Commercial Excellence 2.0

Bart Janssens	Rahul Guha

The pharmaceutical selling model has been established for decades. Much has been done on improving the model and squeezing efficiency from the model using sales force effectiveness tools and IT-enabled solutions. The authors propose six tenets to Commercial Excellence 2.0 which will be elaborated in this three part article series. In brief, these six tenets are:

• Move beyond share of voice: Engage with the customer to drive value in his business and ensure the messages delivered are differentiated, relevant and absorbed
• Manage performance, not incentives: Understand the behaviour of the sales force segments and then customise incentives and coaching to address specific patterns
• Let the market drive marketing: Zero-base your marketing spend and then align your initiatives with where your brands are in the product lifecycle
• Integrate to differentiate: Align the commercial model across sales and marketing and close the loop effectively
• Middle managers manage a business: Equip Zonal / Regional managers with the right skills to manage a business vs. just managing sales
• Sharing is caring: Pockets of excellence exist, but best practice sharing is rarely institutionalized, getting teams to learn from each other is key.

In the first of our series, we focus on the sales model, essentially looking at how to change the value proposition of the sales force from share of voice to a business partner, as well as a deeper look at the selling model to understand what can be done to manage performance better.

Topic I: Moving beyond share of voice

The commercial model today is overwhelmingly skewed towards share of voice with the customer. As companies expand their sales forces [estimates indicate almost 100,000 reps have been added in the last five years], the cabin is increasingly getting crowded. However, the time allocated to MR’s hasn’t increased. We have observed that today, the time per detail has dropped to less than one to two minutes on average. In fact, for the busier doctor set, this often is the outer limit of the time you get in the cabin.

The key question is how sustainable is this model going forward and for how long will the ROI per call make sense in this environment? Our view is this business model is ripe for disruption. Return from investments in field force will continue to decline unless companies do something radically different.

The solution, we believe, lies in understanding the customer. The traditional model has always been ‘company out’ i.e. we have a product and we need to communicate the benefits of the product to the market. Over the last three years, we have been fleshing out this concept through almost 500+ doctor interviews to determine what it is that doctors want to see leading pharmaceutical and for that matter Med-tech companies do differently. We have all done our bit in terms of assertiveness coaching, closing the call well and tracking but must also recognise that almost everyone has the same playbook to learn from. From our conversations with doctors, we find that they do not see much differentiation across the sales teams. We spent time in doctor’s cabins across specialties and observed the pitch from many sales teams, sometimes 15 of them at a time. The sales pitch is undifferentiated, and recall often times was very poor.

In such circumstances, how does one drive recall? Overwhelmingly a single theme emerges – customers want companies to engage with them to improve their ability to help more patients. We present a simple equation to understand potential options which work in Exhibit I.

When it comes to increasing awareness, we see models such as diagnostic camps and patient awareness programmes having significant traction with doctors. While difficult to execute on a scalable basis, once established, these models enjoy significant mind-space with the doctors (and for that matter patients) that they are targeted at.

Companies can also help the doctor expand the patient pool that he is treating. Education packs (particularly in chronic diseases) and continuing education programmes expand the treatment set for the doctor and more importantly, makes healthcare more accessible to the general population. This model we find is meeting with a lot of traction, particularly with younger doctors.

Finally, doctors find, especially when starting new therapies with patients, significant gaps in the patient education literature, both in the clinic as well as online or on the phone. This increases the time the doctor needs to spend explaining basic points of the treatment or answering follow up questions and less time treating patients. Building patient support / engagement solutions is the third area where companies can add value to the doctor.

While hopefully, companies will shift and start thinking ‘customer in’, we must recognise this shift in the model will take time, but clearly the first movers will enjoy significant traction and sustainability in their model.

Topic II: Incentives don’t always result in performance

Incentives drive behaviour – the old adage has been quoted time and again. However, companies rarely manage this well. The design of incentives is top-down using a one size fits all approach. However, the corrective actions in a territory and development needs are bottom-up i.e. at an individual rep level. E.g. a territory manager needs to coach reps based on the territory nuances and at the end of the year explain the reasons for getting / not getting incentives to the rep.

This top down approach in design and fragmentation in implementation at the bottom leads to challenging outcomes. Many a time the rep does not fully understand the incentive scheme and therefore rarely demonstrates the behaviour expected, but also the territory manager improvises on messages leading to a dilution of the intent of the incentive scheme.

We propose an approach that segments the field force on the basis of performance and consistency and then design incentives and interventions at the field level for each segment of performance. Think of field force performance in two critical dimensions: 1. Performance and 2. Consistency and you will see a few segments of reps emerge as illustrated in Exhibit II.

Exhibit II: Patterns of performance behaviours amongst sales reps

You will observe three segments in across the reps who deliver consistent performance either strong or weak.

• Bankable stars: Typically outperform their targets by five to 10 per cent and do that consistently over a longer period of time i.e. one year+
• Consistent workhorses: Work to achieve the minimum target to capture the incentive payouts. Rarely push themselves above the target regardless of incentive slab design.
• Laggards: Struggle to meet targets typically because of poor brand position in the territory, strained relationships with the trade or are new in the territory.

Many of us would have observed these segments in the field force and traditionally most territory managers would segment their people along these dimensions. Equally important and often ignored is a deep dive into inconsistent performance.

You will observe two types of behaviour with reps who deliver inconsistent performance and it’s important to separate intent from results to drive behaviour accordingly.

Gamers

Typically manage effort vs. reward ratio as much as possible e.g. will drive sales in the last month of the quarter to hit the target but will miss sales in the first month of the next quarter knowing that the quarterly bonus higher than monthly payouts. Additionally will hit targets in the quarters where there is slack and the payout the same e.g. Q1 target will be lower vs. Q4 target but companies typically do not differentiate quarter payouts. Net-net these players will maximise the bonus payout to them overall.

Hopefuls

These reps typically do their best effort to drive the sales in the month but don’t have the right guidance and judgment on where they spend their time leading to higher effort for sub-optimal results. These are reps that spend their time on the wrong doctors / channel partners and therefore see wide variability in their performance month on month.

Identifying these segments is relatively easy using the analytics available today. It is important to design the coaching and development messages appropriate for each segment and to coach territory managers on the relative performance and bucketing of their team across these categories. This will allow for a segmented approach to development of sales reps and ensure that performance is categorised and managed appropriately across the field force.

Often the interventions for each of these are different with a mix of carrot and stick, but will need to be designed with the full understanding of the underlying behaviours. Having done this, development conversations are often more focused, driving the right kinds of behaviours in the organisation and penalising the wrong. The simplicity of the segments makes it easy to understand, communicate to the ground level teams transparently the perception of performance and to ensure the right incentives translate to the expected behaviours on the ground.

We hope this article encourages you to challenge the current thinking on the sales model and to bring in new concepts to manage performance effectively. In the second part of our series, we focus on the marketing model, particularly ensuring marketing initiatives are aligned to the state of the market in which the brand competes and outline a concept of an integrated approach to sales and marketing.