Ideal Model for Field Force - Fixed Vs Variable OR Payroll Vs Franchise Model

Is there an ideal model or one size fit all for the Sales Force in the Pharmaceutical Industry. The answer is definitely "No".

The key reasons for the same is the diversity of the products promoted and the markets catered by the sales representatives especially in India. 

To decide which model will work best for the company whether 50:50 or 70:30 / on pay-roll versus franchisee depends on the organization / brand / market goals.

1.       An established product does not need high incentive to motivate the team to sell the product.

2.       In case of new product / new market the incentive percentage should be high to increase sales.

3.       In high value drugs / products like oncology or medical devices, the variable % is high

4.       The plan has to be simple and easy to implement. Difficulty in understanding the incentive plan or miscalculations could de – motivate the employee instead of motivating him.

5.       Incentives should not be linked only to sales target, but they should also depend on other objectives and client feedback.

Similarly whether to have the field force on payroll or franchisee will depend upon the following:

1.       The company has less control on the franchisee model as compared to those on payroll

2.       If the product category is very training intensive and you need to control the quality of the sales pitch and have less  attrition , it is better to have sales force on franchisee

3.       There are companies who hire sales representatives on franchisee model and after observing their performance for 2 years take them on the company payroll.

The compensation models are becoming more and more scientific these days. It is a very important factor to keep the sales force motivated. The right mix of the fixed and variable component for the company is essential to increase sales and keep the employees motivated and keep the attrition rate low.