Income
Income levels vary proportionately to performance orientation. If the sales objective is production oriented in the sense that the company pays the rep only when a product is sold, income is usually higher than when the company pays a salary for activity-oriented performance, which may not result in an immediate product purchase. Capital equipment company's payouts are the highest, and along with MR firms, usually pay based on straight commission. The remaining five categories base pay on some combination of salary and bonus or commission.
Salary plus bonus or commission pay plans need to be fully understood before committing to a sales position. Higher base salaries do not necessarily mean higher pay because usually the higher pay positions end up paying much more in commissions than in base pay. By asking the company for an example of an average rep's payout for the previous year, one can see the percentage of salary and commission that makes up the total compensation. Generally, the companies with lower base salaries offer higher overall income potential, and this is usually accompanied by higher performance expectations.
Commission plans pay based on products actually sold. The plan could be based on any number of methods, including a percentage of total dollar volume, varying commission amounts based on unit profitability, and payouts that change based on performance versus a predetermined quota. Bonus plans differ slightly from commission plans since bonus programs pay a set amount for the achievement of a specific goal, and commission plans are usually open ended (no maximum cap).
For example, under a bonus plan, a rep may earn a $4,000 bonus at the end of the year if 100 percent of the sales objective is achieved. Under a commission plan, however, a rep may be paid 5 percent of net sales for all products sold up to 100 percent of quota and 8 percent of net for every product sold above quota. Income potential is normally greater in commission plans than in bonus plans, but it is imperative to understand both the company's plan and the territory opportunities before estimating the income potential of a specific position.
Travel
Travel is one of those job requirements that go hand in hand with sales of any kind. Travel in medical sales can range from practically no overnight travel for the distributor rep who calls on five to ten accounts in one city, to four or five overnights a week for the capital equipment rep that covers the eastern half of the United States. The percentages expressed in the chart are intended as guides to help the reader understand how much of a five-night work week might be spent away from home.
Travel is related to geography and number of accounts. Each company considered as a potential employer should have drawn maps of the territory and a list of accounts in the area to be covered. Deciding how much travel is required before accepting a position is an essential part of reviewing a sales representative opportunity.
Benefits
Benefits provided by a company can be just as important as the income potential, and they deserve careful consideration. For comparison, "average" benefits are defined as medical and dental insurance, a two-week vacation, job-related expenses, a company car, and a retirement/pension plan. In the chart, "below average" is anything less and "above average" is anything more. When calculating the total compensation potential of a job offer, place a monetary value on each benefit offered and on any required personal contributions. A benefit package might include:
- medical insurance
- dental insurance
- vacation
- retirement/pension plan
- life insurance
- disability insurance (long-term and short-term)
- professional education
- college fund
- matching stock purchase program
- 40IK program
- child care
- company car
- job-related expenses
- performance-related trips/vacations/prizes
Expenses
Most companies pay for overnight travel expenses, car and related costs, secretarial and office expenses, telephone bills, and so forth that are incurred as a direct result of operating the business. Companies with small territories and those that view their reps as independent contractors often require reps to pay their own expenses. Recognize that a sales territory may incur annual sales expenses nearing the actual pay of the position, so know who pays the bills!
The expense reimbursement method can also have an impact on income. Check to see if a company representative is reimbursed weekly or if the rep has to carry the expenses for several weeks while waiting to be reimbursed. Many companies have a voucher or company check system whereby the rep can receive personal weekly reimbursement. Others simply turn in an expense report that must first be audited and approved before any funds will be issued. There is also a trend today for many companies to use corporate credit cards to reduce the amount of out-of-pocket expenses incurred.
Training
On the chart, training for each of the seven types of companies is described as abbreviated, moderate or lengthy. Abbreviated is defined as 0-3 months, moderate is 3-6 months, and lengthy is beyond 6 months. The companies that have a lot of products and require reps to be able to fully demonstrate the functionality of those products have the most-lengthy training programs. Training takes place in the home office, at off-site training locations, in the rep's own territory, and in experienced rep territories. Training can be intense and competitive. Companies expect top performance in training and have been known to terminate individuals who did not pass training tests and develop basic job skill requirements.
After initial product training, companies often provide advanced sales training that emphasizes sales skills more than product knowledge. Companies may also conduct regular sales meetings and sales training seminars to further develop their sales forces.
Previous Experience
If you are just getting started in the pursuit of a medical sales position, it is a good idea to understand how your previous work experience will be viewed by a potential employer in this field.
Pharmaceutical companies, distributors, and CP/OTCs are looking for a pattern of success in jobs that have required strong leadership and communication skills. They do not necessarily require sales experience as long as you can document your successes and skills in your previous position.
Medical/surgical companies are looking for individuals with strong sales backgrounds and they demand documentation of sales results. Sales managers want the superstars from other industries who can prove that they have been in the top percentage of salespeople in their field. Medical Sales is not a requirement but sales success is a must.
Capital equipment companies, MR firms, and OEMs normally require previous medical or medical sales experience. A primary reason is that these companies want an individual who can build business based on relationships with previous customers in the medical field. Medical professionals such as nurses or purchasing personnel can also transition into selling because they are well acquainted with a company's products through personal use, and they have strong professional relationships with accounts in which they previously worked.
Paperwork
Ah, the bane of a sales rep's existence... paperwork! Unfortunately paperwork is an absolute must in just about any sales position. In the medical field, OEM and distributor reps are mostly heavily involved in the paper pushing experience. Accuracy and timeliness are crucial in order for customers to get the correct products exactly when they need them. If paperwork is on your list of annoying activities, stay away from these two areas. The remaining company types require one to two hours of daily paperwork, which may include placing orders, writing follow-up letters, completing sales activity reports, forecasting, reporting expenses, and requesting product samples.
Advancement Opportunity
Advancement opportunity is tied directly to the size of the company and the sales force... the bigger, the better. The greatest opportunities for reps to move into sales or product management are found in medical/surgical and pharmaceutical companies. In the largest companies, sales reps can move out of sales into marketing, training, distribution, sales administration, sales management, and even research and development. Companies with small numbers of employees simply do not offer many career paths or management opportunities; however, small companies often provide a "family" environment not found elsewhere.
Performance Measurement
Measurement of a sales representative's performance by comparing actual sales versus a given objective is the easiest and most accurate method of gauging productivity. Objective performance measurement allows sales production to speak for itself without making any qualitative assessments about how the numbers were reached. Companies using objective measurement do not place many activity requirements upon their employees, and the politics of which managers like which reps best does not cloud performance evaluations. As long as quotas are met, great flexibility and freedom is given to the individual reps in choosing their own sales methods and approaches; however, there is little patience with reps who consistently miss sales objectives.
Subjective performance measurement is required in the businesses where the sales rep is not directly influencing the product end user to place an order. Measuring performance in this way must be done in large part by a manager's personal observation of the rep or by interviewing the representative's customers for additional feedback. Activity-oriented objectives are also frequently implemented in order to measure the results of an entire sales force. For example, a pharmaceutical company may ask all reps to call on two cardiologists a day for one quarter to promote a new drug. This is an activity that is easily measured, and the company will later determine if the activity was effective by monitoring sales to drug distributors and pharmacies for that specific drug during and immediately after the activity period. An individual's performance is measured by his or her ability to make the two calls per day.
In reality, most companies use a combination of both measurement methods. Recognize, however, that the major difference is that objective-based measurement says, "We want $450,000 in new business, go get it!", and subjective-based measurement says, "We want you to make fifteen calls a day, and we want you to do each one like this". Both systems work, but a rep may be more comfortable working in one system over the other. Ask for a blank copy of an annual performance review to determine exactly what the company will expect.
Orientation
Sales can be defined as all activity necessary to bring the customer to the point of purchase. Service can be defined as all activity necessary to support the customer's purchase. Distributor companies are almost exclusively service related, while capital equipment manufacturers and MR firms are particularly sales oriented. The remaining company types provide both sales and service to the customer and one often hinges on the other. Service to an account may include product distribution, staff education and in-servicing, ongoing product assessment programs, and provision of external consulting services. Product support and service programs can be a determining factor in closing a sale, and the sales representative must manage these programs before, during, and after the sale as part of daily sales activities. Some companies also provide service personnel (for support of the sales rep and the customer) to monitor and maintain instruments and equipment. Keep in mind that service time takes away from selling time, so if you are interviewing with a company that pays little commission on existing business that requires frequent service calls, your money-making opportunities will be reduced. Examine the existing business and how much service support it requires.
Structure
The final item to consider is the structure of the sales organization. It may be either horizontal or vertical. Companies that have few reps will have a horizontal structure, i.e., they will not have many layers of management. The owners or managers will be on the same level as the sales representatives, and the organizational chart will be flat. This speeds up the decision-making process and also increases the business flexibility that may be needed on a specific account. Horizontal structure does, however, limit advancement opportunities.
Conversely, a vertical sales structure results when large sales organizations have several management levels. This slows down decision making because a decision often must be pushed upward in the organization. Business flexibility also decreases because many decisions are based on policies written for an entire sales force. Vertical structure, however, does provide the greatest number of advancement opportunities and includes a more exact approach to sales activities.
SUMMARY OF CHART
All of the criteria in the chart are meant to provide a starting point into your investigation of a medical sales position. The descriptions of the types of companies are general guidelines and exceptions will be found. Use them as a place to begin your job search recognizing that one's professional satisfaction is contingent upon knowing as much as possible about the industry and position.
