What’s My Motivation Again?

For many years the concept of incentives in pharmaceutical sales focused on gifts for doctors: free tanks of gas, dinners, tickets to ball games, junkets and so on – all offered with the hope that as a measure of thanks recipients would alter their prescribing habits. But in 2002 the Pharmaceutical Research and Manufacturers of America (PhRMA) voluntarily adopted the Code on Interactions with Healthcare Professionals, effectively bringing an end to this practice, which some maintained was little more than virtual bribery.

According to a recent Incentive Magazine article, this change initially concerned incentive providers who feared that a large market might dry up. But it soon became evident that pharmaceutical sales organizations were responding to the altered playing field by seeking new ways to manage and motivate their sales teams. In fact, according to incentive industry experts, today some pharmaceutical sales organizations are reconsidering which sales behaviors they want to encourage, as well as how they measure sales incentive program effectiveness.

As a result, incentive budgets have grown – both for cash and noncash awards – and the target for rewards is slowly switching from hard sales figures to the behaviors that lead to sales, such as completing sales training and relationship building with physicians. So argues Stan Striker, managing consultant and vice president of Maritz Incentives.

“Pharmaceutical companies have recognized the need to look beyond measures such as sales or the number of prescriptions written,” he told Incentive. “Reps are starting to be rewarded for teamwork, territory development and management, collaborating with experts and conveying the message to physicians. There is a mindset change.”

This change is slow in coming, however. Many pharmaceutical companies continue to respond to the increased challenge of gaining access to physicians by deploying ever more reps, which then makes it more and more difficult for reps to gain access and build relationships. Christian Neckermann, a healthcare/pharmaceutical practice leader with the Norwalk, Connecticut-based management consulting firm Peppers & Rogers Group, says his organization tries to break drug companies out of this dated approach to motivating salespeople.

“We are arguing that those incentives don’t drive the behaviors pharmaceutical companies need,” he says, “which are increased assistance to doctors and building strong relationships. To build relationships, sales reps must understand what a doctor’s concerns and questions are. That way they earn the right to come back in.”

One benefit to rewarding sales or numbers of prescriptions written is that hard numbers are easy to quantify. Not so with the softer behavior-based rewards. For this, Neckermann says, sales organizations need to be more attuned to overall marketing activities and companies need to put in the hard work of finding which metrics effectively measure relationship-building with physicians. This will take time, he adds. “It will take two or three years for the new sales models to trickle down,” he told Incentive, “and another two or three years for them to take root.”

Two notable incentive changes the experts identified in the Incentive article are the growing shift toward creating team-based reward programs and an increase in the discretionary budget allocated to district managers for incentive rewards. Nevertheless, the jury remains out on whether pharmaceutical sales organizations leading this trend will see genuine bottom-line results from their efforts. As Neckermann points out, it’s a lot easier to encourage drug reps to build more lasting relationships with physicians than it is to effectively measure and reward those relationships, a circumstance that leaves the companies with their work cut out for them.

“The industry just has to be more creative in how it encourages those behaviors,” he says.