Making Sense of Sales

How do you rationalize a sales force without sacrificing sales effectiveness? Try these strategies
Nov 01, 2008
By Pharmaceutical Executive Editors

Kelly Tousi
If generics competition, skimpy pipelines, and increased price pressure from managed care haven't done the job, maybe four-dollar-a-gallon gas, the credit crunch, and a sagging global economy will convince you: You need to save money on your sales force.

Angela Bakker Lee
Face it, the direct sales force is one of the largest costs for most pharma companies, and many companies react to any financial shortfall with a temporary reduction in sales force head count. But in the long run, companies don't need a quick fix. They need to find ways to create built-in efficiencies that will lead to sustainable increases in profitability. To do that, they need to address both sales force size and the underlying benefits and risks of their sales model. And that means they need to challenge the conventional wisdom about pharmaceutical sales, considering alternative selling strategies that align with the needs and preferences of their most important customers.

Here are three strategies that deserve consideration.

Put More Products in the Bag

Pharmaceutical companies have long operated under the assumption that pharmaceutical salespeople cannot maintain the high level of expertise required to detail physicians effectively on more than two or three products. But are we selling reps short? Pharma's habit in this area runs counter to sales practices in industries such as high tech, industrial manufacturing, and medical products, where salespeople of similar tenure successfully sell a wide range of specialized products and services to equally demanding customers.

When companies limit the number of products a single salesperson carries, they hinder the rep's ability to adapt to local conditions and offer a product mix that best suits the needs of individual physicians and their patients. It also adds unnecessary costs to the system. Many companies could rationalize sales forces and reduce their costs by as much as 10 to 15 percent—without sacrificing sales force effectiveness—by thoughtfully increasing the number of products that salespeople carry. This sort of change has other benefits as well: It allows greater variability in the product mix from territory to territory and rep to rep, permitting companies to customize sales force resource levels. It also has the potential to reduce demands on physicians' time, easing the irritation of customers who feel they're called on by too many different salespeople from the same company.

Companies with broad product portfolios may need to take an incremental approach to training their salespeople on more products, and making the needed operational changes. For others, it could be a speedy, relatively seamless transition—especially for veteran reps. One salesperson we spoke to has sold almost every product in the portfolio over the last two years as a result of sales force restructuring and alignment changes. If his company were to make this change, salespeople like him would simply have to brush up on a handful of products before they hit the street.

For the sales operations team, adopting this new "highly differentiated" approach to sales force resourcing has many implications for downstream systems and processes that need careful consideration. Some sales operations teams have the tools and resources to take it in stride, but others will need to shore up their capabilities in order to cope with the new demands presented by this model.

In many cases, supporting this kind of change could also require more sophisticated decision-support systems, new business processes, and the development of tailored incentive compensation plans. While management may be concerned that this transformation adds an unnecessary layer of complexity to sales planning and operations, the potential benefits in terms of greater efficiency and cost savings clearly outweigh the risks.

Explore Hybrid Sales Models

Every pharmaceutical company's customer database includes both low-value doctors and "no see" doctors who won't see reps at all. Companies often include these physicians in their direct sales force assignments, planning (and hoping) for a time when the preferences of these customers might change, or when a salesperson might break through and achieve a relationship with them. Yet deploying an expensive door-to-door salesperson to service customers who would either prefer, or do just as well with, a low-cost transactional sales approach is remarkably inefficient.

lorem ipsum