Monthly Archives: May 2014

What do you KNOW about your customers?

No, this is not going to be about segmentation and targeting, we’ll save that for another day, what I want to do is focus on what ‘we’ the pharma industry know about our customers.

I’ve had lots of folks tell me how customer focused their company is; how the company works with customers everyday, and how many resources they allocate to customer facing roles and how much money they spend on customer research and so on. But when you scratch the surface, and I recommend you go and scratch it at your organization, I am sure you will uncover some very interesting insights.

As a start, it is an interesting exercise to ask your colleagues ‘who is the customer’? I’m sure you’ll get a bunch of different answers to this simple question. And, if you can’t agree on who the customer is……..what can I say?

I’ve heard lots of answers, including one that even identified company colleagues as customers, ‘internal customers’. How does that work? Is it still doctors, or does it now include nurses and other HCP’s, what about patients, caregivers, hospitals, payers, pharmacists, healthcare consumers? Clearly, having a good definition is a great way to start, that way your company will be aligned and focused on what matters most.

Pharma is a product-orientated industry. That probably is not going to change, this customer centricity, patient centricity discussion is not about moving from being product focused to customer focused, that is too big a step change for pharma right now, so this is about being more customer inclusive, realizing the importance and value of the customer and ultimately, for most businesses, it is the realization that ‘you’ will sell more product and be more profitable if you become more customer centric. It’s simply a better way of selling!

But, you need to be careful. If all you are doing this for is a cynical strategy to sell more stuff then beware. One of my favourite quotes of all times comes from Martha Rodgers of Peppers and Rodgers fame, she said, “If your goal is to sell more stuff to your customers you will compete on price. If your goal is to add value to your customers, then you’ll end up selling more stuff’.

So being customer focused is a better, more effective and, yes, more efficient way to sell, and it begins with what you know about your customers.

Go ahead and look at your own data, really dig into it, try doing it from a customers’ perspective and you’ll be amazed. Put yourself in the customers’ shoes and ask ‘what does the company really know about me’?

Look at call data. Do you have a single view of a customer, can you see all the interactions across all channels, with a particular customer, start at an individual customer level – don’t be tempted to do the segment average type approach.

Here’s what you are likely to find?

  • You don’t know much about an individual customer
  • You have good call data, but likely not consolidated across all channels and brands
  • You have some contact information, address, business phone etc probably not personal email addresses and other critical business information
  • There will be very little additional customer data – often precluded by out dated and overly conservative legal policies
  • Representatives have more customer information that they do not share with the company
  • Spend a disproportionate amount of time and effort with the wrong customers
  • There is no factual reason one customer is seen more often than another – it could be simply that reps have access
  • Unable to identify your most important customers
  • Some customers are not profitable, you expend too many resources and calls on the wrong customers
  • You don’t treat different customer differently, other than call rate.

Overall, there is very little customer insight to be found.

Most of pharma still, if we are talking healthcare providers, allocate resources according to customer value (their value to us), so a high value customer subset – lets call them A customers, get more calls. This has been around for decades and is still alive and well today.

In primary care in particular, this call rate is usually by brand or in some cases therapeutic area, but when you see the same HCP customer called on by different reps across different channels, you see how much resource is actually allocated to this customer. It’s not a common view; the data is usually not looked at this way.

But go and look at your B Customers. Yes you see them less, perhaps, but the total amount of effort spent on this group will be significantly more that the effort spent with your highest value customers, because when you add it all up, there are more of them, more calls in total, more effort. And it continues to work down your list of priority targets, so that, in the end, the total effort directed at lower value customers is more than your highest value. Why would you do this?

Now lets go back to the individual data and look at what you actually know about your most important customers. I bet you know a lot about their prescribing, particularly if you are in the US and have access to prescribing data, outside the US you may use external services like IMS or others or you may just work on rep feedback to rate HCP’s, either way you will know, or think you know, more about their prescribing than you actually know about them as a customer.

What does your CRM system say about this customer, what facts does it contain? Try asking your reps what they know about their highest value customers and the chances are they don’t know much. Again, probably lots of RX data or impressions and probably a lot of personal stuff, but not much more about them as a customer.

Do you act differently with different customers based on what you know about them, or are you still focused on delivering messages that are important to you?

This situation is the result of the fact that pharma has not wanted, or felt it needed, to know about customers and has fears about the legality of gathering and storing this type of information. But now, it is critical to better understand customers.

This all sounds simple and obvious but the changes required to be more customer or patient centric are significant and it should not be thought of as something you only need to do with HCP’s.

Indeed, how do you become more customer focused with newer customer types like payers? I’d begin asking the same question –‘what do you know about this customer beyond Rx?’

Being more relevant to your customers is key; building trust, being trustworthy and delivering value are going to be significant differentiators in the future and I don’t know how you do this without knowing about what matters to your customers.

Things you can and should do starting today.

  • Establish as sense of urgency.
  • Build a team of passionate patient advocates
  • Become more customer curious. Ask customers about their business, their challenges, what’s important to them and more.
  • Collect customer data. Try at every interaction to come away knowing something about your customer that you didn’t know before.
  • Store factual information, share it across the business, analyse it and then act on it.
  • Develop a comprehensive customer view – monitor and measure the collection of relevant, factual data.
  • Use your CRM system as a source of insight not just call reporting.
  • Build customer advisory boards not for brands but to better understand customers, get customers involved.
  • Segment not based solely on value to the company and Rx
  • Be open and honest about the data you gather. Would you be willing to share what you know about customers with that customer? You should be!
  • Focus on your most important customers and deliver differentiated services and offers to them in response to their needs.
  • Identify the top 6% of customers that generate around 40% of your sales and build an individual customer plan for each of them.
  • Demonstrate that this is not only for the field force – anyone touching a customer should enter data
  • Reward the right behaviours. Senior leaders should review customer data on a regular basis – not just sales managers
  • Review and change attitudes to customer data, engage the legal department in the change.

Of course, the next big challenge, once you’ve begun to better understand your customers is ‘what are you going to do with that knowledge?’ But lets take one step at a time.

What’s it going to take to ‘Rethink Pharma’?

What does that even mean?

Patricia Seybold, Founder of Customers.com, once wrote “fasten your seatbelts!……Why? Because we’re in the midst of a profound revolution. And it’s bigger than the internet revolution or the mobile wireless revolution. It’s a customer revolution.

Customers have taken control of our companies destinies. Customers are transforming our industries. And customer loyalty – or lack thereof – has become increasingly important to executives and investors alike”

And now, even Pharma, once seemingly uncaring and impervious to customer feedback and dissatisfaction is feeling the winds of change. The long held practice of ‘staying below the radar’, not adding to the public debate and keeping a low profile, which worked so well for the industry for so long, seems out of date and a strategy long past its used by date. Public debate, dissatisfaction and lack of trust are plaguing the industry, drawing an ever more serious and growing voice of criticism of big pharma. But, what’s changed over the years is that the power and influence in healthcare has shifted, and the voices that could once be ignored are now dismissed only with potentially serious consequences.

A Patient Centric Revolution is taking place across healthcare, in every corner, in every sector, patients, healthcare consumers and you and me are taking more responsibility and control of healthcare. And pharma can no longer afford to ignore it. Or should I say, they can continue to ignore it, but at their peril. Pharma needs to rethink how it fits in this new changing landscape, a landscape that they will no longer be able to control and shape to fit their objectives as they once did.

So when we say ‘rethink pharma’ for me, it is really ‘rethink around healthcare consumers’ and ‘patient centricity’.

Most other industries now recognize and accept the power of consumers. Not just in whether they buy their products, but also how they buy them, through which channels, how much they pay, the things they like and don’t like and much more. Power lies with consumers. Most industries and organizations recognize and accept this.

The good ones even embrace it and benefit from their close relationships with customers.

This global phenomenon is not a trend, or a fad, or something that can simply be ignored. Pharma has struggled against it – and continues to fight against it, for example with its amazing lack of transparency and pricing policies, but, in the longer term, they will not be able to overwhelm consumer power. We are seeing the reaction to pharma’s continuing internally focused strategies with the steady decline of public trust in the industry and the growing barrage of negativity about the industry’s behavior.

We know the current pharma model is under huge pressure to change. It has been this way for perhaps as much as ten years, but the pressure is really building now. At least it seems that way.

Most senior pharma industry executives would agree that the model is not sustainable, but do not articulate what this actually means and being not sustainable is quite different from being broken.

Not sustainable can be code for; our cost base is too high, our prices are under attack with declining productivity and effectiveness. Therefore, we need to drastically cut costs and slash jobs in order to maintain our profitability. We need to keep working hard to discover and commercialize new products to replace older products coming off patent. We need to hang on, stay focused and weather this storm until things go back to normal and we discover new blockbuster products and boost our pipeline. None of this speaks to significant model change.

 

But many industry watchers do not believe this is going to be enough. Many commentators and consultants would say the model is indeed broken and needs fundamental and significant change. The old model is dying and a shot of innovation in the arm is not going to be enough. Wholesale, fundamental change is going to be required.

There is however a significant lack of agreement in how broken the model is and indeed, what aspects of the model are broken. And that leads to divergent opinions about why the industry needs to change today and not some time in the future.

A true burning platform, al la IBM’s financial position in the 80’s, does not exist for big pharma today and the potential risk to current financial performance is perhaps the major limiting factor in attempts to reform the industry.

How to preserve financial performance is at the heart of the resistance to change, with many people believing that any change in focus away from core business and current focus will adversely impact results, and getting into other non-core business areas will negatively impact the business. There remains a strong attachment to the current business model, with senior executives having limited confidence that alternative business models would be as good as, let alone better than, the current one, and therefore any change away from the traditional approach is seen as downside rather than upside benefit, so the inertia favors the old model with a clear focus on efficiency.

After years of pilots and tests, and a powerful load of PowerPoint presentations, pharma has not advanced much in terms of rethinking its business model. And despite the flurry of mergers and deals either underway or being contemplated right now, the model does not look like changing much anytime soon. Indeed, from past experience, we have seen that megamergers derail business model innovation as the company intensifies its focus on integrating the 2 organisations and eking out the efficiency gains that are required to justify the merger in the first place.

Sure, there have been advances and the industry is much leaner than it was, but the core of the business, it’s underlying thinking, many of the processes, the structures, sales and marketing tactics, approaches to customers, many of these things remain virtually unchanged.

The time for change is now. However, no one would suggest a big bang approach to organizational change in this industry, but there are things that should and could be changed today that would both positively impact short-term financial performance while better positioning the company for the future.

If you would like to contribute to this discussion or you have particular point of view you would like to explore, please let me know. Together we can help the industry take concrete action today and Rethink Pharma to become more patient focused.