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7 Sales Incentive Best Practices for Pharmaceutical Companies

Luke Kreitner
1/30/24 9:00 AM

A well-designed incentive compensation plan can serve as a powerful motivator and catalyst for success across pharma sales teams.

To ensure the effectiveness of the incentive plan, it is important to align it with the company's goals and objectives.

So, how can you achieve that?

In this article, we will provide you with 7 proven tips for designing incentive compensation plans that are specifically tailored for pharmaceutical sales teams.


Tie incentives with sales goals and company objectives

The first and foremost step is to tie the incentives with sales goals and company objectives. Pharmaceutical companies should develop incentive plans that are directly aligned with the company's overall business objectives and sales goals.

These sales goals and objectives can be diverse, including increasing market share, launching new products, targeting specific customer segments, or driving sales revenue for particular drugs or therapeutic areas.

By defining specific and measurable targets, the incentives can be linked to key milestones. For example, if the primary goal of the company is to increase sales of a specific drug or meet regulatory approvals, sales representatives should be heavily rewarded for achieving such objectives.

This alignment ensures that the incentives motivate sales reps to focus on activities that drive business success.


Incorporate compliance and ethical considerations

The pharmaceutical industry operates under strict regulations to ensure safety, effectiveness, and ethical practices. As a result, your company must adhere to these guidelines and maintain a strong ethical foundation. This commitment not only safeguards your reputation but also helps avoid any potential legal and ethical pitfalls.

Firstly, when designing your incentive plan, it is essential to prioritize ethical conduct and patient safety. Sales representatives should be motivated to achieve their targets through legitimate means, avoiding any actions that may compromise the company's integrity. For instance, the incentive plan should not encourage aggressive sales tactics or the over-promotion of pharmaceutical products to healthcare professionals.


Consider market competitiveness

To stay ahead in a competitive landscape, it is vital to conduct thorough research on industry benchmarks and analyze what other pharmaceutical companies offer regarding incentive compensation. By understanding prevailing market standards, you can ensure that your compensation plan remains attractive and aligns with industry trends.

Offering attractive compensation packages, performance-based bonuses, and other rewarding incentives is crucial to attracting and retaining high-performing sales representatives. This approach helps build a high-performing sales team that drives the company's success in a competitive market.


Implement performance-based rewards

Performance-based rewards can serve as powerful motivators for your top-performing talent. By offering these incentives, you can develop a high-performing sales team that plays a significant role in achieving strategic objectives and excelling in the competitive pharmaceutical market.

But how can you effectively implement performance-based rewards?

One approach is to reward exceptional performance by establishing clear and ambitious goals grounded in key performance indicators relevant to the pharmaceutical industry. These indicators may include metrics like prescription volume, market share growth, and customer satisfaction.

Additionally, you can utilize tiered incentives to fuel motivation among your sales representatives. As they surpass predetermined targets, the rewards escalate, fostering a healthy spirit of competition within the team. Gamification such as short-term contests and leaderboards can drive results.


Achieve a balance between short and long-term incentives

Effective incentive plans in the pharmaceutical industry strike a harmonious equilibrium between short-term and long-term rewards.

Short-term incentives can take the form of monthly or quarterly bonuses based on specific performance metrics. On the other hand, long-term incentives are typically tied to annual or longer-term performance evaluations and may include performance-based bonuses or stock options.

By combining both types of incentives, you can ensure that your sales representatives remain motivated in both the immediate and distant future.

Short-term rewards provide instant gratification for fulfilling short-range targets, thus keeping the sales force driven and focused. Meanwhile, long-term incentives encourage a sense of loyalty and commitment to the organization, as sales representatives continuously strive for excellence to reap the rewards of their efforts over an extended period.

Foster transparency and effective communication

Building trust and engagement among sales representatives requires transparency regarding the structure of the incentive plan, performance metrics, and payout calculations. Here are ways to achieve this:

Ensure that sales representatives have a clear understanding of how their performance is measured and how they can earn incentives. Provide regular feedback and updates on progress towards incentive targets to keep the sales team motivated. Utilize what-if calculators to help representatives visualize the potential impact of achieving specific targets, allowing them to take ownership of their performance and deliver results.


Evaluate and revise variable compensation

Evaluating and revising variable compensation is crucial for driving desired sales behaviors and achieving successful outcomes.

To effectively evaluate incentive plans, it is essential to gather feedback from sales representatives, managers, and other stakeholders to identify areas for improvement and potential adjustments.

Additionally, analyzing performance data such as prescription data, sales figures, and customer feedback can provide valuable insights into the effectiveness of the incentive plan. Utilizing data-driven analytics allows for the identification of trends, areas of improvement, and opportunities for optimizing the incentive plan to align with market demands and company objectives.

By refining incentive plans based on feedback and adapting to changing market dynamics, organizations can ensure that their incentive compensation programs remain relevant and competitive.



In conclusion, aligning incentives with sales goals, ensuring ethical compliance, and offering non-financial recognition all play a significant role in building a motivated and high-performing sales force. Implementing these strategies will help organizations design incentive compensation programs that effectively motivate sales representatives, drive sales performance, and contribute to overall business success.

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