Alpha Pharma

Alpha Pharmaceuticals is structured in specialized business unit (BU) and each one manages a
different portfolio of products. Each BU has a manager who concentrates both marketing
(through product mangers) and sales (through district manager s and sales representatives). BU
managers also have a sales operations role reporting to them. Alpha’s three BU managers
and a business intelligence director report to the commercial director. The business intelligence
director is responsible for providing the analyses required for sound management of the
business. Alpha claims that they are one of the most technologically advanced companies in the
sector and all sales representatives have laptops, access to internet, email and mobile phones.

Alpha follows a conventional sales quotas development process: a number of sequential activities
starting with the development of national goals and objectives, then understanding territory
expectations and behaviors, developing potential allocation formulae, finalizing the formulae and
evaluating the impact of the decision s, revision of sales quotas with district sales managers and
culminating in the development of the sales quotas by sales representative. However, the
analysis of Alpha’s sales quotas development process, in terms of satisfaction of stakeholders’
expectations, reveals that the process is ineffective. It fails in meeting the following employee
expectations: (1) allow the sales force to participate in sales quotas setting, (2) use sensitive and
dynamic tools to distribute sales quotas to sales representative, (3) consider the competition and
their effects on the local market place, (4) respect input from employees, (5) be communication
driven and (6) consider qualitative as well as quantitative goals. The reason these expectations
are not being met by the process is that Alpha is following a prescriptive sales quotas
development process. The process covers standard, sequential activities but fails to satisfy
employee expectations that were not considered when the process was initially defined.
Alpha’s sales quotas development process has evolved as a consequence of changes in its
management structure. The company is moving from being highly centralized in terms of decision
making towards implementing a more decentralized approach. This had a positive impact on
employees’ perceptions of the effectiveness of the sales quotas development process.
Employees perceive the process as being fairer, more objective and more transparent as a
consequence of change.
The main stakeholders involved in the process are the general manager, commercial director, BU
managers, district managers, sales representatives, sales operations, finance controller, business
intelligence director, and business intelligence analyst and product managers. Product managers
are responsible for developing sales forecasts for individual products in the portfolio. They
produce first draft sales forecasts through interaction with medical manager, market research,
sales operations and the BU manager. Formal meetings are organized to gather information (e.g.
market conditions, competitive threats and judgement calls on reasonable levels of sales to be

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achieved) from the different stakeholders. Forecasts are based mainly on historical performance
and past market trends. However, different scenarios are sometimes considered, exemplified by
the potential launch of a competitive drug, which negatively impacts performance of their
products. Each scenario is allocated probabilities of occurrence and future sales figures adjusted
accordingly. The planning horizon considers a 3-year period and is revised annually. This initial
process does not consider participation from the sales force. Sales representatives pass feedback
they collect from doctors to product managers through their district managers, most often via
email. However, the feedback is anecdotal in nature and based on the assumption that sales
representatives have a vested interest on having a lower sales forecast. Therefore, the feedback
they provide is neither consolidated nor analyzed. The sales representative feels that his/her
opinion does not count. I am respectful, but it does not mean that I do not want to know what it
is happening and being heard (Sales representative).
The national sales forecasts are allocated to each of the district managers’ areas through an
apportionment mechanism (forecasts drill-down tool) that consists of a formula being applied to
each territory. The formula consists of variables and each has a weight. Exemplars of variables
are the number of sales representatives in the area, market share and sales increase. Both
variables and weights remain unchanged throughout the year, even though anticipated scenarios
become real events. The weights assigned to each variable are discussed and adjusted at a
business line meeting. District managers provide their feedback in this respect and there is a
negotiation process that ends with a final distribution of sales by product to the different
territories.
Alpha’s business lines take slightly different approaches to the delivery of sales goals to their
subordinates. This is a consequence of the lack of consistency in terms of processes. One of the
business line managers does not allow the district managers to participate at all in the
development of the weights. He forces the sales quota to each district manager without any input
from them.
Every business line is different. What I dislike is the fact that there are three lines and that
they are fiefdoms. I consider ‘Alpha Line’ as a sales line and ‘Beta Line’ as a marketing line.
There are two points of view’ (Business intelligence analyst).
Once district managers have the forecasts for their areas, they allocate them to each sales
representative. Again, the drill-down tool is used and district managers are allowed to introduce
minor adjustments. However, the sum of the adjustments must be zero. They
reduce the sales quotas for new sales representatives and put bigger sales targets on high
performers in order to compensate any expected low performance. District managers are
also allowed to change the phasing throughout the four sales cycle meetings (each one for
each quarter of the year). However, the final amount of sales must remain as defined by the

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national sales forecasts. Alpha’s sales quotas development is a top-down process starting from
the general manager to BU managers to district manager s, finally reaching sales representatives.
Sales quotas are communicated to sales representatives at the beginning of
the year; they do not participate in setting them. Sales representatives receive goals
without a chance to argue, and if they argue, it is the same because we are not changing
the goals. According to me, a weakness of the system we must improve in the future is the
involvement of all the different stakeholders from the process (Business unit manager).
Sales objectives are currently like pyramids. District managers gather together and then
each district manager explains to each individual sales representative
his/her objectives. We are not allowed to get involved (Sales representative).
Once district managers define the sales quotas to each sales representative, the information is
introduced to Alpha’s call reporting system. Alpha has introduced some of the most advanced
call reporting and territory management systems in the Spanish market. The system allows the
commercial director and BU managers to integrate data at geographic/physician level on sales,
investments, reach, frequency, type of target, promotional actions, incentives and any relevant
qualitative data that have to do with the client situation. It is used to develop and monitor key
performance indicators to highlight problematic geographical areas where action must be taken.
The technology allows district mangers to monitor and assess sales representatives’ performance
and allocate incentive payments. Despite a number of hurdles to overcome, Alpha is using the
system; the implementation is considered to be progressing as planned. District managers
undertake reviews on a quarterly basis and incentives are paid based only on actual sales
achieved.

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