Pharma Sales, Heal Thyself!
With stale sales practices still rife within the industry, it’s time for pharma sales organizations to have a health-check, argues Marie Crespo.
Back in 1996, when US pharma organizations were really getting serious about expanding their sales forces and competing out in the field, adding a new rep to your team would yield an additional 750 physician visits per year*. Within just four years, that metric had dropped to just 17 visits per year.
At one time, 90,000 drug reps competed for the attention of 768,500 doctors, but the diminishing returns from maintaining such monumental sales forces were becoming very apparent. By 2002, McKinsey & Company was saying that reps succeeded in speaking to a physician and being remembered in just 8% of visits.
“Today, pharma remains in the grip of an identity crisis and is striving to emerge from that era when ‘blockbuster’ drugs ruled the roost”
At the time, the McKinsey Quarterly summed up the situation like this: ‘The resulting system is costly, inefficient, and rife with dissatisfaction. Sales representatives complain that they are undertrained and under-rewarded; district managers are overburdened; physicians feel under constant assault; and drug companies face escalating costs. On top of all that, medical-ethics committees and the media criticize sales practices such as taking physicians to dinner or to the theater and underwriting weekends at resorts as training seminars.’
Clearly, something was wrong: the commercial model was broken and the old proverb ‘Physician heal thyself’ all too easily sprang to mind. Today, pharma remains in the grip of an identity crisis and is striving to emerge from that era when ‘blockbuster’ drugs ruled the roost, and heated competition saw those hugely inflated field forces battling for the attention of prescribing physicians.
Of course, the competition hasn’t got any easier but the signs are that the sector is changing. It has begun to recognize the new market imperatives and is adopting a commercial model and sales approach more suited to the 21stcentury.
“Acknowledgement that the market is constantly evolving is a good starting point for understanding that new approaches continually need to be defined”
So what are the current drivers for the sector in terms of its commercial model and the sales talent working within pharma organizations? Well, much can be learned from the way organisms, including pathogens, interact with their environment. I find it helpful to view the pharma marketplace as a set of constantly evolving ecosystems which like its natural world counterpart, tends to a steady state but is occasionally rocked by major events, such as new technology, financial highs and lows, and game-changing competition.
Acknowledgement that the market is constantly evolving is a good starting point for understanding that new approaches continually need to be defined, in order to address the market in the way that suits different stakeholders. Effective market segmentation is a key aspect of this process, even if, in some instances, this may mean dividing the market into segments of one (key large customer)!
According to David A Aaker in his book Strategic Market Management, a segmentation strategy should be judged on three dimensions. ‘First, can a competitive offering be developed and implemented that will be appealing to the target segment? Second, can the appeal of the offering and the subsequent relationship with the target segment be maintained over time despite competitive responses? Third, is the resulting business from the target segment worthwhile, given the investment required to develop and market an offering tailored to it? The concept behind a successful segmentation strategy is that within a reduced market space, it is possible to create a dominant position that competitors will be unwilling or unable to attack successfully.’
This means exploring exactly how each market segment wants and needs to be addressed and also what we as commercial organizations are trying to achieve in terms of engagement. For example, are we selling ‘things’ or are we selling ‘outcomes’ and ‘value’? The two are entirely different. What’s more, they require completely different selling styles.
“Just as a species constantly adapts to the niche within which it lives, so a sales organization needs to respond to customers’ needs and hone and refine the way it addresses a particular market segment”
The next step is optimizing the commercial approach for each market segment. Just as a species constantly adapts to the niche within which it lives, so a sales organization needs to respond to customers’ needs and hone and refine the way it addresses a particular market segment. Thus, traditional Detailing may one day be replaced entirely by e-Detailing techniques as changing circumstances dictate, driven by advances in technology, physicians’ shifting requirements, and organizational cost considerations.
At the same time, fresh strategies come into play, as pharma sales organizations seek to exploit new market segments, for instance by servicing payers and other key stakeholders through the use of sophisticated account management techniques. A key take-away in relation to this approach is the necessity of aligning appropriate sales talent with the chosen go-to-market model.
A further key take-away is the necessity of aligning sales and marketing to address individual market segments effectively. This applies whether we’re talking about issues like closed-loop marketing (CLM), aiming to sell brands rather than products, or creating compelling value propositions for these brands. It is particularly important to understand that such value propositions effectively communicate what a company’s offering provides to the buyer and user of the product or service. Of course, the value proposition is not limited to functional advantages but can include social, emotional and self-expressive benefits too.
In the future, there will be an increasing focus on brands. A brand is not a physical product; it is the set of associations a product or service engenders in the mind of its users. Selling a brand rather than a product lends your offering longevity. It is an approach that also opens the door to effective alliances, as patients and corporate customers look beyond individual products to seek more holistic solutions to particular issues and conditions.
Consultants PricewaterhouseCoopers explains the attractiveness of brands in a pharma context: ‘Products have no long-term sustainability. They are eventually superseded by rival products with superior features or generic substitutes. Brands, by contrast, can be sustained indefinitely – and the potential for creating brands that physicians and patients value is very much greater with packages comprising different product/service combinations than it is with isolated products.’
Throughout all this runs the thread of needing to ensure you have the right people on board to market and sell your brands. Do you have the talent capable of defining and communicating the value propositions relevant to a particular market segment? Does your sales talent have the capacity to align with marketing effectively?
The only way to answer these questions is to gain deep insight into your talent requirements and the current capabilities of your existing people. An effective sales talent insight tool enables a sales organization to carry out a detailed health-check and formulate an effective plan going forward. It is sure to be part of every pharma sales organization’s diagnostic tool-kit in the not-too-distant future.
*According to Pharma Marketing News.
Sadly this is the final installment in Marie’s excellent Sales Insights column, but fret not as each installment of this brilliant series can be accessed here! If you have any other questions for Marie around sales best practice you can email here at email@example.com.
Stay tuned as next month we bring you a brand new column “Success in Selling” with Ifti Ahmed!
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