- Is the outreach salesperson’s compensation plan a 50/50 plan? That means about half of the compensation is variable based on performance. Or put another way, their base salary does not comprise more than 50 percent of their total compensation.
- Are commissions uncapped?
- Do they have a monthly net new revenue quota of $5,000 per month or more?
- If they do not meet their quota for two consecutive quarters, would you fire them?
- Can they earn more than their boss with exceptional performance?
If you answered “yes” to all of the above, you probably have a real hunter: a high-performing individual who is motivated by money and enjoys the chase and the close. Based on experience, I would say that the salespeople for less than 20 percent of outreach programs meet these criteria. Think of a bird of prey like the Northern Harrier shown below. A Harrier is a type of hawk that is always flying over fields and marshes, looking for small rodents like field mice or voles. You’ll notice that they aren’t doing a casual fly-by—they are flying low over the vegetation, hunting, scanning, and dive-bombing prey at every chance. It’s what they must do to survive. If they don’t hunt and catch their next meal, they won’t last very long.
Photo ©2016, K. Murphy
Likewise, a salesperson who has a “hunter” strategy must be out on the road all the time, doing in-depth medical laboratory research and making calls to potential clients, not relying on those that come to you passively. I’m talking about clients that are using your clinical laboratory competitors and are likely satisfied. A true hunter will visit repeatedly until they catch a rough spot in the competitor’s service, then they pounce on the opportunity to differentiate your laboratory and convince the unhappy customer to change providers.
Good clinical laboratory outreach sales professionals have to be hunting all the time or else they won’t make enough money (with their low base salary) to survive. If they are happy with a low base and some commissions, then you don’t want them on your team. That’s why we need criteria 3 and 4.
If they’re exceeding their quota (and you have vetted that the quota is appropriate for your market), then wonderful—you have a high performer! If they make more than you because they are always meeting or exceeding quota—awesome! That is one of the best problems to have in our business.
If you answered no to most of the questions above, you should reassess your laboratory outreach sales model. Our most recent Annual National Hospital/Health System Laboratory and Outreach Program Survey showed that 60 percent of outreach programs lack an incentive-based compensation program for sales and field service representatives. Of those with incentive-based compensation, less than 30 percent were satisfied with their model.
The lack of a truly competitive compensation model for outreach programs represents a huge upside opportunity. In Part 2 of this blog, we will explore the revenue ramifications. You won’t believe it if I tell you; you have to see it for yourself.
Kathleen A. Murphy, PhD
Chi Solutions Inc., an Accumen Company