Making Europe’s salesforces leaner and meaner
pharmafile | April 26, 2007 | Feature | Sales and Marketing |Â Â Europe, representatives, sales, strategyÂ
The world of pharma salesforce management is witnessing a serious move away from mass detailing to a system based on key account management and other innovative sales approaches.
The market trends pushing this change revolve around shifts among key stakeholders – pharmaceutical companies, healthcare professionals and regulatory bodies alike – under-productive salesforces driven by a decreasing number of large blockbuster primary care products in R&D pipelines and, until recently, an ever-increasing number of product details.
Many pharma manufacturers in the UK are already introducing newly restructured sales models in response to these market changes. Healthcare professionals have reacted by reducing access to pharma companies just as new and more varied decision-makers weigh into the prescribing choice, and the roles of formularies, nurses, pharmacists and key opinion leaders are also having an impact on traditional sales models.
Finally, government regulation and policy decisions have resulted in price reductions, increased use of generics, ever stronger prescribing guidelines and an increased need for pharmaco-economics research, data and proof points to achieve reimbursement.
Evolution in process
Against this background, the imperative for salesforce change has been widely debated but less is known about the nature of the changes and the extent to which new models are actually being considered by different companies in Europe.
To better understand the pattern and impact of their adoption, IMS recently conducted independent research in the form of one-on-one, in-depth interviews with senior pharma sales executives and managing directors in five European markets: the UK, France, Germany, Italy and Belgium. Full anonymity gave participants the freedom to discuss the changing nature of doing business in today's healthcare environment.
A number of leading drivers for salesforce change were found to be common over all five countries studied. Key themes across Europe included reduction in the size of the fieldforce; financial pressures to continue high profit growth; and decreasing access to GPs.
What is clear from these findings is that sales model change follows an evolutionary pathway from mass detailing through to a fully customer-centric approach. This can be defined as a five-stage process starting with mass detailing (the arms race), which is followed by target-driven detailing (initial moves towards an improved understanding of the customer).
After this, comes resourcing to potential (defined as putting resources only where the potential demands it, along with additional salesforce flexibility for adjustment and adaptation), and then precision tailoring (moving towards key account management and team selling with much greater levels of customer understanding). The final stage is to become fully customer-centric, and this varies significantly by organisation, portfolio and market.
As one vice president of sales from Italy commented: "In the past, there have been more battles done with the club as opposed to the sword, but now I think we will see a shift to fewer operators of higher quality."
From walking ad board to regional manager
The progression of salesforce change clearly impacts a number of key sales areas. Of particular interest is the role of the rep which can be seen to move from a walking ad board, through to a key account manager responsible for relationship building and increasing customer value, to a regional manager responsible for his own profit and loss, to finally becoming a valued partner.
"[The concept of account management] is then managing the other resources we need to have, such as the salesforce, the value added services, the training programmes we can give, so we can give a holistic approach to PCTs and practices, rather than individual representatives talking about individual products," noted a sales operations director based in the UK.
Another UK sales director, added: "Our first task involved reconfiguring roles; so for example, first-line managers have moved to a key account management role, or as we call them, business account unit manager. The traditional first-line manager role just wasn't working any more. They have to have many of the same skills, but we had to bolt on key account management skills as well."
The shift to a key account management approach also calls for the need to compensate differently. Historically, compensation rested on the basis of pure sales metrics, but in the future, sales reps will be equally measured on strength of relationships, and softer, customer value-based metrics will come into play.
A new look rep
Research by IMS in the US market has identified some of these key value metrics, which showed that a modern rep needs to be able to adjust his or her interactions to the available time, and these interactions must be engaging in style. A rep should also be a continuing source of unbiased product information, coupled with a varied message.
Obviously, these relationship-based questions will require new types of qualitative studies to measure performance adequately at the individual account manager level. These types of measures will then need to be combined with traditional sales and activity measures to create a fair system of compensation relating to the new emerging role of key account manager.
Another important consequence of moving towards a customer-centric approach involves the changing role of what used to be the first-line manager. Whereas typically, this position has been used to enforce the coverage and frequency goals of the reps in a region, in the future, it will move much more towards (initially) a business coach, before making the transition to the role of a true business owner of the customers, stakeholders and influencers in the total prescribing chain.
Other areas, such as message delivery and use of CSOs, will also be affected. Message delivery will need to be more customised to the particular stakeholder involved; while CSOs will move from being used to support the arms race to being used to enable flexibility in using resources regionally.
Changes on the horizon
A review of the various European countries studied clearly underscores the UK's lead in terms of advanced approaches to sales models. Many pharma companies here are already some way into the salesforce reorganisation process, having changed the size and structure of their salesforces to the point, in some cases, of having fully redesigned their complete sales model.
Belgium appears not that much further behind, with Italy being the laggard. It is interesting that Italy, with some of the largest salesforces in Europe, is proving the slowest to change – still seemingly remaining wedded to the traditional arms race approach.
Strong differences between the UK and Italy are apparent in terms of their respective approaches to salesforce size and structure, with Italy very much based on the product in hand and the impact we need to make according to an Italian sales executive. While in the UK, geographically tailoring salesforces to business and customer needs taking into account different marketing mixes and organisational designs for different parts of the country, is the way forward in the opinion of at least one British sales director.
In Germany and France, the implementation of change is impeded by the power of work councils and government regulation. With upcoming regulatory changes in Germany, it can be expected that new sales models will be developed and launched in the near-term. However, it was clear from the IMS research that among all countries, there is a realisation that change is coming only the speed in moving from awareness to action is much less than equal.
Change and reorganisation
But one thing is clear; responding to the need for new sales models is one thing, actually making the change is quite another. During the completion of many sales model and resource optimisation assignments, there appear to be several elements that are critical to successful implementation.
Planning for change is the first of these, as is having a true change management programme in place as an essential part of achieving positive results when moving to a new sales model. The process of rolling out change to the salesforce also has to be managed.
The retraining of existing reps and the hiring of new ones to allow integration of newly created roles in the salesforce are vital, but can be very challenging especially when higher-skilled sales resources are required to implement key account management roles where the talent pool available (both internally and externally) can be thin.
With reorganisation, often comes the move to a new compensation system, and this can affect the full performance management process within the salesforce. Impacts can be felt in re-defining KPIs, updating reporting systems, as well as in the compensation system and payout schemes.
When considering marketing, it is important to increase the degree of trust and credibility with the key stakeholders and then messaging should be customised to the different audiences in relation to the level of achievement in these factors. Furthermore, the use of additional marketing channels (outside the salesforce channel) should be considered in order to reach new stakeholders.
Finally, the ability to adapt to change much more flexibly, in shorter time-frames and on a local basis, is critical.
All this can be greatly facilitated by having an internal communication plan and an overall programme manager.
The clock is ticking
The pharmaceutical industry is at a critical point in its evolution. The days of the highly profitable and frequently available blockbuster are coming to an end, and in their place, is a challenging transition period.
Other industries have gone through similar changes in the past, the most notable being the finance sector. There, the self-same change process approximately 10 years ago saw the customer positioned firmly at the centre of all marketing and sales activities.
In place of products came customised campaign themes, based around individual profiles. Instead of the standard product salesperson, there were preferred banking advisors looking at clients' total needs, and after the replacement of the standard bank came new channels, such as online banking and direct marketing to the individual.
The waiting game for the first movers is over both Pfizer and AstraZeneca have already announced large global restructuring plans. The remaining question for all companies now is which future model is appropriate given the variation in portfolio, people skills and change readiness. The one common thread is the ticking clock and it is only a matter of minutes before the alarm goes off.
David Ziedman is director marketing EMEA, sales force effectiveness at IMS Health. For more information tel: +31 (0) 6 51305100, e-mail: DZiedman@nl.imshealth.com or visit: www.imshealth.com/sfe/precisionsalesforce
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