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Marketers: get more bang for your buck

Published on 01/10/09 at 10:51am

Pharma marketing is under increasing pressure to demonstrate how it adds value, especially when it comes to justifying expenditure.

Brand managers are desperately trying to get more sales out of a limited budget, often without the tools to help them understand what is and isn 't working. Marketing managers are struggling to compare the return on investment (ROI) from their brand managers ' plans in order to allocate the right budgets, when there is no consistency in approach.

Meanwhile, market researchers and analysts find it difficult to help brand managers improve the robustness of their plans, because the wrong key performance indicators (KPIs) have been tracked.

So how do each of these groups go about optimising the return on marketing investment, and introducing a consistent approach to ROI forecasting and monitoring, enabling the right resource allocation decisions to be made?

The first thing is to dispel the myth that you need cartloads of data to do this. In practice, you probably hold more information in your head about your brands than you give yourself credit for. Just as working out how to catch a ball doesn 't require a knowledge of calculus, because you rely on learnt intuition, putting your money where you 'll get the biggest bang for you buck doesn 't always require lots of data, or the building of some huge mathematical ROI model.

By breaking down the link between what you spend and what you earn into bite-size chunks, you can make reasonable estimates that give you good visibility of possible resource misallocations in your plan. Later on, this can be validated by your market research manager or an agency. So having no data to hand is a bad excuse for not checking whether your plan is going to get you where you want to be going.

Here are five simple checks that you can carry out to help ensure not only that you are squeezing more sales out of your limited marketing budget, but also that you are able to measure accurately how much bang you are getting for your buck!

The real opportunity?

The first thing you need to be doing is checking that you are focussing on the real opportunity, rather than the one which might superficially look the most attractive. In practice, this is a very simple, quick, 'back of a fag packet ' way to sanity-check your plan.

As a rule of thumb, the relative contribution that each Critical Success Factor (CSF) in your plan is expected to make to the bottom line should mirror the proportion of your budget that you are spending on them. So for example, if you expect patient compliance initiatives to make up 15% of the revenue gain for 2009, you would expect to be spending about 15% of your budget on them, rather than say 25%. If this isn 't the case, you may suspect that your resource allocation is misaligned.

To get started, grab a piece of paper and write down the sales growth you expect for next year. Now write out your CSFs for achieving that, leave two columns beside the first, and complete them as illustrated on the post-it note in the main picture (left).

Ideally your CSFs ' contribution to sales growth column should equal 100%. You can sanity check this by simple maths: In this example, if we are aiming for 10% sales growth, and GP compliance with EU guidelines is going to contribute 40% of that growth, it should contribute a 4% sales growth in itself (ie 40% of 10%). Is this realistic? Don 't be afraid to admit that the amount of growth is not possible in the time frame - it is very valuable to know if you have a growth gap, because you can only do something about a problem if you are aware of it in the first place.

Next we turn to your budget. Jot down all the activities planned that relate to each of the CSFs, and if you can 't see a direct fit between an activity and an individual CSF, put it down to 'Other '. If you find you have a lot of activities under 'Other ', this should be a big red flag that you may be spending money on activities that are of low strategic and/or financial importance. The exception can be if the activities relate to longer-term development plans outside of the planning period being looked at, or things you have to do for regulators.

Now cost up the activities and see what the sum total is for how much you are planning to spend to support each CSF. Then enter the percentage of budget each CSF is receiving into the third column on your sheet.

Now comes the moment of truth: Does the percentage contribution to sales growth mirror your percentage budget spend for each CSF? Wherever you see that the contribution to sales is greater than the proportion of budget being committed, you may need to consider allocating more budget towards that CSF to drive sales more effectively. As for where to find that extra budget? Quite simply reallocate it from CSFs where you can see the budget you are spending is greater than the expected contribution to sales.

Are any CSFs missing?

Having established whether you are focusing on the genuine opportunities, the next stage is to work out whether you are focusing on the real CSFs, and whether you are missing any. If your 'Contribution to Sales Growth ' column on your post-it note doesn 't add up to 100%, you may be missing some key CSFs.

The key here is to have a view on where revenue is most likely to be generated and what the barriers of growth are that need to be overcome. What are the critical things that need to happen to overcome these bottlenecks and drive growth? While we all like an easy life, in reality they are unlikely to be exactly the same factors as last year. In marketing, if it ain 't broke it soon will be. So play one step ahead.

For example, a few years ago Plavix (clopidogrel) encountered the challenge that they had exhausted the percentage of scripts for suitable patients they could win over from Aspirin for reducing the risk of restenosis in post-stent patients. Looking at patient volume drivers, they appeared to have topped out.

However, when we looked at patient value drivers, we found a very different story. Patients were being put on Plavix by the cardiologist and then, once back in the community, GPs gave them the much cheaper Aspirin, rather than a repeat Rx.

So even while EU Guidelines suggested 10 months on clopidogrel post-stent, the reality in many EU countries was more like 1-2 months. Plavix had a hidden opportunity to increase the segments sales value by at least 5 times through the CSF of "Getting GPs to comply with EU 10 month duration guidelines ". This allowed a win-win for both Plavix and patients.

To check whether you are focused on the right CSFs, you need to use the patient flow (shown below left). This reflects your current revenues, and identify where the opportunities for growth are. Then you can work out where the bottlenecks are (perhaps a small proportion of diagnosed patients getting a Rx), and what relative uplift is possible in the planning period - and just as importantly what is not going to be possible (for example, impacting bottlenecks higher up the patient flow, such as the proportion of patients consulting a doctor).

Truly SMART Objectives?

SMART tactical objectives are one of those things we all know about but don 't actually apply. Let 's look at each of these objectives as they should be expressed in the context of planning.

Specific to stakeholder: To check this, put your CSFs in the middle of a blank sheet of paper and mind map who the key stakeholders are that need to be influenced to achieve your CSFs. Now for each stakeholder, map out what needs to be achieved with them (for example, GPs issuing repeat Plavix prescriptions for ten months).

Measurable over the year (KPIs): How will you measure your progress? You need to check that your objective can be:

* Measured at the end of the year

* Tracked during the year to let you know whether you are on track, while you can still do something about it

The second of these is normally the more challenging and may require a proxy indicator that tells you in advance if you are on track. For example, it will take ten months for GPs who have changed their prescribing habits to reach ten months of compliance, to be able to say they are now prescribing according to EU guidelines.

Key performance indicators

So how do you know if you are on track in the meantime? You need a Key Performance Indicator (KPI). For example: 'Percentage of GPs in survey who recognise why Plavix 's benefits over Aspirin make a difference for post-stent patients ' would be a first indicator of a change in attitude.

Achievable within the planning period: The time it takes to achieve growth differs by the type of activity you are undertaking. A general rule of thumb is that the higher up the patient flow you go, the longer it takes for the changes to follow through. So you could realistically increase within a year GPs ' repeat scripts if you already have a large GP sales force and guidelines to work with.

However, if you identified that only 10 per cent of patients who medically should get a particular treatment (in our example, a stent and then Plavix thereafter) are actually getting one, it would take a long time to change this, involving partnerships with stent manufacturers and facilitation of guidelines, etc. Therefore, to increase the patient pool might take years before you enjoy the fruits of your labour. So be realistic about what is achievable within the planning period you are looking at.

Relevant to the CSF: All tactical objectives should stem from a CSF. If not what is its strategic purpose? Don 't create unnecessary work for yourself. Focus on doing a few things well.

Timed to know if you are on track or not as you go: What will you have achieved by when? The tactical objective should state a specific timescale. The KPIs that tell you that you are on track in the interval should also have levels in mind for set review points - usually quarterly.

Tracking the KPIs that matter

We all get very used to tracking the same data month after month, and reassure ourselves that some of it must being doing some good. After all, you show those same graphs to everyone, and everyone else shows you theirs, so there must be something in it. If this sounds all too familiar, then you are probably suffering from a 'comfort in numbers ' problem; the same reason that lemmings will all run off a cliff together.

The bad news is that different brands are at different stages and have different CSFs and tactical objectives; therefore they should be tracking completely different things. You may be measuring what feels like everything but are you doing anything with it? Are you on irrelevant data overload? Are you tracking what really matters for your tactical objectives? If you are unsure about the answer, you need to carry out some checks to make sure.

List out all your tactical objectives and write down how you will measure each of them, as well as any KPIs you also need to track during the year (to ensure you are heading in the right direction). Now ask your market research manager to look into which of these they are tracking for you, and what other superfluous data they are also tracking for you.

When they come back to tell you that they are only tracking half of what actually matters, ask them to cut any superfluous data that doesn 't relate to your tactical objectives and your plan, and spend the savings on measuring things that do matter. Suddenly you 'll find yourself looking at a dashboard of data you need, rather than reams of 'might one day be useful ' data. This will do wonders for your time management, as well as reduce the number of graphs in your presentations.

The right spend on the right initiatives?

Our initial opportunity check gave us a 'fag packet ' view of misalignment, and how to improve resource allocation. However, true optimisation requires a more sophisticated approach, which is happily made much easier if you have been measuring what really matters. With the right historical tracking, you can reliably estimate the impact your initiatives are having.

Now you can really see the effect your plans are having on actual sales, and therefore what return is being generated for the resources you are allocating. Now you can prove that you are getting a decent bang for your buck.

None of this is rocket science. All it needs is a structured approach, the right tools to enable you to ask the right questions, separate out the relevant data, and understand what you should be measuring and how, and you can radically improve the effectiveness of your marketing plans. And in today 's ever-tighter environment, that is no longer a nice-to-have - it 's vital.

Alex Blyth is managing consultant at The MSI Consultancy. He can be contacted at ablyth@msi.co.uk; alternatively, visit The MSI Consultancy website at www.msi.co.uk .

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