Pharma Sales Force is facing increasing challenges like tighter regulatory constraints, pressure to find more efficient communication channels, restricted physician access etc.
Solutions to Pharma Sales Force challenges
But these challenges are not unique to the pharmaceutical industry. Companies in various other sectors have been confronted with similar challenges, and some of them have addressed them successfully. Many other industries have been forced to try and reinvent themselves in the face of challenges in their business environment. It happened with the Computer & IT, Automobile, Airline and many other sectors. One thing has become clear. Companies that are willing to adapt their strategies and follow that with excellent execution have had long term success.
By carrying out a similar study in a different industry than the pharmaceutical context, it would be possible to find out similarities and differences among industries when it comes answering the field challenges of the sales force. So let us find out how Pharmaceutical sales force can learn & overcome similar challenges faced by companies from other industries.
Challenge 1: Overcoming loss of product differentiation
What is Product differentiation? It is the modification of a product to make it more attractive to the target market by differentiating it from competitorsʹ products.
It is a common practice in Pharma where different representatives from the same company visit primary care physicians to promote different products. This approach makes it difficult to make a holistic profile of physician needs and respond to them. Many products fail on market because they are busy presenting a lot of messages about a great product than delivering one great message about an average product.
Learning from Xerox; Industry: Computers, Office Equipment
back in 1980, a lot of Xerox customers received visits from up to 5 different Xerox sales representatives, each promoting a different product line. How Xerox overcome this? By shifting its product-based sales force structure in favor of a market segment-based structure.
It began segmenting customers by size such as large, SMB and other characteristics . There were 2 special segments also called distributors and “institutional” customers. The new sales force structure allowed Xerox’s sales representatives work with in with in their designated segment, and geographic areas. Reps could better understand their customers, offer tailor-made solution to customer needs and, thereby, compensate for the loss of product differentiation. During 1990, Xerox created sub-segments to the largest business segments into several industry segments such as graphics & media, financial, manufacturing etc, and restructured the sales force by industry segments. Thus to answer loss of product differentiation by restructuring the sales force resulted in a much improved market position for Xerox.
Challenge 2: Tailoring Communication channels to differences in customer needs
For Pharma companies, sales force is a very effective communication channel which allows face-to-face, interactive communication with physicians for a considerable amount of information. But, with decreasing face-time with Doctors & considering the high cost of a sales rep’s call; do all physicians need such extensive information that can be only be provided in an in-person face-to-face visit? How to better serve physicians as per their communication preferences?
Learning from Charles Schwab; Industry: Stock Market & Financial services
Similar to the Pharma industry, traditional stock market investment firms such as Merrill Lynch & Morgan Stanley provided its customers with sophisticated advice, often based on proprietary research by it’s highly-paid professional financial advisers. But, with Internet & other disruptive forms of media; the free availability of stock market information enabled motivated investors to form their own investment preferences.
Charles Schwab, another such brokerage firm – came up with a low-price “discount brokerage” model targeting these “self-directed” investors, who preferred to manage their investments on their own. The company also defined 2 other segments called “validators” – people who wanted to manage their own portfolios but required some level of consultation; and “delegators” who wanted fully managed portfolio for them. Charles Schwab was quick to design communication channels that responded to the different needs of these segments by eliminating the need for highly-paid advisers & offering better value proposition to its customers.
Challenge 3: Targeting new types of customers
Pharmaceutical sales promotion activity has traditionally targeted physicians. However, recently in many countries – the influence of non-physician customers such as patients, pharmacists and payers are rising steadily. If Pharma companies want to maintain & boost market share – it needs to allocate more promotional efforts towards these new types of customers.
Learning from FedEx; Industry: Air Freight & Logistics
One of the major decision by FedEx was to target non-traditional customers. Earlier in most organizations a clerk aka mail-room supervisor, or dispatcher used to make uninformed shipping decisions resulting in shipment which arrived late or in poor condition. Although FedEx delivered 93% of packages the next business day compared to 42% by it’s best competitor. To overcome this FedEx used TV and business magazine campaigns targeted at executives & their assistants informing about the risk of late arrival of shipments. Thus FedEx empowered the “targeted executives” to increase their influence over shipping decisions which resulted in better sales and market share for FedEx.
Challenge 4: Overcoming regulatory constraints
Pharmaceutical promotional campaigns are faced with a growing number of constraints. The constraint arise from Law makers, National Policy regulators, NPPP of India and other company-specific promotion codes. How pharma companies can come up with novel promotion channels that are effective & compliant with laws of the land?
Learning from Tobacco Industry
The tobacco industry is subject to many constraints on promotional practices for decades. Every time regulators impose a constraint, the industry has adapted. The industry has invented creative promotional methods with every regulatory constraint. The ban on TV ads led Tobacco makers to sponsor sporting events; until sports sponsorship was banned. Other promotional methods invented by the industry include promotion of non-tobacco based products with the same brand name. The point is to be creative, in-genuine and have an open mind in search for solutions that meet regulatory constraints yet prove profitable for Pharma companies.
Challenge 5: New channels to increase access to Physicians
Physicians are increasingly reluctant to visits by pharmaceutical sales representatives. Some even refuse to see pharmaceutical sales representatives. At the same time pharmaceutical sales representatives also segment and filter physicians whom they want to visit such as Physicians who may not prescribe enough to be worth a visit or they might live in remote area.
Learning from Avon; Industry: Cosmetic & Beauty
Avon, which sold beauty products directly to consumers in one-to-one meetings in the consumer’s home, also was confronted with problems of consumer access. As more and more women entered the workforce, they were not at home during the day and, therefore,
Avon representatives were not available to meet women(it’s target customer) as many will be working at their day job. Most of reps were selling Avon products as their second job(part-time). Realizing this, the company encouraged them to sell Avon products at their full-time work place. By the year 1998, about 28% of sales came from in-work sales for Avon. By early 20’s, Avon decided to add an online channel to its traditional face-to-face channel. Women now have the choice of dealing with Avon reps directly or to buy directly from Avon’s online store. Avon’s sales model effectively solve the problems of consumer access & generate more revenue for the company.
Challenge 6: Consider Cost of communication channels to Customer value
Physicians differ in their value to pharma companies; most valued physicians are often handled by a special sales team through KAM(Key Account Management). The indicators of such physician value include actual vs potential revenue generation, influence on peers(e.g. key opinion leadership) and knowledge (e.g. advisory board members or dean at a Medical University). Pharma sales force use a variety of communication channels which differ in their cost, such as face-to-face sales rep visits are more expensive than other channels like phone, online portal and e-mail. Therefore, Pharma sales force should restrict costlier communication channel(such as face to face meetings) to customers with more value.
Learning from Dell; Industry: Computer Technology
In US, Dell assigned its customers to 9 different segments varying in their value to Dell. Customers in the highest-value segment could connect to Dell through all conceivable channels such as field sales teams, telephone sales personnel, sales managers & tech support. Whereas Dell’s Individual consumers, on the other extreme, could reach Dell only via phone & Dell.com site. For the Segments in between these 2 extremes; a channel mix was planned in which the availability of costly channels such as field salespeople increased with the value of that particular segment.
Learning from other industries simple & sensible ways can help you innovate, deliver compelling value and improve your top- and bottom-line results. It’s all about finding inspiration in the brilliance of other industries. Successful Pharma companies broaden their thinking, learn from other industries & where appropriate, adopt relevant ‘best practice’, including processes & technological solutions that have been successfully employed by those industries.
We’re looking for more examples where industries/organizations have triggered and created environments that made the solving real world problems easier, please comment