Pick’n’mix for sales success

pharmafile | October 1, 2003 | Feature | Sales and Marketing recruitment, sales, sales representatives 

A recent look at InPharm.com reveals that there are currently more than 2,200 vacancies in the pharma industry, the vast majority being in sales and marketing. Is this a sign of a vibrant, expanding business or is it indicative of a sector struggling to find the right people for an increasingly frustrating job? What, if anything, has changed in recruitment and selection over the last few years?

Despite the marketing muscle of direct mail, advertising and the much-vaunted e-detailing, the front-line promotional effort remains the road warrior. The increasing numbers of pharma sales people in the UK appear to follow the US market, which has seen a three-fold increase in sales heads in the last 10 years. More than 175 NHS supplier companies are chasing diminishing customer face time with various sized field forces  from over 1,200 at the newly-merged Pfizer to less than six with more specialist players. Total sales headcount fluctuates and is hard to get a fix on, but estimates say there are between 14,000 and 20,000 in the UK.

Whats the cost?

Industry pundits casually talk of an average turnover rate of 19%. To an objective observer this is a catastrophically high figure, both in human and financial terms. It is a sign that all is not well. Putting aside the human cost for a moment, lets take a look at the costs to the business with a relatively simple model (see Fig 1).

A £1 million value sales territory with an 80% gross margin generates £800,000 a year profit. Sales growth of 12% brings in £96,000 extra business. Take away the representative, the growth falters  at 2% a mere £16,000 comes in. As the territory goes into decline, the revenue goes into free fall  a 5% slide is equivalent to a £40,000 loss. A 60-strong field force, with just a 5% vacancy rate (in other words three) is blunting its return on investment to the tune of £50,000 to £120,000 a year.

It is very easy to see  using arbitrary figures  how salesforce turnover can damage company performance, without looking at scenarios that require extra face time, like launching products. These are hidden costs  most companies budget for recruitment costs in fees and ancillary training costs  probably costing £8,000 to £10,000 per head. It is the opportunity costs of running with vacant territories, such as loss of market share, formulary delisting and broken key customer relationships, that are below the line.

Greener grass?

All of the figures point to an average rep life of around 18 months from initial recruitment. It is at the approach to the ABPI exam that the dropout begins  the disillusionment with the job, disenchantment with the line manager or the chance of gaining by moving employer. Lets not discount the positive moves too: career development in the field or the headquarters, and industry expansion. Estimates suggest that around 25% of all new recruits to the industry drop out at this point, which is either an indictment of the recruitment process or how dreadful the job is.

The rest form the pool of experienced reps that then move around the industry, jockeying for higher salary packages, bigger jobs or head office promotions.

Who gains?

As ever, one mans famine is another mans feast  the selection and recruitment of sales heads is big business. There are a lot of large and small suppliers, specialist agencies with long track records of supply to the industry. The pickings look rich, with the top 10 pharma companies often spending more than £1 million on recruitment a year.

How do you pick a supplier with such a bewildering array of choice, from the familiar to the unknown?

Five rules

Look at the client base

Ask to talk to a senior contact in HR/sales about standards and service. A customer reference has to be one of the best guides.

Standards

A good agency will see all candidates face to face, and will screen out up to 95% of approaches on the phone. Look out subcontractors. Most major recruitment houses subcontract work out  theres little point in scrutinising your supplier if they then outsource the work!

Range of services/resources

Check they have the resources to handle Daily Telegraph campaigns. Do they offer contractors or vacancy management?

Consultants

Are they industry experienced? Its easier to work with an agency that has a good understanding of the job on offer. Salaried rather than commission-driven staff help guarantee service rather than just interview schedule filling.

Advice

Expect good advice  client service comes before fee billing with a quality agency.

These might seem obvious guidelines, but try applying them to your current suppliers and see who passes. When you are looking at current client base, check out frequency and recency of supply  are they the first or tenth-choice supplier?

Face-to-face interviewing is still the only way for an agency to assess a potential candidate, but it is hugely expensive and time consuming. A quarter page ad in the Thursday Daily Telegraph will generate a large number of low grade/unskilled leads and a good agency will disregard nine out of ten approaches. Discreet subcontracting is rife in the industry  ask the question otherwise all of your other checks on standards are wasted.

Chris Phillips, Managing Director of Chase Recruitment, says: Every candidate that Chase puts forward for interview can do the job  there are no time wasters, no schedule stuffers. We supply the audience, the manager then selects the right person for his/her team.

Make sure your appointed supplier has the resources available to handle a major campaign, if required. There are a lot of very good, but very small agencies more suited to filling small numbers, not whole new divisions. These smaller, often solo operations are usually run by very experienced senior industry managers, unlike some of the larger suppliers, who often employ consultants who have no industry experience. John Bult of Professional Careers Consulting says: Were a small player within this market, but as seasoned managers, myself and my partners can often complete recruitment assignments that larger suppliers struggle with.

Chris Phillips comments: To me, it is a critical standard that each of my consultants understands the clients needs  the only way to guarantee that is industry sales experience. Chase consultants are salaried, with no commission structure  this mirrors the industry, where the ABPI advises against high commissions to help avoid inappropriate sales.

Choices, choices

Vacant territories can be managed in a number of ways and to some extent the solution depends upon the cause.

Short-term vacancy due to sickness, secondment or maternity can be covered by the existing sales team, maintaining contact with identified key customers and user centres. While this can stretch resources, it can be a good training ground for developing field talent and can minimise the damage of leaving a territory un-worked.

Suddenly finding yourself with half-a-dozen vacancies on the eve of a product launch, on the other hand, is a good opportunity for a temporary team contract. The team would operate for a minimum of six months, with an option to extend or be taken onto headcount at a later date.

Some of the larger pharma players, such as Merck, maintain a team of mobiles  trainees who cut their teeth covering vacant territories. This sounds expensive, effectively recruiting over headcount, but the reality of field force turnover makes this a useful option as a resource training base. The increasing numbers of part-time sales heads  the holders of flexible contracts  can also be used in this way.

Many companies find the commercial trainee route an attractive one, whereby trainees are employed via an external contract until they prove themselves and earn a corporate payroll position. This is the ultimate try before you buy option, says Chris Phillips. It minimises all risk for the client and shifts the recruitment and selection stress to the agency  there is no room for error or low standards. We have supplied more than 250 trainees to a major client over the last three years and had only two reps pull out. Thats a good record by anyones standard.

The process

Getting the right person to do the right job is clearly the challenge. The interviewing process remains at the core of the selection activity, even though it has been shown time and time again that the subjectivity of the process is against the odds. Objectivity can be increased by adding in structured tasks  every time a prospective candidate can be measured, it increases the likelihood of the right fit. The industry has a good track record in using assessment centres and psychometric testing (behavioural measures) for mainline recruiting and they are still popular.

Lisa Williams, a consultant with Syzygy, comments: Its clearly a good idea to profile candidates as accurately as possible to support any selection process. At Syzygy we work with clients to understand the competencies necessary for the job. For example, a territory sales job is often based around influencing, communication, and customer and business focus. The ability to prioritise can be assessed through structured exercises and we can measure written and numeracy skills. The further up the career ladder, the more complex the assessments. For an NHS liaison role, for example, there may be group exercises or roleplay.

She adds: Given the importance of motivational fit for the job, the preference assessment is a key exercise, for which we have many tried and tested tools.

Wanted: sales people

Recruiting graduates into their first serious job is obviously a perilous business. Drawing up the blueprint is a key activity and designing the competencies that match the job and the real company culture is critical. With as many as 12 representatives working a single GlaxoSmithKline territory, the ability to work within a team comes to the fore. Impact and influence is used by many as a recruitment profile, along with communication skills. These are good core areas, but a scan of the Daily Telegraph on a Thursday shows that many recruiters also go looking for business acumen, negotiating skills or the dreaded entrepreneurial flair. In all honesty, very few large pharmaceutical companies have the need or opportunity for such characteristics beyond making their ad copy look more attractive than the one on the next page.

Within the pool of territory representatives, the most sought after remain those with a track record or experience, says John Bult. These form the backbone of most field forces  a resource with long-term relationships with key people in primary and secondary care, with the established credibility to launch products, change prescribing opinions and win formulary status. The survivors of the sales team turnover statistics; its the 5, 10 or 15-year service reps that are the obvious targets for headhunters and the competition can be fierce. They can afford to be choosy and demanding, they are a relatively rare commodity  its a sellers market.

Things arent what they used to be

An interesting point from all sources is the allegation of falling standards. Is this an it was all a lot better when I was a rep type of comment? It looks more like a critical view about declining standards of entry into the industry, and it could be true that jobs are now being given to candidates who would never have stood a chance 10 years ago. Rapid recruitment models by contract houses to fulfil increasingly results-focused sales goals may be the fast and easy way into an increasingly beleaguered industry.

Standards are reflected in lower academic requirements. No longer the preserve of life science graduates of class 2:2 and above, pharmaceutical sales recruitment has, quite rightly, broadened out to the mainstream. There is no way of quantifying standards or calibre  the danger in slipping at this entry stage must be down the line, as recruitment of 2003 becomes the first line management for people or products.

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