How Much Market Share Are Your Sales Force Contributing to Your Bottom Line and Can This Be Improved?
With the ever increasing pressure to ensure maximum return on investment, sales force effectiveness is becoming a high priority area. Sales force represents the largest spend in sales and marketing and is only second to R&D within the whole of a company, and yet, similar to R&D, study after study show that the returns gained from this spend are not particularly strong. Research by Novartis showed that sales productivity is declining rapidly. Novartis presented results highlighting the fact that despite the fact that the top 40 pharmaceutical companies in the US doubled their investment in sales force over the past 5 years, the prescriptions only rose by 15% in the corresponding time period. Research by IBM found a 22% drop in pharmaceutical sales force return since 1996! IMS Health reported a similar figure i.e. that there was a 23% decrease in productivity per detail in 2005 compared with 2004 (measured as dollar growth/detail for all products recording over 10,000 details in the US each year) – even excluding the impact of the Vioxx and Bextra withdrawals . Despite this awareness, few have been brave enough to change the situation unless competitors do.
In the good old blockbuster days, when there were fewer sales reps on the road, our sale forces were ‘detail men’ who enjoyed lengthy and in-depth discussions with their target physicians about their drugs. This led to a ‘more is better’ approach and more sales force was deployed. However, this clearly doesn’t work in todays environment. The pharmaceutical industry as a whole is well aware that although 70-80% of promotional investment is spent directly on sales force, the environmental changes mean that this investment is not paying back as much as it used to. The main reasons for this seem quite clear.
• There has been a dramatic increase in sales reps since 1997 which led to younger, less experienced sales forces (average age of a rep in the US is currently 26 years of age).
• Increases in targeting technologies (in the US – not Europe!) means that individual physicians who have strong market volume potential are receiving so many detail calls they are saturated and unable to find time for quality calls with the reps. Doctors report feeling inundated by sales force (a by product of the sales force arms race) resulting in the average time spent with physicians decreasing (and the physicians do not see this decrease in time with reps as a problem).
• Related to this, the number of personal details received by office based US physicians in the US declined by 13% in 2005 following seven years of increases according to data released by IMS. IMS reported that this was seen across the majority of the major pharmaceutical companies although it was not entirely due to physicians closing their doors.
• Common methods of measuring sale force effectiveness revolve around frequency of calls made by sales reps to target physicians, with the underlying assumption that higher numbers of sales calls will equate with greater product sales. Such data is relatively easy to collect and can be measured directly against sales and market share data. A sales rep associated with a particular territory with falling sales volumes might then be encourage to work harder (i.e. increase the frequency of sales calls) to drive the numbers back up. Unfortunately this is not effectiveness but efficiency. By having this as a metric, sales reps feel compelled to see as many doctors as they can to reach their call targets but the calls are less productive and often to the wrong doctors. Focus on call frequency could encourage inappropriate or non-optimal behaviors in sales staff. For instance, irrelevant calls to non-target physicians or non-prescribing staff just to make up call numbers. By focusing on this metric, reps are encouraged to make as many calls a day as they can to meet their targets so a rep may naturally focus their call plan on accessibility rather than value. The fact that IMS reported that in Europe, in the decile analyses they perform, the often find little difference in the call levels achieved by high decile doctors and low decile doctors supports this theory. This means reps will spend time with doctors that are easy to see, rather than ones that will actually provide value and generate sales. The result is the calls does not seem effective and yet the calls per day target is being met or exceeded. Would it not be far better to measure the percent of high volume, high decile target doctors seen? This highlights a key area for improvement, but also shows that the call rate per day in itself is not the best metric to use as an absolute.
How to Improve the Bottom Line of Sales Force Efforts
To improve sales force performance, sales and marketing directors need a more in-depth understanding of the complex and dynamic interplay among the various elements and activities involving the sales force. They then need a way to translate these understandings to strategies that flow seamlessly into sales strategies and sales tactics.
Traditional measures of sales force activity such as share of voice, physician reach and call frequency are not enough any more and are leading to declines in productivity and losses in financial return on spend in this area.
There are better approaches available now. Sales force analytics provides a complete overview of how the sales team is performing, in addition to the reasons underlying this and what needs to be changed. It diagnoses, tests, and validates what is required to achieve sales and marketing excellence by providing an accurate assessment of the dynamics involved – at the point of time in which the analysis is being carried out – not historically. By solely looking at historical data an incomplete picture emerges, and it will undoubtedly be less than accurate in a changing environment. By doing appropriate sales force analytics regularly (every six months), sales directors can better monitor performance as well as target group influencers more effectively and align sales metrics in accordance with what is having the most impact to achieve brand objectives. This approach is also used to examine regional differences in sales force quality and impact which can then be addressed.
Benefits of Using 94.8 Analytics for Your Sales Force Analysis
94.8 analytics provides a solution to these issues that has the highest degree of accuracy found in the market today. 94.8 analytics is a sophisticated system that identifies the elements of the sales force activity currently (not historically) driving market performance, then calculates optimal promotional mix and budget allocation and tests the results to validate approach. From this you will:
• Identify opportunities to increase effectiveness
• Design the process to continuously track and improve effectiveness
• Maximize return on available sales data
• Assess current sales force effectiveness
• Identify opportunities to increase sales
• Identify the key factors that influence selling results
• Know where, when, how to spend your sales force budget to gain an edge
• Match sales force strategy to your brand and company's best economic returns & capabilities
• Change the process from one based on the past to a dynamic, forward-looking strategy
• Ensure that the analysis is part of a comprehensive cross-functional process
• Integrate into management systems to allow rapid response to internal and external change
• Give senior management the confidence to support a brand with the right sales force focus and resources
Case studies available upon request.
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