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The question we get asked probably most often is how do you develop an incentive plan or bonus plan or compensation plan that motivates this staff member the sales REP or marketer.
But also is thoughtful of the Agency and your budget your revenue and your profit.
Well, we have something that we like to call the-cost-justify-the-COMP plan, and what that fancy word means is that you have to take into consideration what your revenue looks like.
What your direct costs indirect costs look like and you’re a real profit.
So that’s why, when people ask me this on forum, or if I’m at a conference speaking on stage will say talk to me about a COMP plan how much or how many patients should my market or deliver to me how much revenue should my marketer bring to the table for our in-home care.
And what I share with them is it depends, and you know I know that’s a crappy answer from the stage you don’t want to hear that or even hear you don’t want to hear that what you want us number… and what I can tell you is it’s a formula.
You got to take into consideration what is your cost per admission per patient or client, you have to take into consideration what the base COMP is for the marketer.
And then, what is your profit per patient or per client and how much of that are you willing to share with them.
That is the formula that you need to look at and once we do that because everyone’s direct expenses are different for someone like me who lives in Fairhope Alabama.
My office space maybe less than someone who lives in La Jolla California. So my cost per admission or per client started care it’s going to be less than someone in La Jolla.
In fact, my base camp for my REP is going to be less here than it is in La Jolla.
So, consequently, you have to look at the formula in order to best identify how many patients you need how many clients, you need, for example…
And that can be expressed in revenue, it could be expressed in ours for our in-home care friends and it’s often expressed in admissions or start of cares.
So Consequently, I would ask you to take a look at that.
Most REPS think in terms of admissions or clients who start care.
That’s where their brain goes. So if you have a number which you ultimately will you’ll have a number that you are willing to give your reward your marketer per patient.
And that is what I’d recommend because they think in terms of per patient, not revenue growth.
You will, as a business owner or as a manager or leader, but the REP themselves (will not).
So turn those numbers turn those revenue numbers into actual patient admissions or client admissions and then just every 90 days do a check.
Make sure that your average patient profit continues to be the same as what it was 90 days ago, because we know all clients or patients are not created equal revenue-wise.
Just do your checks, so that you can make sure that your COMP plan is in alignment.
We do this every day with our sales management folks.
Every quarter we sit down and do a quarterly game plan that’s also when we look at revenue and make sure that our COMP plan is in alignment with our board goals or ownership goals, so that the Agency can then achieve its goals.
So I hope that helps when you think about COMP plans, just think about the formula.
The formula is going to be different, the formula is going to be the same, but the numbers are going to be different for each agency.
So take your revenue, think about profit per patient and put that into a calculation for a base salary usually about 60% is base salary and 40% is that variable COMP that is rewarded based on growth, for example in your agency.
So we look forward to helping you. If you want more information about our sales management program we help sales.
REPS every day achieve and overachieve their budgets just go ahead and email firstname.lastname@example.org and he’ll set you up for a discovery call where you can learn more about how we help agencies, just like yours manage their sales REPS and grow their business.
Thanks for joining me today I can’t wait to see you on the next question!
Having a solid comp plan for your marketers will ensure that you are getting the results you are looking for out of your team. If you want to stay competitive, a great plan is key to your success.
We just recently covered designing comp plans for marketers in our Inner Circle Mastermind. If you are a home health agency owner who is looking for a major level-up for your agency (and life) you should apply here: homecaresales.com/innercircle
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