effective sales force
TRANSCRIPT
Efektivita prodejních aktivit: novýstrategický imperativ
Ivo Sulovsky,
Director Consulting Services, IMS-Health
Špindlerův Mlýn, 13. května 2006
2
Agenda
• Current Situation
• Prevailing market shifts
• Emerging Trends around Sales Forces
• Practical Approaches
3
Market pressures today are directly impacting sales strategy and execution
• Healthcare Cost Containment
• Pressure on Growth and Productivity
• Product Uptake & Safety
• Understanding and Measuring the Market
• Prescribing influence networks
• Portfolios shifting towards specialty products
4
Some companies are under great pressure to deliver top and bottom line results
R2 = 0,4208
-20.000
-10.000
-
10.000
20.000
30.000
40.000
50.000
60.000
0 200 400 600 800 1000 1200
Spanish Representatives
(€T
hous
ands
) In
crea
se in
sal
es fr
om
prom
oted
pro
duct
s
Source: IMS Spain market analysis
5
Source: IMS National Sales Perspective and Integrated Promotional Services, March 2006. US market only
50.000
60.000
70.000
80.000
90.000
100.000
1997
1998
1999
2000
2001
2002
2003
2004
2005
(e)
SALES
REPS
US Sales force size(Top 30 Companies)
Growth of Detailing Productivity
The incremental return on details has been declining in the US for two years
Key question: How many PSRs does a company really need and how should the sales force be structured?
-30,0% -20,0% -10,0% 0,0% 10,0% 20,0% 30,0%
2005
2004
2003
PRODUCTIVITY GRWTH
6
Numerous recent press announcements illustrate the relevance of SFE measures
• Pfizer: “Pfizer plans to reorganize its domestic sales force of 11,000 employees to shrink individual sales territories and reduce the number of sales representatives
calling on each doctor. But it said Pfizer isn't planning for widespread layoffs although
there could be some reductions through attrition.”
• GlaxoSmithKline: “We do believe there is an arms race out there in terms of sales forces and that if you were to redesign the system from scratch you would end
up with smaller sales forces…The number of representatives promoting rival
medicines has now reached the level where physicians are becoming overwhelmed
and it would make much more sense to divert some of the marketing spend to more
productive areas.”
• Wyeth: “We are looking to change the way our sales force operates…We are looking at delivering medication in a more effective manner.”
7
Drivers 7 - 14
Source: Ranking based on IMS-Management Consulting Sales Force Check 2005; survey among leading pharmaceutical companies in Germany (n=41)
Compensation
Training & Coaching
Sales force structure
Sales force culture
Monitoring
Sales force size
Territory structure
Tools & data
Management of leading companies rate SF competence, targeting and customer segmentation as TOP future drivers
Motivation
Sales force competence
Targeting
Customer segmentation
Analysis & Diagnosis
Communication
Top 6 Drivers
8
A shift from the SoV paradigm to an intelligence driven organization leads to revenue gains
Possible Revenue Gains Through Selected Sales Force Effectiveness Drivers
5 - 15 1 - 50 - 3 5 - 20
2 - 15
2 - 52 - 10
2 - 15
2 - 10
Targeting Increase of call
frequencies
Increase of detailing
time
Optimize SF
structure
Optimize territory structure
Enhance detailing impact
Align sales & marketing strategy
SF tools &
data
Enhance SF culture &
motivation
Source: Experience values from over 50 IMS-SFE projects in Europe
9
The relevant SFE issues have been addressed by companies around Central EuropeanExamples of IMS SFE experience in other CE countries
• Austria− „early adopter“ – majority of the industry has engaged in SFE
projects since 2004
• Poland− Numerous companies have started Targeting & Resource
Optimization projects− Pharmacy segmentation was first in focus, doctor segmentation
and sales rep targeting education are „booming“ now
• Hungary− Targeting/Sales Force Sizing activities in up-take− First projects on the market at the end of 2005, activities of
companies raising in 2006
10
− For the market 20% of the doctors account for c55% of sales
The main focus of SFE-projects has been on understanding the market concentration...
Source: IMS UK-Xponent Data
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
% of doctors
% of Rx
Total Mkt Diovan Teveten Olmetec
Micardis Cozaar Aprovel Amias
11
...as well as the impact of call frequency...Revenue
0
500
1,000
1,500
2,000
2,500
3,000
0 (n
=57
32)
1 (n
=33
26)
2 (n
=22
07)
3 (n
=24
86)
4 (n
=25
4)
5 (n
=83
0)
6 (n
=64
1)
7 (n
=49
5)
8 (n
=38
0)
9 (n
=23
9)10
+ (n=
882)
Non Target Target
Source: IMS UK-Xponent Data
12
Pote
ntial:
Mark
et
Valu
e
Performance: Product A Market Share
High
HighLow
...and segmentation of doctors/ hospitals/pharmacies into four basic segments
DefendInvest
MaintainIgnore
13
Source: IMS Consulting Longitudinal Performance Management
Share of Voice
MessageContent
Peer to Peerinterventions Exposure to
Journal AdsExposure to DTC
Patientinterventions
Pharmacyinterventions
Internet SearchesPayorinterventions
All MedicalConferences
Specialty
Physician PrescribingHistory
Pharma Detailing
Pharma Sampling
Physician Region/Geography
Monitored Medical Conferences
New markets challenges make it necessary to dive “beneath the surface”
14
Pote
ntial:
Mark
et
Valu
e
Performance: Product A Market Share
High
HighLow
Maximise
Revenue or
Profit
Investigate
Influence &
Attitude
Optimise
Sales Effort
Check for
Influencers
The “New Thinking” in Segmentation and Targeting is more complex
15
The impact of relative channels are studied in more detail
Source: IMS Consulting Longitudinal Performance Management
70% 70%75%
46%
34%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Pharma Patient Peer Payor Pharmacist
Relative Impact of Channelon Rx Intentions
16
Example: Measured Impact of Primary Care Organizations, Hospital and Pharma Activity on Prescribing in UK
0
10
20
30
40
50
60
70
No positiveinfluence
Positive hospitalonly
Positive PCO only Positive hospitaland PCO
Average Rx per GP
GP not called on GP called on
Impact of rep activity
Source: IMS Consulting Longitudinal Performance Management
17
“Influence & Attitude” become the third dimension to Segmentation and Targeting
P(v) = f O(p),A(p),I(p)
Prescribing value is a function of the Opportunity to prescribe plus
Attitude to prescribing plus Influence on prescriber
Opportunity
Share
Influence & Attitude
18
Source: IMS Health SMR Team Analysis, Multiple publications & websites, as of March 2004
Number Of Blockbusters
44
82
23%
77%
40%
60%
0
10
20
30
40
50
60
70
80
90
2000 2002 2004
Primary Care Specialist Care
Specialist sales force will become more important due to market shifts towards specialty products
19
Increase Impact of Calls
Whileadaptingto
Challenges in Sales Force Effectiveness are drivingchange towards Precision Sales & Marketing
Right relationship with right prescriber
Published(IMS Health)
21.4 Bn
Pharmacyexport
Pharmacydiscounts
Manufacturerclaw-back
Net ex-manufacturer
Growth ratesM8/05
+6% 15% 0% +8%
20.06 Bn
-21%
Ex-man
WholesalerExport
Measure Results of Sales Call Activity
Speciality drives Sales Force Design
Dynamic Customer Understanding
Dynamic Market Understanding
Increasing SalesProductivity
Increasing MarketComplexity
20
Increased market intelligence and usage of alternative channels belong to the main SFE trends in Europe
More effective utilizationof other promotional
channels in concert withthe field force
Increased spending on competitive intelligence and re-structuring field
forces
Using technology more effectively
Roles and representatives are changing with evolving
models
21
Sales Organization models are changing, right sizing/structuring of the team is the main issue
Right-sizing:removal of mirrored field
forces
Smaller field forces:one rep that sees 30-40 prescribers more often
Key Account Mgt:relationship rep can call in specialized personnel as
needed
Account based selling:managing groups of
prescribers based on % effort and not R&F
22
Resource Optimization answers key questions to allow for deployment of an optimal sales force
How many reps should we have in our sales force?
What is the optimal number of
sales teams?
Which products in which detail
position should we include per team?
How should we structure the
management of our sales force ?
How does our structure impact
our desired coverage and
frequency targets?
How can we best manage the
change involved in sales force
deployment?
Which scenarios should we consider and which future eventsshould we take into account?
23
Optimizing Sales Resources follows four basic steps, but frequently gets very complex
Just follow four steps:
1. Determine the target population and segmentation
2. Determine the desired frequency on the different segments
3. Determine the capacity of each rep to deliver frequency
4. Calculate: Targets x Frequency / Rep Capacity = Size
24
1) Determining Target Population
• Segmentation is a discussion all its own, but in the end you must determine:
− How much of the population you wish to cover
− Which segments you want to approach
• In the simplest case, you can consider the entire population on a concentration curve
25
First StepPrescribing concentration, segmentation & targeting
100%
100%
Cumulative Prescribers
Cum
ula
tive P
rescriptions
26
Using Your Segmentation
• If you are using a multiple segmentation strategy, clearly identify the number of targets in each segment
A18,000
A24,000
B112,000
B26,000
Untargeted70,000
Penetration
Pote
ntial
27
2) Determining Frequency
• We begin with the response curves. Over longer periods, they can resemble an S, although often they look more logarithmic:
Frequency
Results
28
Return on Calls
• If you know the S-curve and your target potential, you can calculate the return on frequency
Sale
s /
Cost
Frequency
Total cost
Sales
Negative return
Positive return
29
3) Determining Sales Force Capacity
• How many calls can a rep deliver in a year?
Days in Field x Calls per day
• This means that you have two levers to increase rep call capacity:
− Increase days in field
• Reduce meetings, increase satisfaction
− Increase calls per day
• Better route planning, review territory alignment, increase satisfaction
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4) Calculating Size
• Annual Rep Capacity = #Days In Field x #Calls per Day
• Σ(Number of targets per group x desired frequency per target group) / annual rep capacity = needed reps
• Factor in turnover
• This should be done for each product to determine the total details needed
• Factor in relative detail position factors to determine total number of reps
• Adjust for salesforce coherence
31
At which point in the profit curve do you find your optimum balance between costs & profit?
Incremental Sales
Effort (Reps, €, etc)
Calculated Optimum
Contributionx
Area of Recommendation
Actual
€
Cost
Too much riskMediumLow
The optimization of sales-force size should be based on quantitative analysis, but overlayed with management judgement – thereby taking realistic and
practical possibilities for change into account.
32
IMS supported Resource Optimization process involves five key phases
Initiate Sales
Resource Optimization
Project
Gather and Analyze Data (Prescribing Knowledge
Base)
Develop Promotion Response models
Analyze Brand/Portfolio
Optimization and Develop
Recommendation
Closeout Project and Plan Next
Steps
ProjectActivities
Internal project kick-off
Client kick-off Base Case Data Gathering Promotional response review
Meetings/Workshops
Final Analysis
ImplementationPlanning
Resource Optimization
Historical Data Review Market Dynamics/ Scenarios
Prelim. Analysis
Close/ImplementationPlanning
33
Strategy design to reach 2008 in optimum shape for new launches without damaging short-term profitability
This company faces up a difficult situation because their two main products are affected seriously by the current regulation and the rest of the products in the portfolio are playing in decreasing or very competitive marketsThe company has recently launched a new product but its sales potential is not as high as expected and the next launch is not expected until 2008. The company needs to “bridge” their way through to 2008 when their launches were taking placeTaking into account all these points this company asked IMS for advise to analyze what an optimal size and structure could be and how to make it “implementable”
Situation
IMS developed a model to study the optimal sales force size and structure for that company at that moment. The model is composed by two parts:
First, the optimum per product is calculated, considering carry-over, response curves, concentration curves, …
After that, it is necessary to combine the different products to obtain the portfolio optimum
Approach
Client Midsized international Pharmaceutical company (study conducted in Spain)
Results & Client Benefits
• The outcome of the project consisted not only on the development of the sales force size and structure and its profitability in the scenarios considered but also on the portfolio design per specialty for the following four years, coverage, frequency and deployment
• In the first year after project completion, the company has reached the sales and profits forecasted in the selected scenario: sales increase of 6%; cost decrease of 12%
Client Case Study
34
IMS has the highest level of local knowledge covering European markets and the prescribers contained within them
• Local prescribing knowledge
• Local market knowledge
• Local information sources
• Local consultancy teams
• Local relationships
Global capability with common
methodologies
LocalKnowledge
Highest
possible
level of
precisionutilizing
lowest level
of
information
granularity
available
per country
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Strategy Development
Analytics: State-of-the-art analytical platforms powered by SAS
Information: Developing and leveraging world class information assets globally and locally
People/Methodologies: Global consistency with local knowledge and understanding
Planning Implementation
Change Management, Training & IM: Define, manage, implement and monitor the transition
Sales Models OrganizationalStrategy
Performance &Compensation
Information & Infrastructure
SalesStrategyEvaluation
Profiling, SegmentationTargeting
Promo Response
Resource Optimization
CallPlanning
TerritoryAlignment
TerritoryMgmt.
Perf & CompAdmin
IMS is ready to support you with our Sales Force Effectiveness Framework!