SFE gives way to value
Izzy Wakeling, regional director for eyeforpharma in Australia & Asia, recently was invited to speak to the Australian Pharma Senior Sales Leaders group about what the region could learn from trends, best practices and unique insights presented at eyeforpharmas 7th annual SFE Europe conference in Barcelona in March.
The event, which boasts more than 650 delegates and 70 speakers annually, offers keen perspective on how pharmas are responding to European market changes that will likely translate well for Australian executives who face challenges similar to those of their European counterparts.
No one knows exactly how the healthcare system will change, but we all agree that it will over the next few years, Wakeling told the group. But theres a strong possibility Australia will go the way Europe has, with the adoption of Health Technology Assessments, shifts in who pharma should be influencing and a strong focus on outcomes.
Changes in pharma sales and marketing in Europe are being driven by challenges such as the growing number of stakeholders to interact with, fewer new molecular entities passing the regulatory hurdle, longer times to market, continuous pressures on market share, early ends to life cycles due to jumbo referencing and patent challenges and increased costs of research.
Healthcare in Europe has changed, Wakeling says. We can no longer just sell to the doctor. In most of the major markets (Germany and the UK are prime examples) pharma needs to be influencing and engaging with practice managers, CEOs of healthcare trusts, financial directors of healthcare bodies and a variety of other stakeholders that vary greatly for each geographic area. Understanding how the healthcare networks are set-up and who influences who, has become essential.
How is pharma responding? There is talk, Wakeling reports, that SFE may be dead. But she says companies have simply turned to other names for their initiatives, such as commercial excellence, business excellence and customer excellence. What these terms mean varies by company, but generally, Wakeling says, it amounts to taking a holistic view of the customer that ensures marketing, sales, medical, human resources, and legal are all working together to produce a truly customer-centric strategy.
SFE isnt dead, but its definitely in need of some refurbishments, she says. Organizations are no longer product-focused theyre moving to models that are customer-focused in their structure, processes, systems and culture. As a result old metrics, models, training programs, competencies and systems which were based on coverage and frequency and share of voice will need a revamp or refurbishment.
A micromarketing approach
One revealing example from the conference on how SFE is evolving, Wakeling says, came from Simon Gineste, head of CRM and sales force for Novartis Spain, who presented a talk on micromarketing, a customer-centric approach to increase ROI.
Spains market, she says, is characterized by increased generic penetration and an influx of specialty products, coupled with highly regionalized healthcare policies and reimbursement lists. And this means customers differentiate on price, leaving innovative products to prove real value in order to compete.
In addition, Ginestes markets have seen strong shifts in customer profiles with more female and foreign doctors and increasing customer expectations of reps. Todays pharma targets in Spain demand partnerships with reps based on knowledge and mutual trust, Wakeling says, as well as messages and service that are relevant to their practices and that deliver value.
So Novartis Spain knew it must focus on differentiation and personalization. Ginestes group used behavioral segmentation as the basis for their commercial strategy and deployed field forces tailored to address different customer profiles. In addition, the marketing mix was customized by territory something the company calls micromarketing and Gineste terms a quantum leap in Novartis philosophy.
Micromarketing, Wakeling says, starts with the identification of opportunities, followed by action plans and objectives and finally tracking systems nothing markedly different from more conventional approaches. But the main objective is to decentralize decision making, bringing it closer to the customer. This empowers the FLM as a GM of his region, continues the regionalization process through action plans, optimizes customer orientation and improves resource allocation and ROI, she reports.
Although Wakeling says Gineste reported mixed results a clear pattern emerged that showed over time the ROI was there. Key learnings at Novartis include:
FLMs must maintain focus on customers and patients
The right balance between empowerment and inconsistency is difficult to find
Collaboration and alignment between marketing and sales has to be strengthened
Risks need to be supported by top management
It is a continuous process
KAM the answer to our dreams?
But talk of SFE is giving way to Key Account Management, with some companies even claiming to have found the answer without having actually defined the problem, Wakeling says. It begs the question, she says, whether KAM is the answer to everyones dreams?
The KAM theorists would argue that many pharma companies dont understand KAM at all and are trying to fit a new concept into an old model, she explains. What can be said is that KAM is a sensible solution for many pharma companies, but it needs to be looked at holistically and built into a larger, more customer-centric organization. Its one tool among many.
More enlightened companies, Wakeling says, also are looking at customer dissatisfaction because of the lack of value delivered by pharma through its old broadcast methods of marketing. She says value was certainly the buzz word of the conference, with Value Based Selling being a big focus, particularly in the keynote sessions, of where pharma is headed. VBS, she says, puts the customer prescriber and payer at the center of your strategy and tactics. Value added services and a clear understanding of customers wants and needs are absolute essentials, she says.
Peter Albeiz, head of primary care for Pfizer Germany, had an interesting presentation at the conference, Wakeling says, on moving from share of voice to share of care, a value-based customer engagement approach focused on relationships, product services, medical knowledge and care products. Because of the complex customer environment for Pfizer Germany, it was essential to establish an integrated customer management system and structure based on identification, analysis, and management of customer networks, Wakeling says.
Albeiz reported that the group was able to create a comprehensive understanding of types, structures and needs of local customer networks, identify levers, build a value proposition and implement an integrated customer management approach to increase efficacy and efficiency. As a result, Wakeling says, Pfizer Germany saw a significant increase in profitability, sales performance and overall market share. Sales per physician grew in all segments and the companys most important physicians now spend more time with its account managers.
But the company learned that the right structure and system is only part of the solution, Wakeling says. The right change management program is also critical for success. And Albeiz says assessment, evaluation of learning programs, training and course communication have all proved key to this programs successful outcomes.
Right channel, right message
Rather than shoveling every message through the sales force, companies are beginning to recognize the need to provide the right information in the right channel for individual customers. Closed Loop and multi-channel marketing are now broadly considered important tools in achieving more customer-centric approaches, Wakeling says.
The evolution in communication approaches can be likened to the changes in the music industry, Wakeling says. In traditional frequency models essentially the days of radio senders decided the content and it is pushed out, she says. Decisions were guided by management and the customer decided when to listen.
In its current state (which Wakeling likens to a jukebox), customers are offered a choice of content and offerings are refined based on aggregated results of reactions, resulting in ongoing improvements in message relevance. But in the future (the age of iTunes), she says, companies will have individual customer knowledge at hand, allowing offerings to be tailored to individuals or small segments. Observed actions will reveal preferences, effectiveness and the value sought.
Mercks closed loop marketing approach, Wakeling says, is a good example of the current state of efforts to be more customer-centric. The companys representatives use tablet PC-based sales materials that support discussion targeted to a physicians segment. Statistics on messages delivered are captured and documented in the SFA, she says and this interaction data is combined with syndicated data and analyzed by marketing to determine effectiveness and further segmentation of audiences. Then, Wakeling reports, new campaigns are created and messages updated based on insights derived and are then distributed remotely as often as desired.
Putting the cart before the horse
Wakeling says theres no doubt that value was the prime focus of the conference.
Value based selling has bubbled up because customers are fed up with the low value and repetitive nature of traditional pharma promotion, Wakeling says. Customers are increasingly refusing to pay unless value has been demonstrated.
But Wakeling says conference participants cautioned strongly that pharma is quite good at coming up with solutions before fully diagnosing a problem. I mention this last, because I believe pharma has jumped at new models without first understanding the root causes, she says. VBS is being bantered around just as SFE was 10 years ago. The responsibility falls squarely on pharma. Its no good having great knowledge of customer networks and influence pathways and building your account-based selling approach around this, if you cannot provide a compelling value proposition.
One senior executive present at the event believes that as customer and payer organizations evolve, so too must pharma to capture customer needs and anticipate future moves. And that can be done, by moving closer to the customer with value-based selling and partnerships. Whats key is to "understand customers and their networks and influences. Once you know this, you can adapt and align your organization accordingly."
Wakeling says customer facing strategies need to be built on a thorough understanding of the market. Account based selling, she says, is a natural part of pharmas evolution and she believes the sales force will be part of the solution.
Pharma companies need to improve their value proposition in terms of the quality of people interacting with customers, the services they provide and by taking an unbiased role in attempting to improve patient outcomes, she says. HTA will continue to play a role in rationing and prioritizing healthcare spend, but without access and reimbursement, theres certainly no need for a marketing strategy or sales force. But as sales force sizes continue to decrease due to economic conditions, companies will be forced to take a more customer-centric approach.