This article concludes our series on customer targeting. Previous articles described successful targeting tactics and a key metric for evaluating sales force execution of the targeting strategy. This month's article highlights a process that will improve targeting in any market, whether data rich or data poor.
The targeting process identifies the most valuable customers. A well executed targeting strategy enables the sales force to dedicate the bulk of itseffort to highly profitable customers and limit coverage of unprofitable or marginally profitable physicians. Our experience suggests that even small improvements in targeting can generate substantial sales growth.
Uncovering Sales Potential
The challenges to implementing an effective targeting program vary according to many factors, including market conditions. One critical consideration is the availability of third party customer information. We broadly classify markets as data rich ( those where high quality customer information is universally available through third party vendors) and data poor (those where the sales force is the primary source of information about customers).
Two firms with whom we recently worked – one in the U.S., the other in Asia – provide good examples. Both used algorithms to rank physicians' sales potential according to multiple criteria, including:
The criteria and algorithms used in each case were similar. The key distinction is how the firms gathered and analyzed customer information.
In the U.S. example, the firm was able to assess and rank customers based on analysis of third party physician and patient level data. Marketing and sales managers (who provided target lists to the reps) identified the targets.
In the Asian example, most of the physician profile data was collected directly by the reps through field observation and customer interviews because no third party data was available. The sales reps then worked with their sales managers to choose the target customers.
In the U.S. example above, the target identification process occurred entirely within the corporate headquarters. Statisticians analyzed huge volumes of prescribing data to determine which physicians would most likely respond to detailing. Once they developed the target lists, the biggest execution challenge was effectively communicating the rationale for the strategy to the field.
A common problem for systems using centrally developed target lists is that the field either does not understand or does not buy-in to the targeting strategy. In such situations, reps typically develop their own target lists based on their relationships and their instincts about which doctors are most likely to prescribe their products.
For example, consider one of our recent clients that launched a drug in a crowded therapeutic class. It selected a targeting strategy that included several criteria in addition to total therapeutic class potential. Reps did not participate in developing the criteria or the customer profiling process.
Sales management provided reps with target lists similar to Figure 1. Many reps questioned the wisdom of including Doctors Commart and Simpson (decile 4 and 5) on the target list while excluding Doctors Gonzalez, Grossman, and Mack (deciles 10 and 8).
Management faced two problems. First, reps did not understand the criteria used to select target doctors, and second, the information was poorly communicated in the target lists. As a result, reps allocated effort to the high-decile non-targets at the expense of the low-decile targets.
Once the client understood the reps' perspective, it re-educated the field force and shared the rationale for the targeting strategy (the physicians' individual prescribing habits) by including this additional information on the target lists (see Figure 2). By clarifying the reasons for inclusion or exclusion from the target list, the firm achieved greater buy in among reps and better execution of its strategy.
In markets such as many in Asia where reps must collect and maintain customer profile information, management must train the sales force in proper methods for collecting these data. Can reps simply ask each physician for the information? Should they ask office managers, pharmacists, and nurses? Will companies pay for the information, and if so, in which cases? Or will profiles be developed solely by observation – for instance, by recording office patient flow during a defined period of the day or by counting the number of patients in the waiting room on three consecutive visits?
Consider these examples of successful and innovative profiling techniques. One sales force we worked with in Latin America spends two weeks at the end of each year calling only on pharmacies to collect physician prescribing information. In one Asian market where third-party customer data is poor, we worked with a field force that hired a team of interns to survey doctors and pharmacies. Armed with standard questionnaires, the interns conducted the profiling of a large number of pharmacies and physicians in just two months, and reps suffered no loss of selling time.
In data poor markets, as in data rich markets, rep buy-in is critical. A common problem arises when reps are asked to implement a new profiling process that will be used to “re-target” customers. Profiling typically requires reps to make estimates. If the reps are not comfortable with their ability to accurately gauge physician activity, they may reject the validity of the profile database. When the “re-targeting” then requires reps to stop calling on “proven” but unprofitable customers in favor of new “unproven” but potentially very profitable targets, they may resist.
The lesson here for sales organizations is to consider implementing two or three profiling cycles before re-targeting customers. Multiple profile cycles help identify past errors and build rep confidence in the accuracy and credibility of the profile database.
One of the key benefits of developing a credible customer profile database is that it serves as a “fact base” for decision making. Without this fact base, management has little ability to influence reps' target choices. A credible profile database gives managers a powerful tool to drive sales effort toward the most potentially profitable customers. The challenge is twofold:
A credible customer profile database gives management several options for creating the target list. The marketing function may develop a target list that is “pushed” to the reps. Sales and marketing might establish a collaborative process to create target lists. Or, reps and first-line managers may develop target lists from the profile database. Whatever the mechanism, remember: the database provides the foundation for decision-making.
Once the target lists have been generated and sent to the field for implementation, managers must be prepared to track targeting implementation. The targeting effectiveness metric described in a previous newsletter article is a powerful tool for assessing targeting execution and driving targeting improvement. But even in markets that lack credible third party customer profile data, management can track, report, and manage targeting performance.
Each target customer should be assigned a frequency goal. Reps should report calls on a daily or weekly basis depending on their geographical and reporting system constraints. Good managers review each rep's call reports on a weekly basis to determine the percentage of targets visited, and the percentage of targets visited with desired frequency. The manager should discuss these metrics with the rep regularly by phone or during field travel. In our experience, surprisingly few managers consistently track this information and review it with their reps.
Sales organizations that implement profiling, targeting, and tracking systems for the first time should see continuous sales force-wide improvement in the targeting metrics over a 1–2 year period. Reps should achieve near 100% coverage of the target list and delivere the desired frequency on at least 80% of targets in the top target segment.
Beating the Competition
Among all the factors that determine sales success in the pharmaceutical industry, none is more critical than choosing and calling on the right customers . Firms that effectively execute their targeting and profiling processes gain a competitive advantage that cannot be quickly or easily matched by competitors.
To view prior newsletters, please visit our News & Events web page.
Please click here to unsubscribe from the RMCI newsletter.
Copyright 2004, RM Consulting International. All rights reserved.
Every viewer may copy, reprint or forward all or part of this newsletter to friends, colleagues or customers, so long as any use is not for resale or profit and the following copyright notice is included intact: "Copyright 2004, RMCI. All rights reserved."