There’s never been a greater need to impress customers and make them understand the value pharmaceutical companies offer. Following on from his article on the concept of mass customisation, Apodi’s Tony Swift discusses how this theory can also be applied to two customer segments: the patient and the GP.

With the reduced number of blockbuster products entering the market, many sales and marketing departments are tasked with gaining market share for products and services that may have similar characteristics to competitor products. These departments are skilled at identifying traditional routes to market with the result that the promotional strategies deployed are often quite similar from one company to the next. The only real differentiator may be how much budget each company is willing to allocate to support respective products.

However, some companies are starting to implement mass customisation strategies, because as Jack Welch, former CEO of General Electric stated: “We have only two sources of competitive advantage: 1) The ability to learn more about our customers faster than the competition, and 2) The ability to turn that learning into action faster than the competition”. These companies are focusing on identifying what value means to each individual customer, collating that information effectively and delivering the value in an efficient and economic way.

The patient

Traditionally, pharmaceutical companies have focused on engaging with GPs and other payer stakeholders rather than on building relationships with the end user – the patient. However, companies are realising that engaging with patients can lead to improved adherence results, better compliance and more appropriate use of their product. The attempts to engage with patients vary in levels of sophistication. At a basic level, companies are investing in digital IT platforms where websites attempt to inform patients about the therapy area and the products available. These sites might also attempt to improve adherence through reminder systems such as emails and texts to encourage compliance.

More sophisticated solutions now aim to identify key characteristics of patients and their behaviour and to customise the offering to them. For example, by identifying why a particular type of patient fails to adhere, the offering can be customised to that patient. By having a clear understanding of why people fail to comply, a company can then identify groups of patients whose reasons for non-compliance are very similar – i.e. one group responds better to online health monitoring, another to reminder systems, another to better education etc. As a result, each individual patient is allocated to a group and the adherence offering is then customised to each group.

Successful implementation of adherence programmes which include customised solutions to patients is still quite rare. The reasons for this may differ. However, I believe it all starts with the product-centred cultures that are prevalent in many companies. Historically, companies have been focussed on winning market share and new customers. Whilst this, of course, still remains important, many companies now have to focus on customer retention, customer loyalty and customer satisfaction. Where this strategy is in its infancy, many companies look to IT for salvation – if only it were that simple! Customer Relationship Management (CRM) is more than deploying similar marketing techniques and new information technology. It needs new skills, systems, processes, behaviours – in fact, a CHANGE IN CULTURE. This can only be driven by the leadership of the business once it has decided that CRM and mass customisation are a strategic imperative.

This new strategy, if executed effectively, can lead to a range of new tactical initiatives in the area of patient adherence, such as improved technology, clinician-based call centres, education programmes, patient acquisition programmes, patient service programmes and so on. With the appropriate systems and processes, these initiatives can be developed to provide real customised value to patients.

The GP

Because pharmaceutical companies have been engaging with GPs for many years, mass customisation programmes aimed at GPs rather than patients should be easier to deliver. They know where GPs are, often know them personally and still have access to many – although the ability to engage is declining quickly.
Currently, however, successful customisation programmes aimed at GPs are few and far between. The reasons are similar to those above and result from the product-centred nature of most pharmaceutical companies. This product-centred approach can impact on the daily life of GPs in numerous ways, including:

• The traditional detail deployed by many sales representatives when visiting GPs.
• The practices, processes and systems that define ‘sales excellence’ in the industry.

An example of this is a detailed follow up I reviewed recently for a company. This was an extremely professional piece of work that identified the impact of the visits of a sales force on GPs. Multiple questions were asked about the ability of the representative to convey the product’s characteristics and benefits – and from this point of view the exercise was worthwhile.

However, there were few questions based around what value each visit had created for individual GPs. The assessment was almost solely based on the product and what was important to the company, rather than what value could be created for the customer both now and in the future.

For companies wishing to deploy VALUE-BASED MASS CUSTOMISATION, the following key initial steps could prove useful. These steps would run alongside more product-focused activities, not replace them.

1. Build a structure based on Customer Account Managers driving key messages and value to targeted healthcare professionals.
2. Develop a segmentation strategy for identifying segments of GPs based on value characteristics.
3. In each interaction with GPs, identify what value characteristics are important and allocate to a segment – commit to developing a mutual LEARNING RELATIONSHIP where knowledge of the therapy area, product and patient outcomes are paramount.
4. Access IT systems where the value identified can be saved and distributed to key management and marketing professionals – some existing CRM systems can be customised to make this happen.
5. Develop value solutions that can be quickly deployed to individual GPs – these can include additional services, product support, access to Key Opinion Leaders, clinician staff training, and services that improve the patient experience.

The role of IT

IT has a vital role in the development of value-based mass customisation strategies. I recently spoke to an expert in the industry, Charles Roots of Actis Sales Technologies, who explained that:

• Successful implementation of CRM projects needs input from senior management, IT departments and marketing departments. Technology implementation must be aligned with the business strategy and, in the area of mass customisation, with the whole initiative of providing value to customers one at a time. If only one of the above parties is included in the implementation process, the strategic benefits that could be obtained often fail to materialise
• Some organisations believe that installing technology is the determining step in the drive to a more customer and value-focused organisation. However, it is clear that truly successful companies understand that the process begins with a strategy to transform the company from a traditional selling organisation to an organisation where delivering value and developing learning relationships comes first. In these companies, IT becomes a very powerful enabler of business strategy.

Conclusion

Many commentators have noted that the pharmaceutical industry is at a crossroads. With fewer blockbusters, governments facing huge financial challenges and health services looking for more value for money from all suppliers, times are hard. This is causing difficulties in the marketplace and many people have lost jobs in the resulting turmoil. Company leaders are under pressure to maintain and increase profitability and restructuring is increasingly common.

And yet comparatively, healthcare budgets are being protected and there has never been a greater need for a positive contribution from the pharmaceutical industry. Despite the distrust that has arisen between the industry and the NHS, enlightened leaders from both parties understand how a partnership between the two is of critical importance.

Whilst researching for this series of articles, it has become clear to me that this partnership can only prosper if the industry is willing to, and be allowed to, engage with the NHS in a positive and economically viable way. I believe pharmaceutical companies should play their part by focusing on delivering real value to all key stakeholders, including patients, GPs and other payer stakeholders. That is not to say this is absent in the industry, but there is no doubt that more can be done.

For those companies embarking on such a journey, the impact on customers (NHS and patients) could be dramatic. But it will also benefit employees of such companies. The vast majority of people want to do something worthwhile and being able to see how their work creates value for the customer and improves patient outcomes is just about as rewarding as it gets.

Tony Swift is the Managing Director of Apodi. He may be reached on tony.swift@apodi.co.uk.

Charles Roots is the Managing Director of Actis Sales Technologies. He may be reached on charles.roots@actisst.com.

The switch to Key Account Management is one more companies are introducing to tackle current challenges. Apodi’s Tony Swift highlights the principles of effective execution and making a strategy work for a smooth transition.

More and more companies are now addressing the changing healthcare market by transitioning the sales process from one which primarily involves representatives engaging with healthcare practitioners on a ‘one-to-one’ basis, to the establishment of Key Account Management (KAM) teams.

The rationale for this change is irrefutable. Access to GPs is increasingly difficult and the ‘customer’ now represents a series of more complex accounts with numerous stakeholders and influencers. Furthermore, decision making is both at a national and regional level and there is now a greater need than ever to focus on local healthcare economy needs and requirements.

As a result, pharmaceutical companies have established, or are in the process of doing so, KAM teams in which individuals have increasing responsibility and autonomy in addressing the needs of their customers at a local level. Some pharmaceutical companies have even taken the model further and given team members, or a small collection of them in a specific locality, P&L responsibility – essentially establishing micro business units within the team itself.

 

A different approach

Some years ago it could have been argued that any company transitioning to the KAM model was differentiating itself from the competition. This argument is much more difficult today because most pharmaceutical companies have moved, or are moving this way – in short, almost everybody’s doing it.

However, there is still a key source of competitive advantage in this environment – and that is to actually make the new model succeed.

Our research, and the feedback we have received from companies trying to adopt the new model, is that the execution process is much more difficult than originally anticipated. The type of feedback we receive often includes the following observations:

• Account managers do not appear to be acting in any materially different way than the sales representatives of the past
• They are adopting the new model at vastly different rates with a small number leading the way and the rest struggling to come to terms with the new strategy
• The move to more local autonomy is creating confusion about the role of the centre and its interaction with the decentralised function.

 

Difficulty of execution

So why is it that so many companies are finding the execution process more difficult than anticipated? The primary reason is that there is often an underestimation of the scale of the organisational change required.

For instance, many sales functions in pharmaceutical companies have historically been based on a traditional command and control structure. Here, the sales management instructed sales representatives on which HCPs to target, how many times they should be called on and exactly what to say during any meeting with them.

Within the new model however, many of these individuals are now faced with adapting to a new environment where decentralisation, decision making, autonomy and P&L accountability are now among the order of the day. Given the above, managements’ task of transitioning the organisation from the old to the new model requires considerable skill, focus and expertise.

 

A decentralised approach

Many management commentators argue that decentralisation is a panacea for all ills. If executed effectively, in an appropriate environment, this structure can deliver enormous benefits to an organisation. However, the move towards decentralisation often creates a number of serious problems which, if not addressed directly and quickly, will significantly impact on performance.

These problems are as follows:

A lack of expertise: a decentralised structure almost always requires an increase in expertise in the key roles within the structure. For example, increased knowledge will be required by employees AND management to solve problems, address more complex customers and, in effect, run businesses – particularly if P&L account responsibility is part of the role.

Inertia: many employees enjoy going to work in an environment where they understand exactly what the day will bring; the common challenges they always face and, in exceptional circumstances, being able to refer any unusual problems to their line manager. In a new environment where their decision making authority is increased, many employees will be reluctant to do things differently and may continue behaving much as before.

Lack of responsibility: the new environment is a scary prospect for some people. The last thing they want is more responsibility and a fear of failure and an inability to work in the new way paralyses them – again leading to ineffective execution.

At Apodi we have looked at specific pharmaceutical companies that are struggling with the implementation of KAM teams and researched the reasons for their difficulties. In every single example, one or more of the problems outlined above was prevalent – and in most cases all three problems coexisted together.

In fact, some of our own executives have reported their own first-hand experiences of working with companies in which the almost evangelical zeal and enthusiasm of top management continued unabated whilst chaos reigned and they failed to achieve an effective transition.

 

The way forward

As we have seen, the execution process can be difficult. And because of this, it is critical that a clear procedure for managing an effective transition is implemented. This process needs to address the following:

1. Identify clearly the strategic intent of the company, including the projected benefits of changing the model and how these are to be measured

2. Given the strategy noted above, clearly identify the role of the centre and the role of the decentralised units and how these might evolve over time. In our view, companies are often too ambitious in managing the transfer of responsibilities from the centre to the divisions or KAMs. Clear standard operating procedures need to be driven from the centre in the early stages and KAMs need to understand the rules that they are expected to work to. Think carefully about giving newly formed KAM teams P&L account responsibility. It may be better to transition to this over time, and in some cases, not even to go this far

3. Identify very clearly the roles and responsibilities of management and KAMs at all stages in the change process

4. Given the roles identified in the new structure, carefully recruit the appropriate personnel. Implement a training and development programme focussed on areas such as the role of Key Account Management, the implementation of a complex sale, general business disciplines and other skills

5. Management need to quickly identify any KAM team member who cannot make the leap to the new world of working and deal with this appropriately

6. Instil best practices across the whole KAM team by establishing effective coordination and information sharing processes

7. Establish effective incentives to drive the performance required

8. Put in place appropriate controls, feedback, learning and corrective action processes to improve performance. Key to this is the management team that drives KAM performance. This team needs to be highly experienced and knowledgeable about the requirements of KAM teams and how to manage a change process.

 

Leading the way

As ever, the role of the leader is absolutely critical in driving through the changes to address the needs of the new healthcare economy. Whilst the development of a sound strategy is critical, it is also the relatively easy part of the process. In every pharma magazine, nearly all consultants and most competitors will support the notion of moving towards a KAM driven business.

However, it is the effective execution of this transition that the leader should focus on. They will also invariably experience many of the challenges that are common to such change programmes, such as internal politics, resistance to the new way of operating, lack of appropriate skills within the team and so forth.

It is because of this that a leader needs to draw on commonsense business disciplines to be successful. It is also crucial that the immediate management team are able to do the same. Therefore, before embarking on the process, it is important to make sure that the management team is capable and ready to execute change.

As I noted at the beginning of this article, many companies are implementing similar strategies. It is therefore logical to assume that, everything else being equal, it is the company that has the management capabilities to execute these changes most effectively that will gain a competitive advantage over its competitors.

 

Tony Swift is the Managing Director of Apodi. He may be reached on tony.swift@apodi.co.uk.