By Dr. Andrée K Bates, June 2010
We all know that today’s Pharmaceutical marketplace is extremely competitive. Not only are there significant budgets at stake, but the environment around big Pharma is also becoming increasingly hostile from multiple viewpoints: patients, physicians, regulatory agencies, reimbursement, as well as Branded and Generic competitors. Sales Managers must stay tuned into what Sales Force activities are actually encouraging prescribing decisions among various physician segments, as well as monitor how their Reps (and competitors) are performing in these areas.
Efficiency versus Effectiveness
As we’ve shown, in the past 5 years, the number of Sales Reps has grown by 85% and yet the productivity has declined by 23%. Something, somewhere, is not adding up. It is vital that Sales Managers start to get to the bottom of this issue and develop and implement a sales strategy that has measurable Return On Investment. Current metrics are more focused on efficiencies rather than effectiveness. Finding a better tool to measure financial impact is an imperative for this very significant budget allocation.
Let’s examine this distinction in more detail:
- Sales efficiencies include things such as procedures, calls per day, minutes per call, cost per detail, cost per minutes, and so on.
- Sales effectiveness is focused on productivity, looking at the impact of behaviors on prescribing, impact of each interaction, content requirements of interactions for improved financial return, and so on.
There is a very big difference in these two approaches, and this difference seems to be the heart of the Pharmaceutical productivity problem. While the Industry has described its metrics and analytics as effectiveness, it is actually focusing on efficiencies. The direction from here is clear: companies need to refocus on effectiveness. They must measure actual effectiveness instead of efficiency to ensure they are delivering the right messages to the right target audiences, with the appropriate influencing behaviors.
Targeting
Better metrics can lead directly to better performance and productivity. By focusing on effectiveness rather than efficiency, Reps are encouraged to target their efforts more, leading to more appropriate messaging and more relevant marketing. Physicians are much more likely to respond with prescriptions when the message is tailored to their needs, their practice, and their patients.
A case study will illustrate how better metrics improve targeting, Sales Force productivity, and company performance.
A market leading company located in Europe did not report or measure sales activity. They focused exclusively on sales results and paid no organized attention to sales behaviors driving those results. This left them at a strong disadvantage: although they were a market leader, they had no insight into how their Sales Reps and their marketing had pushed them to this spot. How could they effectively plan for the future when they had no idea how they got there?
A European CRM implementation across more than 15 countries provided the impetus to begin reporting and analyzing sales activities. They focused on call activity, as many Pharmaceutical companies do. Analysis of the first 6 months of reported call data confirmed an overall result common among these companies: frequency attainment on key customers was highly variable, and generally low. Statistics showed:
- Across the major markets, only 20-50% of customers were seen with the desired frequency
- Up to 30% of effort in some countries was on non-target customers
- As many as 30% of target customers were not visited at all in the most recent 6 month period
- Planned target calls – the sales call goals established for Sales Representatives - greatly exceeded the total call capacity of the Sales Force
Obviously, simple call metrics were severely limited. Quotas exceeded the realistic capacity for Sales Reps. Also, Reps were not effectively prepared for meeting the best prospects – they often misunderstood the criterion for targeting appropriate physicians.
This company considered several different ways of measuring Sales Force activity and eventually selected one that incorporated measures of efficiency (calls) along with effectiveness (the percent of customers seen in the desired prescription frequency range). They made concerted efforts to point the Reps in more realistic and effective directions, identifying the right customers to call.
The results were impressive. Over the next 6 months, the percent of customers seen with the desired frequency increased by 20% and in some markets, by almost 100%. More importantly, there was a clear correlation between the frequency gains and sales increases in the five major European markets. An estimated $15M in increased sales resulted from improved frequency performance.
Now important to consider was what happened after this. This company experienced some big wins in their first 6 months with better, more behavior-oriented metrics. This is crucial for reorganizing analysis procedures. Big wins on a small time-frame keep the company invested and encourage future change. That’s exactly what happened over the next 6 months. To build on their success, this company worked for longer-term change. They moved to improve their target lists, directing Reps towards relationships with new high prescribing potential customers. They phased out high frequency but low target physicians.
The result was actually a period of lower wins. During the time that new relationships were being developed, a temporary decline in sales took place. However, this was a necessary dip in order to build the foundation for future productivity increases.
This case study demonstrates the potent power of more effective metrics focused on targeting and sales behaviors. It also reveals an important point we’ll discuss further in later chapters: achieving and sustaining sales productivity.
Improvement is not easy. It requires excellent change management, continued focus and persistent effort from all levels of the sales organization.
Effectiveness Measurement: Moving Beyond ‘Recall’ and ‘Intent to Prescribe’
How does this change happen? Behaviors are key. There are core sales and marketing behaviors that correlate with sales performance. Behaviors that drive prescriptions in one type of therapy category aren’t necessarily going to be successful in another. In addition, behaviors that drive prescriptions in early life cycles aren’t necessarily going to be successful in mid or late life cycles. Finally, this will also be different for Primary Care Practitioners versus Specialists. Sales management needs to understand what sales and marketing behaviors are really influencing different types of doctors to prescribe one brand over another. The bottom line is they need to know what works and what doesn’t during sales calls.
Measurement of Sales Force behaviors has been limited to numbers of calls, building on the assumption that enough calls will yield sufficient prescriptions to drive the Pharma Company’s success. But this won’t do. To find out if a Rep is effective, the best way is to move beyond static call metrics and analyze physicians’ minds. Of course, much market research is devoted to uncovering whether the physician recalled a Pharmaceutical product message, whether the physician ‘intends to prescribe’, and what the physician thinks they think. All of this, while useful and interesting, is very superficial if we are trying to get to the core of the real influencers. Physicians do not necessarily know why they do what they do. Many factors come into play in the decision process – many they are not consciously aware of, but they are influencers. We need to know what is influencing them, even if they do not. What matters is finding out how a Rep can provide the most perceived value and influence the physicians’ prescribing decisions.
Although this is not a precise Science, there are tools that are accurate in assisting Sales Managers to do this task with a high degree of confidence. Eularis (www.eularis.com) has developed just such a tool – the 94.8 Sales Force Analytics Tool. This metrics system helps companies know how much their Sales Force is contributing to their brand growth and overall company growth, as well as identifies territories with the highest business potential. It also helps analyze what messages and what Rep behaviors have positive financial impact, and how these behaviors and messages should be time-allocated in a sales call. This tool collects vast quantities of data from physicians and then validates this data against prescribing to uncover real, rather than perceived, influencers. Then, powerful analytics are applied that help Sales Managers identify what is needed and how to change for maximum sales growth.
This type of analytics is critical to ensuring that Sales Force efforts actually increase sales and market share, and demonstrating Sales Force Return On Investment. By limiting metrics to those that measure only call volume, calls per day and market share, companies are limiting the provable results and return they will achieve with their Sales Forces.
Sales Force Resource Optimization
Real Sales Force optimization will only be realized when companies successfully integrate efficiencies and effectiveness to provide an approach that improves strategic planning, as well as Sales Force productivity and measurable financial return on individual activities. To really succeed, there needs to be more focus on ensuring the right message (the one that influences prescribing) gets to the right doctor (high category volume and high potential) with the right behaviors (the ones that influence prescribing) at the right time, instead of aiming for a set number of calls per day.
A simple targeting effectiveness metric can follow along the lines of the metrics used by the company in the case study instituted, comparing a Sales Force’s actual market value coverage to the best attainable market coverage, given a particular reach of physicians. In this example, dropping lower-value doctors from the customer target list and adding higher potential doctors would significantly improve market coverage and incremental sales. Now, this is a huge shift from simple call-based metrics. As we mentioned, a major reason why the Pharmaceutical Company is entrenched in call frequency metrics is their ease in use. However, their measurement ability is significantly limited. To truly optimize a Sales Force and ensure high productivity and sales, better metrics must be incorporated.
To get support for this shift, objective evidence-based analytics are needed so that the company understands the need for change. This evidence needs to be collected regularly to ensure approaches are adapted for the changing environment as well.
By using the Eularis Sales Force 94.8 optimization service, Sales Managers, for example, can easily identify their Return On Investment, where it stops and where it starts to plateau. Eularis 94.8 Analytics uncovers this information by collecting current data from physicians on what they think and then validating this with prescribing, to uncover which Sales Force behaviors truly drive them to prescribe a company’s product. Sales and market share, as well as spend, can be applied to this data for unique insights into what the real influencers are, what Reps need to do to tap into this, and what financial return can be gained.
This kind of analysis can show what specific Rep behaviors lead physicians to prescribe more of that Rep’s product, and which ones have a negative impact on prescribing. In addition, this type of analysis uncovers areas of individual strength and weakness and shows how the Reps compare with their competition. This insight can improve Sales Rep performance by pinpointing areas where training is needed and behaviors need to be modified.
An optimized Sales Force, then, will drive company productivity. Reps will be pushed to succeed by knowing the areas in which they excel and those in which they need to work. They’ll have support with appropriate goals and physician targets. They’ll contribute directly to company sales by increasing product use. And they’ll justify their own existence with metrics that show sales management and upper echelon management their significant Return On Investment.