In Part #1 of our Sales Force Focus series, Marie Crespo explains how an effective sale talent strategy is the key to driving revenue in the face of unprecedented industry change.
If you talk to the majority of physicians, either in hospitals or primary care, a pattern soon emerges: not only are they ferociously busy, with unrelenting schedules; they are also extremely wary of accepting absolutely anything at all from pharma reps – even a simple pad and pen. What’s more, this story is being repeated across the industrial world against a familiar backdrop of mis-selling scandals, severe time constraints, and uncompromising budget restrictions.
As Dr Rita E Numerof wrote recently in her column: “Pharmaceutical companies are increasingly challenged to demonstrate the value of new products – in particular by payers who are demanding hard comparative economic and clinical value (ECV) data to justify premium pricing, price increases and sometimes just to maintain the status quo.”
Yet, in many ways, this should not come as a big surprise to pharma sales forces, as it reflects wider trends in industry where the balance of power between buyers and sellers has shifted dramatically. A cocktail of factors – advances in professional procurement practice, more knowledgeable buyers with access to vast libraries of online information, compliance issues, and a greater focus on value – has served fundamentally and irreversibly to change the way sales organisations are able to interact with buyers.
Professor Neil Rackham, one of the founding fathers of research into sales performance and patron of the recently launched Sales Leadership Alliance – an organisation representing sales leaders from global corporates and larger organisations – had this to say recently: “The sales profession is in the midst of a radical change. Simple sales are inexorably moving to the Internet. The selling that remains will be sophisticated and demanding. The salesperson of the future will become a business equal of the customer, a creative problem-solver and a value creator. These changes will demand a high level of professionalism.”
True, he was referring to the wider B2B (business to business) sector but the lessons apply to pharma too. The first important lesson, widely acknowledged across the industry, is that pharma sales is no longer a numbers game, at least not in terms of the numerical size of the sales organisation. During the so-called ‘Sales Force War’, which began in the 1990s and petered out some five years ago when companies recognised it was unsustainable, sales organisations swelled to an unprecedented size only to be shrunk in the face of budget constraints and a general recognition that the strategy was failing to deliver acceptable ROI.
Throw in some major mis-selling scandals like the recently settled $3bn suit against GSK in the US and there are increasingly powerful incentives for pharma companies to find other ways to address their chosen market segments. Simply doing more of the same is no longer an option.
Value is a recurring theme in today’s marketplace: buyers – whoever they may be – are looking for value, and value means different things to different buyers depending on the type of organisation they’re working for. Furthermore, value is increasingly expressed in sophisticated financial terms set against the broader business context: a decision to buy a particular drug will only be justified if it is seen to be supporting the wider aims of the specific purchasing organisation.
Peter Mansell, writing on this site, explains: “In the UK, for example, companies face the prospect of a value-based pricing scheme that will front-load the market-access functions of health technology assessors (HTA) such as the National Institute for Health and Clinical Excellence by folding them directly into price determination. One feature of the proposed value-based system is that it would set higher price thresholds if companies met certain added-value criteria related to burden of illness, therapeutic innovation and broader societal benefits.”
So what has this all got to do with the people – the talent – in your sales organisation? Well, put simply, pharma companies are having to learn how to sell differently. They are facing unprecedented pressure to restructure their sales forces in ways that address the evolving requirements of the market; this will inevitably mean changes not only to the numbers employed but also in the types of salespeople they retain and hire. Addressing the market effectively is not simply a case of employing ‘better talent’; it necessitates employing the ‘right talent’. The new sales forces will deploy their talent in fundamentally different roles compared with the past, introducing an entirely new talent mix across the organisation.
It’s important to be clear that the word ‘sales’ has a very broad definition, referring to a wide range of roles with a shared goal – to generate revenue – yet which involve fundamentally different skills and behaviours. For instance, it has long been acknowledged that top-performing salespeople do not necessarily make the best sales managers – the roles are quite different.
Furthermore, it is vital to recognise that the ability to perform well in one role doesn’t imply a salesperson will be successful in another – although some of the relevant skills and behaviours will be transferable – and they are highly unlikely to be ‘high-performers’ in a new role. Why is this important? Because high-performers deliver significantly more revenue: in a well-known study, McKinsey & Co research* found that sales high-performers generate 67% more annual revenue than average performers.
High-performers are usually defined as being amongst the top 20% of performers for their role within an organisation. We define high-performers even more rigorously, based on the global population for a sales role, such that they are positioned on or above the 80th percentile on a scale which measures the three intrinsic factors which predict sales performance – critical reasoning, behaviour and skills – at a level optimized for that role.
Either way, an absolutely key issue for any sales organisation is to ensure they have the right people in the right roles to address the market in new, more relevant ways. And, with the current imperative for pharma companies to change their approach, this is driving a requirement for sales talent with an entirely new competency profile.
Of course, talent is not the whole issue and cannot operate in isolation. Maximum revenue over the longer term can only be delivered when what we call ‘the three key pillars for growth’ combine to form a coherent and cohesive strategy for engaging the market.
These three pillars are:
Thus, strategic growth objectives can best be realized by optimizing the structure and role-mix of the sales organization for maximum market impact, with each role filled by high-achiever sales talent supported by the appropriate sales process.
Given the fast pace of change within the sector, how can pharma sales forces respond effectively to this market evolution in a timely manner? As we’ve already acknowledged, this involves extensive change while they down-sizes and re-focus on the roles relevant to today’s marketplace. Such complex re-engineering requires the retention and employment of high-performers in roles that are best aligned to meet customer expectations going forward, and developing or re-deploying the rest.
This task is made immeasurably easier if companies have the appropriate diagnostic tools to help them. We are able to accurately assess talent for performance potential against 19 current sales roles, including all the most commonly encountered functions such as Key Account Manager, Strategic Sales, Solution Sales, Sales Manager and Sales Leader.
Step one in the process is to define the new sales roles that best address an organisation’s target market segments: for instance, many businesses are currently seeing the role of Key Account Manager as strategically important. Beyond that, sales organisations also need to define the role-mix and level of resourcing that will achieve revenue goals and deliver long-terms sustainable growth in the most cost-effective way.
If step one is all about understanding where you are headed, step two is about knowing where you currently are. Comprehensive assessment of existing talent (benchmarked against the profile of a global sales high-performer for the relevant new role) delivers the data in relation to individuals’ key behavioural competencies, skills and critical reasoning ability, while appropriate ‘dashboard’ tools provide the appropriate insight at the organisational level.
Such insight is based on what we call the Sales Talent Performance Matrix (see figure 1). Skills and behaviour are the two intrinsic ‘performance factors’ that organisations are able to influence in relation to their talent. Plotting individuals’ skills and behavioural fit for the role the organisation is asking them to perform provides instant insight into their performance potential.
For instance, those falling within or close to the High-Performer category will be the organisation’s stars. Clearly, many more individuals are likely to lack skills and behaviours necessary to fulfil their new sales role effectively. Such concerns may be addressed by development – training in the case of skills gaps and coaching in the case of behavioural issues – but the scale of the investment and time taken to address them will vary according to the individual’s position on the chart. And, of course, a substantial number may lack both the behavioural profile and the relevant skills to enable them to perform effectively in the proposed role, so consideration should be given to redeployment in such cases.
Figure 2 illustrates the options available to organisations in terms of developing an effective sales talent management strategy going forward.
Clearly, an organisation should focus on retaining the stars of the show – the High-Performers – in light of the McKinsey research discussed above. Where there are gaps, however, it is important to deploy the appropriate development intervention.
Most behavioural issues are not solved by training and can only be satisfactorily addressed by intensive coaching – that’s one of the reasons sales training may not be effective in boosting performance in many cases. What’s more, coaching tends to be a longer-term process than training skills and is correspondingly more costly, at least in terms of management time.
Conversely, individuals with poor skills but a good behavioural fit to their new role should receive the relevant skills training as a matter of priority in order to equip them to perform at their full potential. If they don’t receive the necessary training in a timely fashion, not only are they likely to under-perform, but this inability to perform means they may become disillusioned with the role and leave.
In terms of individual and company performance there is no more significant factor than role-fit – an individual’s suitability for the specific sales role they are being asked to perform. Indeed, the importance of role-fit cannot be overstated nor its ramifications underestimated for both the individual and the employer. It has far-reaching consequences across a number of areas including: hiring, retention and replacement costs; development strategy; the structure, efficiency and profitability of the sales organization; and, of course, revenue performance, growth and company profitability. We will explore some more of these issues in subsequent articles.
*Ref: McKinsey’s ‘War for Talent 2000’ survey of 410 corporate officers at 35 large US companies.
This article is Part #1 in the "Sales Force Focus" series, the series will continue with Part #2 on Monday 13th August.
To discuss further training and development issues with Marie you can contact her directly at firstname.lastname@example.org.
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