Sales and marketing: Implementing new commercial models on the front-line
Paul Van Arkel, a principal with McKinsey & Company in Zurich, on how to make a multi-channel sales and marketing model work, region by region.
By on Jul 13, 2010Paul Van Arkel, a principal with McKinsey & Company in Zurich, on how to make a multi-channel sales and marketing model work, region by region.
The pressures that todays pharma companies face are well known, as are the solutions industry sages have devised to address themKAM, CRM, customer centricity, smaller sales forces, e-marketing.
But implementing any one of these strategy shifts, let alone two or three in conjunction, presents challenges.
Piecemeal approaches can get bogged down by short-term fluctuations in performance, and top-down roll-outs can seem distant and haphazard.
We find that 70% of the new commercial model implementations do not change the customers perception enough to make a meaningful difference in the market, because they dont invest enough in the behavior change of their frontline employees, says Paul Van Arkel, a principal with McKinsey & Company, Zurich.
Van Arkel endorses a different implementation strategy, what he calls a Viral C2C (cell-to-cell) approach that introduces change district by district, region by region, until an entire company is transformed.
You want every district to feel like its getting the same level of attention and focus, says Van Arkel.
Each one needs high-pressure, high-attention, high-touch transformation. This cannot feel like just a roll-out of a program.
Viral C2C fundamentals
The Viral C2C approach begins with a single mini-transformation.
Take one district and, over the course of three months, expose the field force, medical, and marketing teams to a number of training days (as many as 10), coaching, and role modeling sessions.
Its important that throughout this period the national sales manager and senior management is visibly invested in the project.
At the end of the day you want to change the behavior of an individual, and you will only do that by changing his district, says Van Arkel.
Frankly, he doesnt care about what happens in the rest of the world.
Once the first district has adopted the changes, it becomes a champion and helps spawn a second round of mini-transformations, this time with, say, five districts.
District managers from each of those districts will have participated in the first districts training sessions so as to be comfortable with the process.
After another three months, each of those five districts becomes a champion for another five, and in turn those 25 for another five after that, until after one year and four waves youve completed mini-transformations across 125 districts.
What youll see after three months is really enthusiastic reps, says Van Arkel.
After six to nine months, youll have really enthusiastic customers, and between month six and 18, the market share line will trend up.
Challenges of implementation
One might expect the Viral C2C approach to be more effective with smaller companies with fewer districts.
In fact, it works equally well for large, multinational organizations.
The method is rooted in behavioral psychology (with a touch of viral growth) and has been used in numerous large transformations, both within pharma and without.
For instance, the Italian postal service transformed 10,000 post offices across Italy from simple, postal hubs to complex, multi-channel banks using this method.
Van Arkel says implementing a Viral C2C approach in a large country like Germany or the US or across a number of countries is simply a matter of ratcheting up the number of districts in each wave.
McKinsey has executed a Viral C2C approach across 35 countries and 500 districts in just four waves.
Its counterintuitive because you start with only two districts, say part of Holland and a district in London, says Van Arkel.
If youre managing all of Europe, that doesnt look like much. But it works.
Interestingly, the biggest hurdle to implementation is not scale but time, he continues.
You have a discussion with a senior manager and they say, Yes, but theres always the next quarter, the next launch, the next urgent thing to do.
The result can be devolution from continuous mini-transformations to piecemeal implementations that arent nearly as effective.
Keys to success
One key to success, then, is continuous investment in consecutive Viral C2C rollout.
The second tip is a crystal clear commercial model.
Though the commercial models are usually well thought-through on a conceptual level, they often are not tangible to the front-line employees and their first-line managers.
Usually, these key people simply do not understand in granular enough detail the from-to changes in their every-day working routine, during typical customer interactions.
Van Arkel explains that it is often surprising to clients how granular they need to get in order to help their people understand.
Best practice examples include before and after videos of sales calls, role-plays by senior management, and traveling market-places in each district with a stand for each new element of the commercial model.
A third piece of advice is pulling multiple levers of change at once.
The shift toward any new commercial model requires new technology (e-channels, CRM system, etc), but above all a very significant change in the behavioral patterns of the frontline employees a sales rep visiting a physician suddenly needs to do a hundred little things differently.
These manifold shifts in employee behavioral patterns are often neither considered nor sufficiently supported within the transformation program.
Decades of McKinsey research have provided a deep understanding of what it takes for people to fundamentally change their behavior in a lasting way.
For an individual to change his or her behavior, he or she must know how (s)he needs to change, and agree with the need to change; see his/her peers and superiors change their behavior; receive training and coaching to build the capability to change in an environment where the performance management structures, enabling (IT)-systems, and other processes are supportive of the new behavior.
Any transformation program needs to provide these levers in parallel to each of the individuals whose behavior is expected to change.
This implies a significant increase in engagement, communication, training, and incentive-changes compared to the typical implementation approaches of new commercial models in pharma.
The soft changes help create commitment and behavioral changes that at the end of the day are going to make the real difference, Van Arkel says.