Targeting and segmentation within the changing UK customer base

In order to target the right customers, medical sales and marketing professionals need a dynamic approach to the market information.

OVER THE PAST 20 years, the concept of being able to target elected doctors who are more likely to give you trade has become prevalent in the pharmaceutical industry. Different data sets and different methods of analysing and profiling data have allowed ever more complex lists of target customers to be generated – each iteration further from logic as the sales person sees it, yet all scientifically valid.

But what is targeting in reality, and why do companies spend so much money undertaking these ever more complex exercises – and are they indeed relevant to today’s changing NHS? Let’s start by defining segmentation and targeting:

• Segmentation: The identification of key features in the customer base and the grouping of like members into common strategy groups.

• Targeting: The application of a promotional strategy to the identified groups from the segmentation analysis in order to achieve a marketing effect.

Segmenting the group of customers into discrete cohorts is not targeting. Targeting is the strategy that makes a cohort work for you, and relies on your ability to define a strategy that will maximise the potential for the cohort you have identified. As such, it is very realistic to have a multiple targeting strategy within a single customer base – though in the main, the UK pharma industry tends to simplify this to a single or dual strategy. This differs from more consumer-based strategies (eg in finance and publishing), where there may be true 1:1 marketing.

The adopter curve

Most targeting strategy is based on the premise of Rogers and Moore that different people accept or adopt an idea at different rates. ‘Adopter curves’ are usually segmented into five groupings: Innovators, Opinion leaders, Early majority, Late majority and Traditionalists (or Laggards). Where a person is on the adopter curve for your product proposition will determine the strategy you should use to convince them of its benefits. Over time they will naturally move along the curve, and so will come to need a different strategy. Most sales people see this as obvious and adopt it subconsciously as a matter of course. (See diagram)

However, a person’s position on this curve is dependent on the product you are talking about, their experiences and other environmental factors. Segmentation thus becomes very complex and three-dimensional, and the need for CRM becomes obvious. The pharmaceutical industry tries to simplify this complexity by combining segmentation cohorts using a series of ‘black box’ initiatives, so that most sales people are given one, two or three cohorts to focus on per cycle. Assuming the analysis is right, and ignoring environmental factors, targeting should have a positive effect on the sales proposition. The implementation of this usually takes the form ‘Focus on target and ignore non-target doctors’ – which given the complexity of the segmentation does appear to be illogical, though easier to manage.

Defining the segments is not enough. The ability to transfer the message will depend on the recipient’s ability to absorb that message, which is often ignored. Your strategy may be to focus on selected cohorts as defined by a complex 3-D analysis, but the recipient’s ability to respond will depend on whether (a) it is the first time they have heard the message (Level 1 on the Rainbow™ method); (b) they already have a little experience (Level 3 on Rainbow); or (c) they are well versed in the product and have lots of experience in its usage. In addition, their influencer network will have an impact beyond the confines of the segmentation model.

A good sales professional will instinctively recognise many of the customer traits necessary for the sale, and this underlines the value to an organisation of capable and experienced career sales people.

Access

Defining the segments and the targeting strategy is only part of the equation. If the sales person is going to gain access to the customer, accessibility is a very important issue. Currently (not allowing for some recent downsizing) there are over 14,000 sales representatives in the UK pharma industry. This equates to one representative for every 7 doctors. In primary care, the ratio is even lower: an average GP territory has around 200 sales representatives trying to visit around 110 practices, of which about 50 are usually target practices.

Up to a third of the practices in some parts of the UK will not see representatives – so the remaining practices see relatively high numbers of representatives, thus compounding the problem. Access to GPs has dropped by 25% in the last four years, yet the number of representatives has stayed roughly the same.

To make matters worse, Practice-based Commissioning means that a new approach needs to be taken in terms of the information needed and the methodology used to engage the NHS. Some companies, notably Takeda, have taken the bold step of totally refocusing their method of access to the NHS; others have high-level teams at work in PCTs, SHAs and higher levels.

Data sets

The use of new data set libraries such as NHIS (www.nhis.info), where much of the new NHS information resides, will support these steps. The more traditional data sets such as sales data need to be reassessed: with more than one company selling sales data, and each company processing the same data in different ways, various different pictures of the outcomes can be presented. This makes measuring the effectiveness of traditional targeting strategies very difficult, since the different data sets will give different measures of outcome.

The analysis of sales outcome against target doctor lists has not changed fundamentally in 10 years, and in many respects this is holding back companies from being creative. The NHS has changed, and continues to do so. Thus the measurement methods need to change too. Many other types of data are now available that, viewed holistically, can give the sales representative a very good picture of the mechanics of their territory – as long as they understand the source data and how it is processed. Transparency in data and data processing is the key to progress.

Reassessing the future

The age of the traditional representative is not over, however. The sales roles may change, but change is good. Given the incredible range of data available, the ability to move from the linear and 2-D targeting models of the 80s and 90s to 3-D models whereby all the influencer facets are considered, and where the sales representative is truly a business person, could at last be upon us. The future needs reassessing, but so does the now.