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Rafael Natanek (email@example.com) and George Eliades (firstname.lastname@example.org) are partners with Bain & Company’s Healthcare practice.
A customer "episode" is a key unit of management that can produce significant growth and cost savings, writes George Eliades.
Pharmaceutical companies find it increasingly hard to deliver growth from their in-market portfolios or through product launches. Categories have gotten more crowded, making market share gains harder to eke out. Price increases, the main lever in markets such as the US, are more difficult to impose. And doctors in many developed countries have been moving away from pharma sales representatives as a primary resource for learning about medicines. How, then, can pharma firms create the next wave of frontline productivity, becoming more efficient and delivering growth? Some leading firms have made progress through a customer-centered approach. The goal is to make each interaction with the company relevant, seamless and hassle-free, so that customers truly value the reps and channels as helping them make informed treatment decisions. And the key unit of management to make this possible is the customer “episode.” An episode consists of all the activities involved when a customer has a task to complete or a need to fulfill. It starts when the need is triggered and ends when the customer has met that need. Episodes focus the organization around the customer experience. As a result, they can produce significant growth and cost savings, because delighted customers buy more, stay longer, refer the company more to colleagues and often cost less to serve.
Our work with pharma firms shows that about 40% of a doctor’s drug recommendations are linked to how effectively a firm delivers an overall experience, as distinct from product-related attributes such as clinical data. That share rises to about 60% for factors within the control of the commercial organization. Doctors who give high marks for their experience with a company are between 2.3 and 2.7 times more likely to prescribe the company’s products as those who give low marks. Yet for the pharma industry as a whole, loyalty scores run low, both for the average firm and for many individual episodes. That’s because firms have focused mostly on pushing out sales and marketing messages through as many channels as possible. The industry’s mediocre performance does, however, open a major opportunity for successful episode management, guided by four principles.
1. Emphasize episodes that greatly improve both the experience and business results.
We have identified more than two dozen episodes that doctors find relevant for their interactions with a drug company. Executives will want to select a handful of episodes to tackle first, along two dimensions: how satisfied doctors are with the episode, and the effect of the episode on the doctor’s propensity to prescribe. Consider how different episodes rate for satisfaction and impact on prescription among US oncologists. While “I want to review clinical trial data” is important and delivered fairly well, others episodes lagged. “I want to monitor and measure patient outcomes” and “I want to understand the reimbursement status of a drug,” for example, each have a significant effect on prescribing but get average or poor ratings, respectively. Both are good candidates for redesign. Some episodes also vary by country and treatment area. “I want to receive samples” matters a lot to German physicians when they are making prescription decisions, while it is irrelevant to their UK counterparts, our survey of pulmonologists finds. Oncologists tend to rank “I need to understand treatment guidelines” much higher than pulmonologists do. Understanding which episodes to focus on, given a firm’s specific portfolio and geographic footprint, is the start to realizing the full potential of this approach.
2. Design episodes to remove hassles and evoke delight.
Designing episodes requires a deep understanding of customers’ needs, as well as which aspects of an episode evoke delight and which cause hassles. Surveys and focus groups provide a surface view, but uncovering deeper insights requires ethnographic methods such as shadowing doctors, asking them to keep diaries and related techniques. The resulting insights allow the team to design an episode that removes hassles as well as introduce moments of delight; the combination of these tactics is what makes for a superior experience. One global firm, for instance, decided to prioritize the “I want to connect with peers to learn about a medicine” episode, after it found that 40% of customers learned about new medicines through their peers. Aiming to sharply increase the number of peer-to-peer meetings, the firm identified five areas of hassle and delight in meetings, which when addressed should significantly increase customer attendance, improve the experience and help increase prescription rates.
3. Choose the right channel.
Customers have proved to be discriminating in their use of digital or human channels. Our survey shows, for example, that most doctors expect to be able to submit a medical query to a company online, but they prefer to connect with peers in person. This highlights the importance of devising a multichannel mix that meshes with customer preferences. A common area of vulnerability is the handoff from one channel to another within an episode-say, a doctor making a request online or through a sales rep to meet with a company’s medical science liaison. If that handoff gets botched or delayed, the entire episode could be tainted. Attention to handovers thus should be a key element of redesigning the episode.
4. Close the loop with customers.
Sales reps tend to be measured and motivated by product sales, with limited data on how they perform at the episode level, or how to improve delivery of an episode. To gauge whether they’re making progress or moving backward, companies can track customers’ perception of an episode by asking a couple of questions about the episode and the company, and then obtaining more detailed comments from a smaller sample of customers. Customer feedback goes to the relevant employees and supervisors, including the episode team, so that they can learn what does and does not work, change behaviors accordingly and follow up with customers. At regular huddles, teams can discuss the feedback, share learnings, escalate issues that cannot be resolved locally and follow up with select customers.
Putting the customer experience at the heart of global operations is not a trivial endeavor. Companies already must manage a complex cube in which multiple functions (IT, medical, sales) are trying to provide cost-efficient and consistent services to support scores of individual country operations delivering multiple products across multiple franchise areas to a broad range of customers (doctors, nurses, practice and formulary managers). Maintaining a focus on customers is tricky enough in the current cube, and shifting to an episode approach adds new challenges. To reap the benefits of global scale and consistency across all markets, as well as promote local experimentation, pharma firms will need to develop new capabilities, new ways of working and a dual-track model. Executives should keep several points in mind as they pursue or consider an episode approach:
Episode design and management has proved successful with forward-looking firms focused on creating an exceptional experience for customers. Other pharma firms can learn from those experiences and make their own strides in delighting customers, thereby improving loyalty and advocacy. Further, the episode approach opens up an avenue for productive growth, which has been so elusive in recent years.