‍Lonza is a preferred global partner to the pharmaceutical, biotech and nutrition markets. 

They are well-known for their wide range of services and products from early phase discovery to innovative dosage forms. 

With 30+ global sites and 17,000+ employees, it would be an understatement to say that Lonza has an impressive global presence!

Needless to say, their scale and resources come with a bunch of challenges as well. 

This case study explores said challenges, details the impact of Kennect’s solution on Lonza’s Incentive Compensation process, and outlines the company’s future plans with the solution.

‍Challenges:

After initial discussions, we were able to identify key bottlenecks in Lonza’s IC process: ‍

IC calculations for complicated hierarchies and multiple territories were being done on spreadsheets.

This is something that we see everyday with most of our B2B customers. However, it is true that these companies don’t choose to complicate their crediting processes. These intricate, hard-to-navigate processes are essentially by-products of growth and partially due to the dynamic nature of their ever evolving business needs.

More often than not, crediting is extremely simple in the beginning. But, companies grow! More people are hired. 

Before you know it, you are staring at this large, daunting pyramid of hierarchies just like Lonza: Sales Reps, Business Development Officer, Account Executives, Customer Success Teams, Service Engineers, and so on. Each of these chipping in at various stages of the sales journey as prospects navigate through the funnel. Their contribution in each deal varies depending on factors like gross margins, order value, Brand category, renewal vs new customer etc.

Every role in Lonza had a different KPI, and matrix calculations varied. 

Add multiple geographies to the mix, and the permutations are endless. So is the hassle when it comes to crediting! Incentives at Lonza were to be calculated and paid in different currencies, which made the overall activity even more difficult. 

Therefore for Lonza, sales crediting was a tedious, manual and time consuming process. More so because they were trying to do it with a legacy system like spreadsheets that usually hit a wall when growth demands scalability. 

It was challenging for Lonza to manage data from multiple sources. 

Incentives at Lonza were based on many KPIs which were captured in different systems. For admin, extracting this data required coordinating with multiple stakeholders handling these multiple systems. Equally frustrating was for end users to go to multiple portals to track all their KPIs linked to incentives.

Absence of not having a unified source that could act as custodian of  all incentive related KPIs was consuming bandwidth of the incentive admin team and eating up productivity of sales teams.‍

Real-Time visibility of ​incentives was not available for the reps and the admin.

Lonza was relying heavily on spreadsheets to calculate incentives. Which means they were calculating incentives only once, that is during payouts. Therefore, they were not able to properly communicate to their reps what their targets were, provide them visibility of their incentives during the incentive cycle and guide them on how they could earn more. This is common amongst companies that use legacy tools or spreadsheets.

Chances are, that more often than not, your reps don’t even know how much they are going to get paid until they receive their compensation. If these spreadsheets are error-prone, it becomes increasingly harder for your reps to trust the organisation’s data and they are likely to resort to shadow accounting. 

This lack of visibility was not just limited to the reps at Lonza. Visibility of analytics on incentive payouts was not easily accessible for the upper management as well. ‍

All incentive related communication was being facilitated over mail trails.

•  It was difficult to maintain deviation/exception cases: 

Let’s understand this with an example. If a rep at Lonza wanted to adjust their target because of shortage of supply, this request had an approval flow including multiple managers. At last, it would be presented to an incentive committee. 

All of this communication was being done over emails. Because this process is long, it was becoming very hard for Lonza to keep track of these exception cases. 

• Query resolution over emails was time-consuming:

In the absence of a proper query management channel, queries were being addressed over email. This required Lonza to pull up queries from different months at the end of the year. 

Lookout Process and Decision-making Factors:

For a global leader like Lonza, there is no dearth of options. The pressing question is: Why did Kennect stand out? 

Well, there are multiple reasons for that. Perhaps, the important reason would be that we were able to provide a fully automated solution for all their problems on a single platform.

We helped Lonza break the silos of spreadsheets by integrating their data from multiple sources and streamlining it into a single source of information. This macroscopic viewpoint made their data usable, helping them make better business decisions. 

With all the relevant data in one place, sales comp managers can proceed to analyze it more deeply and give holistic insights. Things that simply weren’t possible with static spreadsheets like identifying problem areas in real time were possible with Kennect. 

Lonza was also impressed with Kennect’s understanding of their business. Our functionalities like Custom Workflows, Simulator, and the Nudge Feature also tipped the scale in our favour. 

Once Lonza decided to go ahead with our solution, we started the on-boarding process and were able to go-live in just 2 months. 

Apart from having a single source of truth for incentives, other notable benefits include-

• Our real-time SIP dashboard where the users can check their latest SIP data and payout amounts. The result is that shadow accounting has reduced drastically and productivity has increased by ~5%.
• Through our Nudges feature, we were able to send personalised notifications and emails to users notifying them about which KPIs to focus to maximise their earning potential. This received a huge appreciation from reps and helped the company win trust of their sales team. 83% of surveyed participants agreed that they were feeling more motivated than earlier to perform better.
•  We have built a data collection where all deviation cases can be maintained, to help with audit traceability and SIP calculations.
•  We have provided Lonza with a query resolution module wherein the user can flag any particular KPI, even transaction and raise a query related to it which is then passed on to the respective administrator to resolve through Kennect.
•  We were not only able to incorporate complex KPIs like geographies and hierarchies, but we were also able to give HR and Finance access to usable data such as incentive payouts and forecasting and incentive plan fairness scores etc. 
• Incentive leakage was stopped completely. Overpayment of around 3.5% was brought down to zero.

We can confidently say that since its implementation, the solution has come a long way and has become the only source for  “anything related to incentive” for Lonza.

Future:

We have a robust roadmap with Lonza. With the basics now in place, the next goal is gamification. Recently, we built a leaderboard for them to push reps to perform better. We also provide the support of SSO logins. 

In the near future, we plan to-

• Configure more nudges.
• Leverage the Incentive planner as a tool for better planning and execution by linking it with a nudge.
• Find better ways to derive more insights from incentive data so that admins can be better prepared for what-if scenarios.

The truth is that most companies hesitate to automate their incentive compensation processes for the fear of dismantling the status quo. Lonza’s journey with us is testament to the fact that breaking the status quo might not be such a bad thing after all.