefits of reduced travel included more nights at home for salespeople and
higher sales force morale.

67
Obstacles that inhibit companies from developing and maintaining
good alignments
• Sales Forces Resist Change:
• The company supports the transition by instituting a transition incentive compensation plan whereby both salespeople share in the continued success of
the account relationship.

Disruption Impact Study–Results Summary

Extra- Medium- Extra-

Small Small Medium Large Large Large
Accounts Accounts Accounts Accounts Accounts Accounts

Annual Purchasing Volume $(000) $2 - 4 $4 - 8 $8 - 20 $20 - 50 $50 - 100 $100+

Total Sales Volume in millions $22.1 $65.2 $220.4 $291.7 $182.4 $306.6
(Percent of total) (2%) (6%) (20%) (27%) (17%) (28%)
Was purchasing affected by change
in salesperson relationship? * No No No No Yes No
Did strong salesperson relationships
exist before realignment? No No No Somewhat Yes Yes
Was relationship transition program
implemented? No No No No Somewhat Yes

• Results are based on statistical tests performed at the 95% confidence level.

• Sales Force Incentive Compensation Plans Can Work Against Achieving the Best Alignment: Incentive plans based on sales volume
encourage salespeople to want more accounts than they can cover effectively. More accounts mean more opportunities to build sales.
• Incentive plans based on market share encourage salespeople to want fewer accounts than they could manage. With fewer accounts, a
salesperson can penetrate their accounts more deeply and drive out the competition.
• Growth-oriented incentive plans encourage salespeople to want territories with large numbers of accounts with untapped potential.
• The Data Required for Realignment Are Often Not Readily Available

68
Structured, data-driven process for successfully realigning
territories
• A centrally-derived alignment to act as a benchmark, followed by local adjustments
• Centrally derived Someone with a broad perspective using objective business criteria
• Local input also facilitates acceptance of the realignment by the entire sales organization

• Step 1, alignment criteria such as “balance workload” and “minimize

disruption” are selected. Centralized benchmarking activity:
“good for the business”
• In Step 2, a database is developed. The database usually includes (3) (5) (7)
customer and prospect locations, travel time data, and alignment attributes Develop sales
Develop Develop
regional territory
such as market potential, sales, and workload. territory centers
alignments alignments
(1) (2)
• In Step 3, optimal sales territory centers (or salesperson locations) are Determine
determined centrally, based on business needs. alignment Develop
• In Step 4, territory centers are audited and finalized by the national and criteria and
objectives
database
(4) (6) (8)
regional managers (the sales managers reporting directly to the vice
Finalize sales Finalize regional Finalize territory
president of sales. At the end of this step, management can start hiring territory centers alignments alignments
salespeople (if an expansion is planned), decide who stays with the sales Review with Review with Review and
national and national and modify with
force (if a downsizing is anticipated), or decide who is relocated (if several regional sales regional sales first-line sales
sales forces merge and are integrated). managers managers managers

• In Step 5, regional alignments are developed centrally, based on well- Local review and modific ation:
defined, objective criteria. “good for the people”

• In Step 6, the regional alignments are audited and finalized, again by the
national and regional managers. Implement
• In Step 7, optimal territory alignments are developed centrally.
• In Step 8, alignments are audited and finalized with the help of first-line
sales managers (managers who manage the salespeople directly; they
usually report to the regional sales managers).

69
Managerial Implications
• What are the criteria that help determine whether a realignment is necessary? What are the triggers?
• How can specific salesperson factors such as expe- rience and historical performance be incorpo-
rated into an alignment model?
• How can competitive measures be incorporated? Some markets and segments face more sig-
nificant competition than others do.
• How can we measure the cost of disruption precisely relative to the value of improved cover- age,
without running an experiment?
• What are the conditions under which compensation plans need to be reformulated when terri- tory
alignments are modified?
• How can alternative alignments be compared? Is there a metric that can be developed? How difficult
is it to estimate the profitability of an alignment?

70
Choosing a Territory Design and Alignment Methodology
Approach Geography based
Use cases • Reps call on all the prospects and
customers in their geography
• Companies need local sales presence
Pros • Easy to manage and administer
• Does not require account mapping
(parent, ship-to, bill-to, sold-to)
• Accountability over all customers in the
geography
• Sales reps is encouraged to find new
leads in the geography
Cons • Difficult to minimize customer-rep
relation during redesign
• Possible conflicts of account crossing
territory border
• Accounts within a territory cannot be
split among 2 reps
• Reps need to manage time across
multiple accounts
Account based
• Small team drives revenue through
account management of the high value
accounts
• Team covers only one product
• Facilitates ability to drive focus on a
vertical market or specific customer
segment
• Avoids low value opportunities or high
cost to serve accounts
• Easier to develop holistic view of each
account
• Reps target specific accounts
• Multiple reps can split the same territory
or even postal code
• Requires a strong understanding of
account universe
• Requires development and maintenance
of a master account list with clear parent-
child relationships
• Complex to administer amid merger and
acquisitions
• May lead to travel inefficiencies
Geography-Account based hybrid
• Field sales team and a key account team
that is sole owner of our largest customers
• Need to split postal codes across multiple
reps
• Offers benefits of both methodologies
• Increased flexibility in account
assignments
• Provides ability to better address
undesired account disruption
• Most complex to manage & administer
• Require clear communication of territory
vs account ownership
• Requires development and maintenance
of both territories and account alingments.
71
Territories can be balanced by deciding an index to compare the
territories

Workload
Calls
Index

1 FTE 800 100% Index threshold can be decided by client

leadership or historical data. It may vary due to
Maximum workload
acceptable
950 119% access issues or geographical conditions

Minimum workload
650 81%
acceptable

An alignment index allows a user to compare and balance the workload across all territories in a sales force by
using a unified metric

SF Sizing & Alignment &

Targeting Call Planning
IC design IC Operations Reporting 72
 73

Goal setting case study

H2’19 Nation goals will be based on 2019 national forecast times
the IC eligibility factor
H2’19 Product Goals
Calculation Methodology

H2’19 Forecast
$229.08M

IC eligibility factor IC eligibility factor is calculated as (Govt & Whitespace sales / Total sales – 1)
97.51% during the baseline period

H2’19 Goals
$223.38M

Q3 Proration Factor Q4 Proration Factor

46% 54%

Q3 goals Q4 goals
$102.7M $120.59M

74
Product territory goal is calculated based on 95% product
baseline sales (current success) and 5% untapped market
potential 95% 5%

Goal Method

Territory % to Nation sales Untapped Potential % contribution

10.5% 10% * 95% 20% * 5%

10% contribution to nation 20% untapped potential
during baseline period contribution in nation based
on Procedure

Territory A $21M 10.5% $200M

Goals Territory contri Nation goals

Goal Setting:
Q3’18 & Q4’18 baseline period for goal setting is Dec’18 to May’19
75
Product goals are based on baseline sales & claims data
$600 are the sales $720 is the 20% is the increase in
in baseline forecasted goals goals over baseline

95% Product + 5%
Product Procedure count Product Procedure count
Procedure

Dec'18 to 2017 number of % contribution for % contribution of H2'19 Nation % increase over
Sr.No Region % Contribution
May'19 Sales Procedure each region each region goals baseline sales

1 X $300 200 50% 31% 49% $353 18%

2 Y $100 50 17% 8% 16% $117 17%

3 Z $200 400 33% 62% 35% $250 25%

Total $600 650 claims 100% 100% 100% $720 -

76
 77

Incentive Design
 Types of Plan Designs

Commission plans are suited to maximize impact in the early part

of a product’s life-cycle

Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Commission Mixed

Pay Pay Pay

Sales or Profit Sales or Profit Sales or Profit

• Features  Applicable situations

• Payout is % of results (e.g., sales)
• May or may not have a base salary
component
• Different percentages may apply to
different ranges of results
• Can link commission rate of a new
• Highly risky and prominent situations such
as new product launches or start-up
companies
• Sales force “owns” the customers
• Commodity selling situations
• Want to reward volume

 Issues
product to success with in-line
products
– Not appropriate when product potential is
not balanced among territories
 Types of Plan Designs

Ranking plans are popular when sales forecasts are uncertain but
the incentive budget is fixed

Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Forced Ranking Plan

Rank
Top 10%
Next 20%
Annual Payout
$40,000
$20,000
 Applicable Situations
• Product forecast unreliable
Next 40% $10,000 • Some level of internal competition is
Next 20% $ 5,000 desirable (e.g. Contests)
Bottom 10% $ 0 • High level of certainty in total payout is
desired
• Features • Data is imperfect but all territories have
equally imperfect data
• Payout a function of relative performance
• Can be based on different metrics (e.g.
sales, units, profits) and measures (e.g.
absolute, % attainment, points)
• Usually has a base salary component
• Payout can be function of company
 Issues
– Can create internal competition
performance – Some reps will be poorly paid even if the
product over-performs in all territories
– Link between company and rep
performance is weak
 Types of Plan Designs

Matrix plans are a popular option in growth and maintenance mode

Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Salesperson Performance (% Objective)

80% 90% 100% 110% 120%
80% 20% 40% 80% 120% 170%
Company 90% 30% 50% 90% 130% 180%
Performance 100% 40% 70% 100% 150% 200%
(% Objective) 110% 60% 80% 110% 160% 210%
120% 70% 90% 120% 170% 220%


▪ Features
Applicable Situations
– Incorporates two distinct performance – When you want to link two different
measures
measures
– Can use different matrices for different – Want to clearly specify the relative
types of territories or different levels
impact of the measures
 Issues
– If used to link national and territory
performance, national measures may
not be known to reps in advance
– Can be difficult to understand since
calculations are complex
 Types of Plan Designs

Goal-based plans can be designed to suit a diverse set of product

and market situations

Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Payout curve

Pay  Applicable situations

• It is important to have goals or to meet a
national goal
• Forecast is available and reliable
• Mature products or when goals can be set
reasonably well (history is available)
Goal • Sales volume from territories vary significantly
Attainment to render commission plans infeasible
• Features
• Incentive payout is a function of goal
attainment
• Motivational since each rep has a
 Issues
– Forecast uncertainty - If national sales are far
single number to hit from forecast, many reps will be impacted
• Goals can be set for different metrics with high or low payouts
such as sales, profit, market share, – Data quality needs to be high, else
number of calls, etc. restatements and distractions can occur
• Easy to communicate and understand
 Types of Plan Designs

MBO plans are suited for situations with high data uncertainty or
to set direction for non-sales goals

Commission Plan Ranking Plan Matrix Plan Goal Based Plan MBO Plan

Objective Weight Example Objectives

 Applicable situations
A 5%
• Formulary
B 10%
Conversion
C 60%
• Residency
– High uncertainty in data
D 25%
Programs quality or in data availability
100%
• KOL relationships – Need to reward non-sales
activities or position is more
service oriented
– More likely to be used for
management positions
▪ Features
– Payout can be related to results by
 Issues
– Can be subjective
an objective achievement scale – Can lead people to “manage the
– Removes worries about data or manager, not the territory”
forecast uncertainty – Increases the administrative workload
for managers
 Payout Curves

Several considerations go into designing payout curves

Plan Design Measure Benchmark

Payout curve design
considerations Engagement RateTM
Percent of reps receiving > $0 payout 90-100%

Do we decelerate
Meaningful Engagement RateTM
Percent of reps paid at least ¾ of target payout 70-80%
or cap payouts?
% of Target Incentive Pay

What should our top

performers earn? Percent of reps engaged at or above target 50%

Bottom Performers to Target

Pay ratio shows how the bottom performers are 0.1 – 0.3
rewarded vs. average reps
How progressive
for overachievers? Excellence to Target to average pay ratio shows
how top performers are rewarded vs. average reps 2x – 3x

Maximum to Target pay ratio shows how the top

performers are rewarded vs. average reps 2.5x – 4.0x
When do we
start paying?
Total Payout (as a % of Budget) 100-120%

Goal Attainment % Total Payout (as a % of Sales Revenue) 3-5%

 Exercise

Pick the Best Plan Type for following scenarios

1. A Maruti dealer has introduced new range of accessories in its showroom

2. ICICI wants to increase its book size of premiums by closure of financial year

3. Taj hotel is preparing for a new fiscal year based on its historic performance

4. Mahindra management want to increase their presence in rural markets

5. CCD (coffee-chain) realizes importance of repeat business

6. Naukri.com wants more business from its clients

7. Micromax is planning for a highly aggressive 2015

Multi-
Commissions Goal-based MBO Ranking
parameter
 Exercise

Match the Cause-Effect pair

Incentive Feature Potential Rep Behavior

Very high incentive component Discount

Paid on units Enlarge territory

Paid on sales Hoard sales

Incentive based on customer satisfaction Ignore it

Manager sets objectives or determines reward Relax

Monthly objective with over-achievement bonus Seek satisfaction at the expense of seeking sales

Caps Sell at all costs, invent product application

Team incentive Sell every other month

Complex plan Work the manager, not the customers

 86

Goal Setting
We will follow a four phase process to set territory level goals
1 2
Input Gathering &
Validation
Input Receipt
Inputs
▪ Territory level data
▪ National level data
▪ Forecast information
▪ ZTT/hierarchy files
Data Validation
Processing Steps
▪ Compare territory/nation totals
with previous data files
▪ Ensure past adjustments have
been correctly captured in the
data
▪ Evaluate any data risks (E.g. –
handling of key accounts,
accounts with partial/blocked
data etc.)
Data Check Summary
Deliverables
▪ Share any potential data
Outcomes /
disconnects with the data
analytics team
Receipt of Revised Data
Methodology
Finalization
Using outcomes from previous
phase as starting point
Applicable for
plan/data changes
Methodology Options
▪ As per the available data,
develop methods, along with
pros & cons for each
Methodology Finalization
▪ Ensure plan fairness &
simplicity
Review Final Methodology &
Rationale with client
▪ Review final methodology with
key stakeholders along with
rationale
▪ Receive final go ahead from client
▪ Client often provides confirmation
3 4
Forecast Goals Creation &
Summary Creation Delivery
Using outcomes from previous Using outcomes from previous
phase as starting point
phase as starting point
Field Forecast Creation Goals Processing
▪ Apply national capture and ▪ Create territory/district/region
coverage rates to arrive at the
level goals
final forecast that needs to be
distributed among territories
Deliver Forecast Summary
workbook
Confirmation on forecast
Goals Delivery
received
▪ In preferred format (E.g. –
on forecast type (BP, LE etc.) prior Excel for HQ, MSTR app for
to the goal setting process field)
87
 Quota Setting Overview

Different goal setting methods may be used depending on

circumstances

Goal Setting Methods

Simple Moderate Complex

• Equal unit/percent growth

• Weighted Index • Regression
• Equal share growth
• Maintenance plus growth • Frontier analysis
• Trending
• History Plus Untapped
• Top-down manager assigned Potential
• Bottom up forecasting

Simple to communicate, More complex to Complex to understand

but often not fair communicate, but more and communicate
flexible to adjust

Commonly used methods

 Simple Quota Setting – Equal Growth Method

Equal growth methods are very simple to implement and calculate

but is often not very fair

How it works Pros

• Easy to communicate
Last Year This Year Goal • Easy to calculate
Territory-level Product Units
Actual Sales (based on equal • Territories sum to national goal
and Share national units or
share growth)

+120 (equal % units growth) Cons

1,200 Or +2% (equal share growth)
45% • Punishes high performance with an
+30 (equal % units growth) increasing goal
or Share

300
Or + 2% (equal share growth)
20% • “Expects” low performers will stay
“low”
• Is not very fair
 Simple Quota Setting – Trending Method

Trending is easy to communicate but may be unduly influenced by

past performance

How it works
Pros
▪ Easy to communicate
Actual sales Trended sales ▪ Easy to calculate (usually, not always)
Sales Outcomes

Cons
▪ Does not account for market differences
between territories
▪ Past performance may be affected by
skills/experience of prior reps, vacancies, etc.
▪ “Expects” low performers will stay “low”
▪ Adjustments required to ensure that territory
Time (months) sales add to national forecast
 Moderate Quota Setting – Maintenance + Growth Method

Maintenance plus growth method

How it works Pros

• Adjusts goals based on opportunity
Last Year Next Year
Actual Goal
• Logical to explain
• Relatively easy to communicate
Territory-level Market Share

Share of un-
Maintain captured • Sum of territory sales equals national
last year’s market goal
sales potential
(until
Cons
national goal
is allocated) • Territories with low market share
receive largest growth goals

Territory Territory Territory Territory

A B A B
All territories are expected to maintain historical sales, while converting
some competitive sales
 Moderate Quota Setting – History + Untapped Potential Method

History plus Untapped Potential method is reasonably fair but

relies on territory level untapped potential calculation

Pros
Assumed Market Growth
• Adjusts goals based on
opportunity
Max.
Accessible • Reasonably simple and easy to

Untapped
communicate

Potential
Share
• Sum of territory sales equals

Untapped
Potential
GOAL national goal
Total Market

Comp
• Appropriate for a wide range of
Cons
• products
Territories with low market share

History Component
Sales receive largest growth goal
Product Sales

History
Multiplier • Method works well for goals
measured over extended time period
(quarterly, semi-annual)
• Relies on territory level “Untapped
Year 1 Year 2 Potential” estimate
• Products sales during launch phase
may be constrained by other factors
other than sales force activity
 Territory level quotas are set by allocating the national forecast to
the individual territories based on historic sales and untapped
potential
Quota Setting Methodology
Mathematical Formula to calculate quotas
Sum of 6 months of historical
National TRx product sales for territory
1 Forecast

( ) *(
2 Historical
Territory Product
History
*
Divided into two components
Component 75% Forecast
National Product
Product-History
Based Component
Untapped-Potential
Based Component
History History
Weight )
Allocated to each territory based on
territory’s % of the nation’s: Sum of 6 months of historical

+
Product Sales Untapped Potential product sales for nation

e.g. if Territory A has 2% of the Untapped

Sum of 6 months of historical
nation’s product sales, Territory potential is
A will receive 2% of the Product- adjusted based competitor sales for territory
History Based Goal on territory’s
Untapped
3

(
potential

)(
Territory Untapped

* *
Potential Potential 25% Forecast
Total

)
Territory Product- Component National Untapped
Quota Territory UP Quota Potential
History Quota + Potential
Weight
Quota Adjustments

Sum of 6 months of historical

competitor sales for nation
Final Quota
4 Determined by
fairness testing
 It is important to note that untapped potential, even at a very small
percentage, can be a key driver of the quota
• Example:
• Assume quota is based on 75% of historical sales and 25% of untapped potential
• Assume the national forecast is 6,000 TRx

Illustration

% of Quota
History Untapped
Market Product Market Untapped from Expected
Terr Component Potential Quota
Sales Sales Share Potential Untapped Growth
of Quota of Quota
Potential

Terr 1 50,000 500 1.00% 49,500 395 363 758 47.9% 52%

Terr 2 100,000 4,000 4.00% 96,000 3,158 705 3,863 18.2% -3.5%

Terr 3 60,000 1,200 2.00% 58,800 947 432 1,379 31.3% 15%

Totals 210,000 5,700 2.71% 204,300 4,500 1,500 6,000 25.0% 5.25%

(500/5,700)*75%*6,000

(49,500/204,300)*25%*6,000