CRM The "Ecosystem" Difference

To make effective use of Customer relationship management, pharma companies must go beyond sales force automation.
Aug 01, 2002

Successful pharmaceutical sales and marketing organizations operate much like healthy ecosystems: each interdependent group fills a critical need for the company's growth and survival. (See "Sales and Marketing Ecosystem," ) Yet many pharma com-panies can barely sustain past growth performance, let alone attain a higher level. If the trend continues unchecked, several pharma companies could falter.

Sales and marketing ecosystem
To survive-and prosper-in today's environment, most companies believe they need to make just one key adjustment to their sales and marketing eco-system: Implement any form of customer relationship management (CRM) software-typically, a sales force auto-mation (SFA) system. Yet, an ASI Business Solutions survey of 20 large and mid-sized pharma companies revealed that only a few using such systems actually enhanced their sales and marketing performance. In fact, most of the CRM implementations only magnified a company's inability to effectively operate as a single unified business by distracting managers from their real responsibilities-marketing and selling the products that assure their companies' financial success.

That result is disappointing in view of the significant time and money companies devote to CRM projects. The survey revealed that most respondents took 12–18 months to implement systems and invested between $20 and $90 million in start-up costs and between $10 and $40 million for annual upkeep.

This article describes the difficulties most pharma companies experience with CRM installations, explains why it is critical to use those systems effectively, and suggests 11 practices companies can follow to build a healthy CRM system that will help increase sales.

Forces for Change It's clear that the industry's fast-growth, high-revenue days of the 1990s are over. Most companies have lowered their revenue and profit projections, because they expect to earn less from blockbuster products, and there are fewer potential blockbusters in the pipeline than there were during the last decade. To make matters worse, at the regulatory level, the new-drug approval process has generally slowed.

A more fundamental reason for lower revenue and profit projections is price pressure from federal regulators, key members of the US Congress, and managed care organizations, which have succeeded in lowering drug prices for their members and are pushing to bring low-priced generics to the market faster. Generics already account for nearly 50 percent of all prescriptions written in the United States, the largest prescription drug market in the world.

And companies' efforts to squeeze more sales from existing products are running into regulatory hurdles. FDA is reviewing more direct-to-consumer advertising and lobbying efforts and issuing more citations for sampling and physician incentive programs.

Although blockbusters were the revenue saviors of the past, contributing an average of $2 billion annually each, expectations for future products could be as low as $500 million.

Complex Ecosystem In view of the complexity of companies' sales and marketing divisions and their resistance to change, alterations in the business environment pose a major challenge. Of the companies surveyed, not one views its promotional operation as a single, unified entity. On the organizational level, business units serving discrete market sectors such as primary care, specialties, and managed care operate on an autonomous basis.

On a functional level, senior executives, sales management, marketing, market research, product managers, and field sales reps tend to work independently and have limited ability to exchange ideas and information.

Because of that culture of separation, most of the companies surveyed were unable to solve the basic problem of creating a consolidated body of information that the various and highly mobile users in the sales and marketing operation could easily access and share. Instead, information is maintained in separate silos, which provide no access to managers outside one business unit or functional area. Further, those silos tend to favor the primary care business, to the exclusion of institutional, specialty, and managed care units. In the absence of a holistic view, many companies have become bogged down in elementary issues, such as trying to capture reliable data or reporting sales electronically or on paper, and thereby wasting time, money, and human resources.

The separation of business units, managers, and information severely limits a company's ability to effectively market products. Because each unit operates in a vacuum with partial information, no one in the company benefits from a consistent method for measuring the business, let alone looks at it in a way that factors in all of the marketplace relationships and interdependencies. Thus, for example, most pharma companies consider it virtually impossible to maximize a managed-care contract by generating a pull-through list of prescribers.

Improvement Scorecard Although all of the large and mid-sized companies surveyed sought to use some form of SFA or CRM system to improve their performance, they were at different stages. Some had recently completed installations, some were implementing new systems, and others were replacing systems provided by suppliers who had gone out of business. But only three of the companies seemed to derive benefits commensurate with their investments.

Those winners were using technology to make information available to their entire sales and marketing team and to measure the effectiveness of their sales programs more quickly than their competitors. That information included details about prescribers and healthcare plans as well as targeted business analyses and measurement of the teams' sales success. It also allowed team members to identify and exploit business opportunities rapidly, manage their different sales regions as empowered entrepreneurs, and enjoy overall sales growth.

One mid-sized company with a blockbuster product used its CRM system to manage co-promotional efforts at an inter-company level- with a sales and marketing partner-allowing the two companies to exchange data on detailing and sampling efforts and to make their multi-company sales team more effective. As a result, managers were able to measure performance, to deliver updated target lists to individual sales reps, and to redirect sales efforts based on newly identified opportunities.

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