SFE metrics more important than ever in a tough market
Hans Nagl, a scheduled speaker at eyeforpharmas upcoming Sales Force Effectiveness Europe 2009 summit March 3-5, focuses on SFE metrics for Shire. We had a chance recently to talk with Nagl about how the current economy and changing pharma landscape is impacting program effectiveness measures.
eyeforpharma: How might current economic conditions affect promotional programs?
Nagl: In our current dire economic situation, everybody is trying to reduce costs and save as much as they can. With large numbers of people being laid off, many are losing their ability to purchase medications.
More than ever, that means we really need to know who were talking to - who we are targeting. We cannot just produce from big promotional programs that half the time dont even reach relevant people that can generate a positive return on investment. We need to streamline our programs even more and make them better, more effective, more efficient and thats where promotional response analytics come into play.
eyeforpharma: How do we go about gaining these efficiencies in our programs?
Nagl: Were spending time trying to find out how well a certain promotional program performed in terms of the financial aspects ROI and sensitivity. But ROI is usually just one point in time, and at that single moment no one knows whether it would be good to spend more money, stick to the campaign or even spend less money. So thats where the whole promotional sensitivity approach comes into the game and allows us to make decisions in a more rational, rather than emotional way.
In the past, in my experience, many companies based their decisions on experience decisions that involve many millions of dollars and took a chance they could be flat out wrong. The landscape is changing and although experience is relevant, you need something more to make a better educated, more rational decision. So my question is if you spend say $25 million in a promotional campaign and for a large pharma company thats not much then wouldnt it be helpful to do a $100K study that would give you an estimate of what your ROI might be in order to make a rational decision? From what Ive seen, our industry has very few professionals that are actually able to deal with these particular questions.
eyeforpharma: Are the necessary skills resident in the industry?
Nagl: We know a lot about segmentation research, attitudinal research, qualitative research, traditional market research ideas and forecasting techniques, but theres been very little or shallow interest in the promotional response area. If you want to go to the market and find people who can do this, its usually very hard and its especially difficult to find companies or individuals who can do this kind of analytics on a global basis. You find companies who can help you do this in the US and thats it. But if you want to look at this from a portfolio approach, it all falls apart. There are only three or four companies that can really do this.
And this is where conferences like eyeforpharmas become so important. The pharma audience actually has the chance to engage with these people and learn these technologies not only the technical information, but what it means and how this information has been derived and can be managed and put to work. Thats an entirely different thing.
In my experience, I can come up with some great estimates based on some calculation, but when I go to my sales department, they say they cant implement it. So the people in this area must be practitioners but also technically savvy in these kinds of economic techniques, and thats really a challenge. Weve been trying to hire people at Shire who are both statisticians and practitioners, and it takes us months to find someone to fit the bill. We either find statisticians with great technical knowledge but that cant go in front of leadership and put what they just analyzed into simple terms, or we find people whove managed these types of things but have no clue how to really do it and engage in an in-depth discussion with a vendor or research person.
Finding the right combination is really difficult. I would even challenge academia when they produce MBAs in this area to have a good deal of class work incorporated into their curricula to that includes these kinds of econometrics and techniques so that people coming to industry actually know that this is available.
The time is really right for that in pharma and elsewhere, too. Everybody wants to streamline. Nobody wants to waste any money at this stage. And this is when these kinds of things become even more important. Past experience is helpful, but not to a large degree. It certainly helps you gauge where something could go, but it cant be the sole driver. Even vendors in the market are experienced-based. And that means there are a lot of assumptions built in. Theyre not really objective studies and thats mostly because companies go out looking for quick answers and dont let the experts do their jobs right. Its not really about quantitative answers.
eyeforpharma: How could such approaches change the path forward for pharmas?
Nagl: With so many layoffs in the sales force, you cant help but think that the promotional response work is all about mitigating risk. If companies would have done a thorough job and looked at the long-term implication of their portfolios and thought more about how many sales reps they really needed in the future even two years out they might have seen this coming.
To learn more about measuring the effectiveness of promotional programs, be sure to hear Nagls talk at eyeforpharmas upcoming Sales Force Effectiveness Europe 2009 summit March 3-5 in Barcelona, Spain. For more information or to register, please visit www.sfeeurope.com.