Sales

Martin Stuart Smith on how an efficient, effective sales force can drive sales, market share and profits.

Martin Stuart Smith on how an efficient, effective sales force can drive sales, market share and profits.

Pharmaceutical organizations have the ability to drive significant and sustainable growth of their products through sales efficiency and effectiveness improvements. Double-digit, year-on-year top line revenue improvements can be achieved by identifying the biggest drags on sales productivity and putting in place programs to unlock additional revenues.

Changes to the way the sales force is recruited, trained, deployed and managed can accelerate both revenues and bottom line growth.

Focus on the drivers of results, not the results per se

Virtually all pharmaceutical organizations have systems in place to measure the performance of their sales teams. Such systems can be quite sophisticated, combining in-house and commercially available data to provide an accurate understanding of the performance at a national, regional, district and individual sales territory level. This data is used for both performance management and for the payment of compensation incentives.

While sales results and market share are undoubtedly the ultimate acid test of performance, the ability of this information to drive greater performance from the sales team can be limited. There are a number of reasons for this:

Lack of performance insights: Sales results alone provide limited insights into the reasons for good or poor performance, and thus provide management with little information to drive improvements.

Mirrored sales territories: Frequently, pharmaceutical organizations have mirrored sales territories where more than one rep may be detailing the same products to the same physicians. In this case, the use of sales data can be a poor guide to individual rep performance and, for this reason, may be inadequate for sales improvement purposes.

Environmental factors: Weve all heard of, and perhaps have personal experience with, vacant sales territories with good sales growth. This can be due to a number of factors, but the point to note is that sometimes the performance of the territory has little to do with the effort made by the sales rep, and is much more dependent on local environmental factors.

Best practice pharmaceutical organizations understand that their top line business results are a consequence of the underlying processes and activities, and that to grow their business they need to focus on the drivers of results, not the results per se. This means developing a clear understanding of the key factors affecting the efficiency and effectiveness of the sales team, putting in place metrics and measurement systems, and finally, using this information for performance management purposes.

Understand the key drivers of sales efficiency and effectiveness

Efficiency is a measure of the number of calls per rep. An efficient sales force is a sales force with a high call rate per representative. Large differences in call rates may exist from one customer type to the next with possible variations from one geographic location to the next. For example, the call rates would likely be very different for a GP rep and an Oncology rep. Best practice organizations recognize this difference and seek relevant industry benchmarks (where available) to help them to accurately define target call rates.

Effectiveness is a measure of the value of sales generated per call. An effective sales force is a sales force with high conversion rates and a high value of sales per call. Once again, large differences in effectiveness may exist from one customer type to the next. The same example of the differences between a GP rep and an Oncology rep illustrates this and for the same reason: best practice organizations will take these differences into consideration when selecting their benchmarks.

Identify and prioritize efficiency and effectiveness opportunities

Best practice organizations will typically identify, prioritize and implement a select number of strategic sales initiatives each year to enhance the efficiency and effectiveness of their sales teams in order to drive improvements to their key business results. The first step will be to identify the areas for improvement and then to quantify them using objective means. A few examples of typical efficiency and effectiveness improvement initiatives follow:

Territory alignments: Many organizations have sales teams with territory structures that were defined many years ago. Typically, over time, the target customer base will change significantly. The result is often a series of territories that are no longer balanced in terms of sales potential and workload.

Conducting a territory realignment can result in improved coverage (sales people with additional capacity will be able to call on customers who are underserved by sales reps in neighboring territories who do not have sufficient capacity to call on all of their customers), lower expenses (journey planning within well designed territories will result in reduced sales person travel and as a result, reduced expenses), and lower staff turnover (better workload balance coupled with fair and equitable balance of territory potential is likely to lead to higher levels of staff morale).

KPIs, benchmarks & performance management: Often, pharmaceutical organizations make little or inadequate use of industry benchmarks to establish call rate targets. Sometimes, they do not record actual call rates, or where they do, this information is not used consistently for performance management purposes.  Inadequate use of benchmarks will result in targets that are below or above industry norms and as a consequence an over- or underworked sales force, causing loss of efficiency or demotivation. The revision of call rate targets using appropriate benchmarks, together with the provision of reporting systems and performance management of achieved call rates, can increase sales.

Customer targeting: Frequently, there is a major opportunity to improve customer targeting with a resulting uplift in sales. The basic principle of customer targeting is that customers should be targeted on the basis of sales potential, not current sales. As in other industries, the 80:20 rule applies when it comes to targeting customers the bulk of sales potential is concentrated in a relative minority of customers. Improvements to targeting methodologies are nearly always possible based on the use of better data sources and more sophisticated modeling. Revision of customer targets coupled with effective implementation, invariably results in measurable sales growth.

Staff selection and training and development: In an industry where, in the physicians eyes, there is frequently little differentiation between products, a sales force of motivated, articulate and knowledgeable staff with well honed selling skills can provide a real competitive edge and drive positive prescribing decisions, sales and market share. Each sales role will have clearly defined tasks and competency definitions, and rigorous recruitment processes to select individuals which have the ability to meet (with training) their customers needs. Finally, the role of the district manager is increasingly being seen as critical to success and accordingly, the same processes are applied to the selection and development of district managers.

Incentive compensation plans: Poorly designed incentive compensation plans can have a number of negative consequences, among them the loss of good sales people, the failure to attract good candidates, customer dissatisfaction, poor staff motivation and sales performance below expectations. Well- designed and implemented plans have the ability to attract and retain the best sales people and to inspire the sales team to work hard to achieve stretching targets.

Best practice pharmaceutical organizations do not wait for change to be forced upon them. They proactively and continually seek opportunities to improve business performance. Such organizations typically invest heavily in new product development, but much of their growth will come from their existing products and will be driven by operational excellence.

Martin Stuart Smith is a specialist in commercial effectiveness who has worked in several multinationals in Brazil, Latin America, Europe, North America and Australia. For more information, contact: martin.smith@sfe-in-action.com.br.