When the Customer is King

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-02-01-2002,

An evolution is underway. As the industry faces new technologies and economic changes, many companies have begun to experiment with the concept of customer centricity, otherwise known as customer relationship management.

An evolution is underway. As the industry faces new technologies and economic changes, many companies have begun to experiment with the concept of customer centricity, otherwise known as customer relationship management. CRM's value to pharma companies is not just a near-term increase in sales or market share. It is also the integration of insights and the long-term development of relationships with customers who may one day buy products that don't exist yet. That requires a fundamental transformation from a product-centric business to a customer-centric one.

CRM in pharma is not new. Rather, it is an extension of practices that have evolved to meet the challenges of the increasingly complex pharma customer, from professional prescriber to patient end user.

This article explores the concept's drivers and components, differences in pharma companies' approaches, and some lessons learned from early examples of implementation.

Variations on the Theme

There are several ways to tackle CRM. Many companies focus on enhancing traditional physician or professional relationships for greater and more immediate market impact. Others concentrate on consumer-directed initiatives to leverage the growing amount of demographic and behavioral information they have collected. Still others use technology as a tool to improve and streamline information and services internally and externally.

In early 2001, many pharma companies took on the challenge of defining a broader CRM vision that would coordinate their internal initiatives and better integrate external efforts to reach both professionals and consumers-including individuals at risk for a particular disease, patients, and caregivers. A global corporate culture and more aware leadership have encouraged companies to widen their vision of CRM. Taking a long-term view of the converging international marketplace, top management is now beginning to drive a holistic CRM approach to achieve operational excellence and sustain a competitive advantage.

Change Drivers

The need to improve customer interaction methods has been triggered by the need to update sales force automation (SFA) systems, to improve returns from direct-to-consumer (DTC) expenditures, to keep pace with advances in technology, to deflect competitive threats, and to respond to increased external scrutiny and regulation.

Recent industry mergers-Glaxo Wellcome and Smith-Kline Beecham, Pharmacia and Searle, and Pfizer and Warner-Lambert-increased the size of sales forces to the point that existing SFA systems could not absorb the combined needs of two sales departments or readily integrate disparate systems. Because sales forces are the single most important and costly component of a CRM strategy, many companies are updating their current SFA systems or changing to newer platforms that enable better CRM. Some companies are improving their use of sales technology to enhance market knowledge, improve targeting skills, and increase call productivity, as reported by Dr. Michael Ahearne of the University of Connecticut (Business Technology, May 2001). Merged product portfolios also underscore the importance of planning throughout a product's life cycle. CRM allows companies to focus on high-value customers, such as influential physicians or at-risk consumers, and can help optimize launch allocations when resources are available. With an infrastructure in place, it can also help product managers better target late-stage marketing, which receives less funding.

Many pharma companies have concluded that corporate systems-particularly information and data-storage components-no longer serve their needs efficiently. And, as DTC ads and programs increase in number and scope, consumer data has become much more complex than traditional spreadsheets and simple databases. Consolidation of disparate consumer information into a single repository is fundamental to CRM as a vehicle to enhance relationships with consumers and to decide which patients deserve more costly programs. Improved systems also facilitate compliance with federal regulations, such as managing electronic signature capture and deploying corporate privacy policies.

Why Now?

The feasibility of enterprise-wide solutions is moving companies to define a vision and technical platform that coordinates marketing and sales. Connectivity between internal and external operating systems provides a pathway for an overall CRM system that encompasses not only technology but also processes, skills, information integration, and analytics. Such an enterprise-wide solution coordinates marketing and sales activities, pools information from multiple interactions and improves the effect of such interactions through better segmentation, targeting, and timely follow-up action.

Today's customers-professionals, general consumers, patients, and caregivers-want relevant information when they want it, in a format that suits their tastes, through their preferred communications channels. To influence those customers, today's pharma companies must allocate resources over a complex mix of messages and media that is no longer driven by yesterday's formulas for success.

Complex Customers

In the pharma industry, two customer segments dominate: professionals and consumers. Professional CRM, in general, describes the management of the relationship between a pharma company and a medical professional. Consumer CRM describes the management of relationships with those who use pharma products or services. That includes individuals at risk for a targeted disease, patients who take a particular medication, and even caretakers of those patients.

Today, physicians remain center stage, and traditional forms of promotion prevail. In 2000, companies aimed approximately 85 percent of the $15.5 billion spent on pharmaceutical promotion at professionals. That included physician detailing, events, and journal advertising. But they directed only 14 percent to consumers and less than one percent to online investment, according to 2001 estimates by IMS Health, Jupiter Communications, Scott-Levin, and WR Hambrecht & Co.

Looking forward, however, research by the Gartner Group indicates enterprise-wide CRM competencies will become more evident in the marketplace in 2005. (See "Today's CRM.") As a result, teams responsible for professional, consumer, and patient segments can be expected to collaborate more closely, leverage customer information, and deliver more unified and coordinated initiatives. Executive leadership and first class implementation, could accelerate cross-functional collaboration and information integration.

Holistic Rationale

For CRM competencies to develop, it is important to integrate the information gathered as individual customers interact with the company. Because a customer's multiple interactions are interrelated, a consolidated view provides a better understanding of the customer's likelihood to change behavior and, thus, a better basis for a response with the most impact. Companies must coordinate and communicate internally so that individual departmental efforts appear seamless to all customers. Regardless of the communication channels used, customers should believe that the company recognizes and values them and their individual needs, and likewise, companies should capitalize on those insights.

Valuable experiences outside the pharma industry can illuminate the factors necessary for success. Driven by the need to improve customer service and increase sales, Murphy's Brewery, an Irish subsidiary of Heineken International, developed a holistic CRM approach (IDC Report #PR17G, "Measuring Customer Loyalty in the eBusiness Era: Five Real-Life Case Studies," December, 2000). Murphy's aimed to create a system that could recognize a customer across all channels, regardless of how the customer contacted the company. In less than a year, the company redesigned and streamlined its sales, customer service, and order management processes; selected and installed a CRM system; provided training and support; and embedded performance metrics into day-to-day operations. The resulting benefits included a 14 percent rise in packaged beer sales, increased customer satisfaction, improved call handling, and improved order entry. Murphy's sales agents also had 10 percent of their time left for other duties.

Holistic CRM allowed the company to collaboratively manage multiple customer segments, satisfy specific customer needs, and mesh communications, regardless of the point of contact. Similarly, pharma companies will find that, when they link information from different corporate departments, their interactions with customers will be based on full prior information and any follow-up actions will be based on collective insights. Collaboration and insight sharing among all stakeholders allow companies to retain and use customer feedback as an intellectual asset rather than losing this knowledge as people change positions.

Missing Link: Analytics

Today's analytics can enhance professional marketing by enabling companies to gain more information about behavioral and attitudinal factors influencing their customers. Generally, companies research behavioral characteristics of physicians, patients, and consumers as they develop their product positioning, strategy, and tactics. But now companies can incorporate behavioral segmentation into their day-to-day, customer-facing operational activities and continually add to their customer knowledge base.

In a recent pilot program for a major US pharma company, sales reps were asked to characterize physicians' beliefs about managing of a particular disease, their understanding of a newer way to treat it, and their knowledge of how a newer class of drugs works. The company then mined that data to see which behavioral characteristics aligned with prescribing behaviors. After further analysis that confirmed the most effective sequence of messages, the company electronically delivered the preferred action steps-customized for particular physicians-to their sales reps. The company was able to use technology and turn data into knowledge into insight into action on a near real-time basis, thereby better integrating marketing and selling processes and improving effectiveness.

Leading companies also use robust analytical tools and reporting mechanisms to meet the needs of strategic planning, regulatory compliance, resource allocation, performance measurement, and incentive alignment. Attention to such managerial needs can reduce unnecessary or redundant internal operations or confusion. One company discovered it had nearly 75 systems for medical market data; another had more than 15 medical opinion-leader databases operating on different systems. Improved internal efficiencies provide a unified view of the customer, thereby avoiding duplication of effort and improving return on investments.

CRM in Action

Overall, pharma is at the early stages of developing and adopting holistic CRM. The following examples of very different CRM projects indicate the wide range of today's initiatives:

CRM vision. Several major companies have undertaken "vision" initiatives. To define the scope of the task, identifying the customer is the primary concern. With progress, it is also important to conduct the initiative with active executive support and the leadership of a recognized peer. Unless a top executive is in charge, too many groups often claim CRM ownership, triggering defensive postures and fragmented decision making. During the planning stage, it is critical to gain buy-in throughout the organization. That task requires a cross-functional effort to ensure that business and technical issues are considered in tandem.

Handheld technology. With the rapid acceptance of relatively inexpensive handheld devices, pharma has begun to explore the potential for improving sales force productivity and for obtaining higher quality information about physician interaction. One company's specialty sales force was equipped with CRM software installed on new handheld devices and on existing laptops. That team's success is a result of carefully refined requirements, training for rollout, and implementing systems that evaluate performance, goal achievement, and knowledge transfer.

Thought leadership. There is a clear correlation between clinical rapport with thought leaders and early and lasting market success. Many top companies have set up databases that profile thought leaders and log interactions with them, whether initiated by marketing, medical, or sales. Cross-functional teams regularly review those databases to see whom they are contacting, the frequency and nature of that contact, and whether sustained interaction aligns with product priorities and long-term business goals.

Call center capabilities. The call center is a necessary part of CRM that provides faster, more integrated, and more personalized service by using prior experience to anticipate callers' needs. One company found that sales reps drive 80-85 percent of medical requests taken through its call center. That company's solution was a more efficient process for managing document requests.

Other companies are installing new and efficient systems that address the need for faster, more responsive customer service processes. To prepare for the launch of a new cancer treatment in the United States, for example, a major UK-based company designed and implemented a call center with an order processing application. Key business objectives were to

  • provide an integrated order processing application for use within a product specific call center

  • integrate the application with internal finance and enterprise-wide systems and external entities

  • comply with federal and local regulations and guidelines for account registration, delivery logistics, and treatment scheduling.

Each product order required detailed processes for customer registration and verification, order processing, order fulfillment, and treatment scheduling and delivery.

Multiple communication channels. Many overlapping processes are involved in managing call centers, websites, and request fulfillment, including information capture and storage. Typically, companies outsource all or most of those processes including database management, often by product. However many processes and databases can be consolidated for greater efficiency and effectiveness in operations and impact. A major US-based pharma company recently implemented a web-enabled CRM solution that involved software that allows marketing managers to better track customer responses, select an appropriate mix of messages and media, determine the optimum frequency of communications, and improve response models on an ongoing basis.

Key business objectives included conducting both time- and event-triggered marketing, increasing the number of sophisticated web-based campaigns, accelerating "campaign-to-market" time, improving campaign cost management, and integrating consumer communications channels. The selected solution achieved the following:

  • simplified campaign management processes

  • aligned roles and responsibilities

  • integrated appropriate campaign and website tools.

Consumer and professional integration. Web-based and electronic programs have afforded pharma companies new opportunities to interface concurrently with both consumers and professionals. One pharma company recently tested an acne treatment and used InfoMedics to capture self-reported data. It passed on the data to the patients' prescribing physicians and then surveyed them regarding the medicine's effectiveness, patient results, and results of the data-reporting experience. Of those doctors, 74 percent believed the program offered a useful means of evaluating a medication. More than 85 percent agreed that patient feedback helped support their prescribing decisions. And 64 percent said the program provided an opportunity for more useful interaction with the company's sales reps. Thus, companies can create new value around products by providing a forum for greater collaboration between patients and healthcare professionals. Using the web, a leading pharma company engaged Softwatch to develop a disease community portal for multiple sclerosis to assist professionals, patients, and caregivers. The website helped enhance physician-patient interaction and improve overall patient compliance.

Clear Vision Critical

To achieve customer centricity, pharma companies must view CRM in a holistic manner. A clear CRM vision, including a plausible implementation plan, is critical to success. Companies that understand their customers' needs and preferences can deliver more effective messages and services more quickly, and more successfully, in the marketplace. CRM necessitates the integration of customer information from multiple sources and the coordinated deployment of multiple activities among many customer segments. As the industry changes and shifts its focus to customers, CRM will be one of the most important tools helping companies to maintain a competitive edge.