BIOMED CO., LTD.: DESIGNING A NEW SALES COMPENSATION PLAN

BIOMED CO., LTD.: DESIGNING A NEW SALES COMPENSATION PLAN

Biomed is a family business which belonged to Thailand drugs Co., Ltd. It could be viewed as a sales agent of Thai Drugs and it sold over 100 kinds of drugs. 35 per cent of Thailand drug market was occupied by local manufacturers in which five giants accounted for over fifty per cent. The rest of the domestic producers had a scarce market and the price competition was very hard. There were three major channels for selling drugs: hospitals, pharmacies and clinics. The current compensation system is salary, plus commission, plus bonus. It is necessary to design a new compensation plan; For example, according to the new strategy, some measures need to be taken to change the behavior of employees: For example, the representative will award a 3% bonus to the sales representatives after reaching the target, Close the sales transaction at any cost such as. Spending by the sales representative is not enough for the customers, other expenses that they spend more than 380 TBH per day have to go out of their pockets; This means that it will prevent access to customers and this situation is adversely affected. The company must cover all costs of loss and reasonable costs incurred in doing business. On the other hand, in addition to salary, commissions, bonuses and work costs: medical insurance and Thailand Drug Worker contribute 7% to reserve funds. Keeping the compensation plan with a few changes will allow each salesperson to set a goal and reward performance. Sales representatives were used to address every customer they thought could increase sales volume, the compensation plan should not relate to volume sales, the salaries should represent the product sales award and the stability for the employee. Commissions should be awarded based on how much they sell over the given objectives. A higher commission on the sale of items that set the focus for the different regions being designed, because revenues and education levels vary between cities. And finally, they gave the company a number of new customers, how many times they reached the target for these 3 months, and a bonus of nearly three months of target success quotas based on good management in the cash flow movement. Almost every employee means that it is very easy to achieve goals. On the hospital channel, a new government regulation, although small local producers prefer generic brands, only offers the lowest price the manufacturer has earned in a large territory order. Due to Biomed's inability to work in a low-strategy system, Biomed's previous strategy was supported by excellent services in medium to high through high prices. For this reason, the company decided not to give up this market. Pharmacists and clinics responsible for thirty percent of the market also wanted generic brands. The reason for the company's focus on this market, according to Biomed, is that it does not appear only as a price when compared to the hospital market. For the price is still a matter for Biomed, it has gone through a new low-medium to medium priced strategy of ten to fifteen drug-focused. In such a system, the sales target can only be met by selling in a large volume. However, many preparations had to be made for the new strategy. The first issue was the redesign of the compensation plan. The previous compensation plan was for sales volume. Salespeople received an annual commission and a three-month bonus, excluding basic salary. The new sales strategy forced sales people to think of scale economies that combine variable costs and volume with a limited number of drugs. According to my opinion, the quarterly premium is a short-term incentive and annual commission targeting long-term performance. In the short ward, a three-month bonus can be changed by other players, such as a sales contest. The sales contest supports short-term performance and the winner can get a huge bonus. The nature of the competition leads salespeople to sell more and become faster adapters. At the same time, the winner can share with other salespeople. The winner will also get recognition. Target is no longer volume, volume and price combination. For example, a company can reward salespeople with the highest volume and highest revenue. The sales contest will reduce overall pay. Most salespeople will not take anything. Therefore, this form should not last long. It is better to hold the contest once a year to replace the three-month bonus. To get the ideal affect, the price is 25% of the quarterly bonus pool. The compensation plan is only an incentive for salespeople. However, without proper training, salespeople can not effectively perform sales and prevent better performance. Systematic training is required and salespeople should show a new image of the company. A sense of security is also important for salespeople. Salespeople can be aggressive for new strategies and can not manage to make effective sales, they have to believe in and support Chiemchanya salespeople. Salespeople fighting on the façade understand the current situation better than others in the company. If they show resistance, Chiemchanya should ask why instead of convincing.