MedTech + Mindset Newsletter #043

Welcome to the MedTech + Mindset Newsletter!  

This is a continuation from last week's newsletter about sales force compensation models. We dig really deep this edition.

 It's time to talk about a little Medtech....

and a little Mindset too....

Here's your step by step guide to creating a variable compensation model?

Insight from Matt Tucker    

Everyone is afraid to ask for it...they don't want to appear like they don't know how to set up a variable comp model.  

So here it is!

Setting up and managing a variable sales compensation program in medical devices involves several steps. Follow these steps and you'll be golden: 

1. Determine Your Sales Goals: The first step in setting up a variable sales compensation program is to determine your sales goals. This will help you establish the performance metrics that will drive the program. Goals may include market share, revenue, product adoption, or customer satisfaction. 
2. Define Performance Metrics: Once you have your sales goals, you need to define the performance metrics that will measure success. Metrics may include the number of units sold, revenue generated, customer satisfaction ratings, or market share growth. 
3. Establish the Compensation Structure: Next, you need to determine the compensation structure for your sales team. This may include a base salary plus commission or a salary plus a performance-based bonus. The structure should incentivize sales reps to achieve their goals and reward high-performing sales reps. 
4. Define the Commission or Bonus Plan: Once you have determined your compensation structure, you need to define the commission or bonus plan. The plan should be easy to understand and transparent, so sales reps know how they will be rewarded for their performance. 
5. Communicate the Plan: Communicate the plan to your sales team clearly and concisely, including how it works, how sales reps can earn commission or bonuses, and when they will be paid. 
6. Monitor Performance: Once the program is in place, it is essential to monitor performance regularly. Use your defined metrics to track individual and team performance and identify areas for improvement. 
7. Adjust the Program: Based on the results of your monitoring, adjust the program as needed. This may involve adjusting performance metrics, the compensation structure, or the commission or bonus plan. 
8. Review and Repeat: Finally, it is essential to review the program regularly and repeat the steps above. This will help ensure that your variable sales compensation program remains aligned with your sales goals, performance metrics, and company strategy. 

In addition to these steps, it's essential to work with your sales team to ensure that they understand the program and how to achieve their goals. Providing regular feedback and coaching can help sales reps improve their performance and maximize their earnings under the compensation program. 

Psst...my business is special.  Standard variable plans aren't good enough for me!

Insight from Matt Tucker    

Yeah but my business is special! 

I'm new and innovative, I don't have a sales history to base our plan off  of, and I need to protect our company from downside.

You're in luck!  Use a tiered model. It will amplify your variable compensation program.

A tiered system for variable compensation motivates and incentivizes sales teams at different levels of performance. Here's how you can introduce a tiered system for variable compensation with different rates for low, medium, and high performance to goal: 

1. Determine the Sales Goals: The first step is to determine the sales goals and establish the performance metrics that will drive the program. Goals may include market share, revenue, product adoption, or customer satisfaction. 
2. Define Performance Metrics: Once you have your sales goals, you need to define the performance metrics that will measure success. Metrics may include the number of units sold, revenue generated, customer satisfaction ratings, or market share growth. 
3. Establish the Compensation Structure: Next, you need to determine the compensation structure for your sales team. This may include a base salary plus commission or a salary plus a performance-based bonus. The structure should incentivize sales reps to achieve their goals and reward high-performing sales reps. 
4. Define the Commission or Bonus Plan: Once you have determined your compensation structure, you need to define the commission or bonus plan. The plan should be easy to understand and transparent, so sales reps know how they will be rewarded for their performance. 
5. Introduce the Tiered System: Introduce the tiered system by setting different rates for low, medium, and high performance to goal. For example, a low performer may receive a commission rate of 5%, a medium performer may receive a commission rate of 7.5%, and a high performer may receive a commission rate of 10%. 
6. Communicate the Plan: Communicate the plan to your sales team clearly and concisely, including how it works, how sales reps can earn commission or bonuses, and when they will be paid. 
7. Monitor Performance: Once the program is in place, it is essential to monitor performance regularly. Use your defined metrics to track individual and team performance and identify areas for improvement. 
8. Adjust the Program: Based on the results of your monitoring, adjust the program as needed. This may involve adjusting performance metrics, the compensation structure, or the commission or bonus plan. 
9. Review and Repeat: Finally, it is essential to review the program regularly and repeat the steps above. This will help ensure that your variable sales compensation program remains aligned with your sales goals, performance metrics, and company strategy. 

Introducing a tiered system for variable compensation with different rates for low, medium, and high performance to goal requires careful planning, communication, and monitoring.

But....it can be an effective way to motivate and incentivize sales teams to achieve their goals and drive revenue growth. 

Good luck out there!

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That's it for this week.

 — Your Friends at the M+M Team.

 
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