Why You Need More Flexibility in Your Commissions Process

“There is more than one way to skin a cat,” goes the old adage. It means, of course, that there’s more than one way of doing something—very much like the reality of the commissions process in the orthopedic medical device industry.

 

How many different compensation plans and scenarios do you have in place right now? Based on the size of your company, what you’re trying to accomplish, where you’re hoping to accelerate growth, and who brings in the relationships (and the business), you could have many, many ways of skinning the cat when it comes to paying commissions. And there are very real consequences when you fail to track them all accurately.

 

Consider, for instance, a field rep who brings in a lucrative new contract because of a longstanding relationship with his hospitals and surgeons. While this rep is earning 25% on all other business, he negotiates a 35% commission on this particular contract. Now keeping track of his various percentages has added a layer of complexity to your sales management team’s monthly commissions calculation process. The team uses an Excel spreadsheet to manually track and calculate percentages, and three months into this rep’s new deal, an errant keystroke wipes out that 35%. What’s going to happen once he gets his monthly payout? How upset is he going to be?

 

If that example didn’t hit home yet, consider this one. As an OEM, you are familiar with the unfortunate reality that sometimes product gets returned. And you’ve just received a sizable return from one of your biggest hospital accounts. The field rep who manages the account, though, doesn’t know yet. He’s going to find out the bad news when he receives his commission payout this month, since the sizable return is going to make a sizable dent. What if he knew about the return before his payout, because he had visibility into his commission report all month log?

 

From a sales management perspective, having more flexibility (and absolute precision) in how you handle the commissions process could be critically important in either of the above scenarios. And these scenarios aren’t exhaustive of all possibilities. Think about the array of variability in commission types and structure, from incentivization designed to embolden reps to win doctors’ business from your competition, to the accelerators intended to bolster a product launch or enhance market penetration. An OEM’s sales management team may have dozens or more ways of paying distributors and field reps, including ad hoc, draw, guarantee, quota threshold bonus, sales target bonus, targets by material class, and rules by surgeon, hospital, sales rep, product line, and more.  

 

With all that variability in mind, consider the process by which commissions are calculated at most companies. By and large, calculating commissions is done via Excel spreadsheets. Homegrown processes and systems have evolved over time to track changes, percentage variations, and new commissions structures. Not only does the process itself take significant administrative hours each month, it’s rife with the potential for human error. An errant keystroke, an ill-timed phone call, an ill-fated save—and you’re going to have a mess when your reps start the dispute resolution process with your team.

 

Imagine, though, the power of a different approach. With the right tools and process automation, your commissions process could take three steps and just a few minutes—each and every month. That approach has enough flexibility to accommodate the full range of nuance in the commissions process, from incentives to accelerators to exceptions-to-the-rule-this-month scenarios.   

 

Transformation brings other benefits, too. These include, for instance, visibility into the process in real time, for both reps and sales management staff, so credits, rebills, deductions, and returns aren’t nasty month-end surprises anymore. With rules-based logic to keep tabs on expected vs. unexpected variability, everyone affected knows what’s happening. Think about the collective time savings of a precision process, which reduces the administrative hours necessary to calculate payouts, eliminates human error, and radically drives down the hours eaten by dispute resolutions.

Now, think of all that promise being accessible to your full team in real time, via their mobile devices. Think for a moment what that kind of tool would mean for productivity and relationship enhancement, across your functions and between OEM, distributor, and field force.

 

At ImplantBase, when it comes to commissions, we’ve seen it all. We have seen all the ways OEMs and distributors handle payment and contracts, and we understand firsthand the struggle of the commissions process. That’s why we’ve created our Commissions module with flexibility to handle all the nuances in your commissions process.

 

As a leader in digital transformation for the orthopedic implant industry, we’ve built a platform that provides manufacturers of every size with a unique cloud-based solution to transforms how the business operates on every level and across your critical functions of finance, sales, and operations. That means bringing automation—and revolution—to scores of mission-critical business processes, so that your team can stop flailing in chaos and start driving improved performance.

If you’re ready to transform how you handle commissions—and other functions—ImplantBase can help. Give us 30 minutes to assess your performance and help you determine a roadmap to digital transformation—and we will also demo our newly redesigned Commissions module.  

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