IC story: Consulting for a launch product

IC story: Consulting for a launch product

As a consultant, my role involves assessing the client’s current situation, collecting data, and identifying areas for improvement or growth opportunities. Based on this data analysis, I provide recommendations. However, the suggested figures often fall short of the client’s expectations, particularly concerning Incentive Compensation (IC).

IC simulations rely on data and may not fully consider on-ground factors like market access and competition. Therefore, it’s advisable to present simulations on the higher side to account for these external factors. For example, instead of a commission rate of $300 per unit, which pays 100% target pay at 100% goal attainment, we could propose a higher commission rate of $350. This would result in 110% target pay at 100% goal attainment. Although this scenario might not make analytical sense, it is beneficial for a launch brand. Many territories might receive lower payouts, and a higher commission rate can help keep them motivated. High-performing territories are already profitable, but ensuring that low-performing ones also earn well can accelerate the drug’s promotion.

I recommend to the client to adopt the $350 commission rate, which would lead to a 10% increase in payout. The associated risk is minimal since there are fewer sales reps (as against a set drug with 1000s of reps), and the additional 10% payout is unlikely to raise concerns from the finance team since sales are growing.