Incentive story: How do you motivate high performing territories while moving from commission to a goal based plan - 03/24

A key challenge in pharma consulting is transitioning sales forces from commission-based plans to goal-based plans. While commission rewards every unit sold, favoring territories with high potential, goal-based plans offer greater fairness by setting goals based on individual territory potential. However, this shift can demotivate high-performing territories whose previous quarter's performance becomes the baseline for the following quarter.

The solution? Combining commission and goal plans. This hybrid approach offers a fixed commission on every unit sold exceeding the set goal. This ensures both low- and high-performing territories receive similar remuneration upon exceeding their respective goals.

For instance, a territory with a 50-unit goal receives a $10,000 base + $5,000 commission for achieving 60 units (assuming a $500 commission per unit). Similarly, a territory with a 100-unit goal receives $10,000 base + $5,000 commission for achieving 110 units.

While this approach may not offer the same high payouts for exceptional performance in high-potential territories compared to pure commission plans, it promotes fairness and motivates continued performance improvement across all territories. While on the other side, under a pure goal plan, a territory achieving 60 units sales over 50-unit goal (120% attainment) would receive greater compensation than a territory achieving 110 units sales of a 100-unit goal (110% attainment), despite both exceeding expectations by 10 units in sales.

This combined approach fosters a more balanced incentive structure, encouraging continued motivation and goal attainment across all territories.

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