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The basic process of defining customer segments and appropriate promotional messaging benefits from a cross-disciplinary approach
Physician-facing sales representatives remain the dominant means for communicating the manufacturer’s messages, but sales reps find it increasingly difficult to meet with physicians for the amount of time required to deliver targeted information. Our objective is to provide recommendations for addressing physician segmentation issues specific to the pharmaceutical industry based on our collective expertise gained from years of industry consulting and the successful implementation of numerous segmentation projects. The common element for success is the use of an institutional and disciplined approach to segmentation. Carefully constructed physician segments, along with the corresponding promotional messaging, can be the key to success for both the brand and the firm.
Segmentation: values and challenges
The goal for physician segmentation is to reach prescribers who share similar prescribing behaviors with appropriately tailored promotional approaches. This methodology enables pharmaceutical companies to boost sales force efficiency and lower their “cost to serve,” which is an important consideration in the current resource-constrained business environment.
Over the past decade, many pharmaceutical companies have evolved from the basic volume-based segmentation template to more-sophisticated attitudinal segmentation methodologies. While more and more-advanced analytical techniques are being used, the results have been largely mixed. Specifically, some companies derive little benefit from the advanced attitudinal segmentation schemes, because the methods they choose are:
• Too complicated - Collecting the data is a difficult process that can be expensive and time-consuming.
• Not actionable - Segmenting physicians may require sales representatives to profile prescribers using a separate set of questions because the methods generate results that are too complex.
• Non-differentiable - Messaging for the various segments turns out to be strikingly similar in spite of the substantial effort to develop the physician segments.
The difficulty with designing and implementing virtually any physician segmentation program arises, in part, from the compartmentalized practices within pharmaceutical companies themselves. Typically, a dichotomous relationship exists between marketing and sales. Marketing teams perform the overall segmentation with the assistance of market researchers, while sales and sales operations develop the call plans—resulting in conflicting goals for the promotional campaign. Without reconciling these disparate outcomes, each group addresses its own set of priorities and prerogatives, thus sub-optimizing the overall effort.
Marketing organizations, for example, traditionally conduct segmentations to determine, at a high level, what prescriber segments exist within a market, which segments offer the greatest responsiveness to promotion and return on investment, what messaging is required to motivate these segments, and what mix of promotional activities is required to engage physicians effectively. These activities generally result in segments based on customer attitudes toward both the product and product promotion derived from physicians’ responses to survey questions. Such reliance on surveys frequently produces a handful of segments often labeled with fanciful names such as “Brand Loyalists,” “Efficacy Advocates,” and “Early Adopters.”
This approach to segmentation, although sufficient to answer marketing’s questions, may not support optimal sales force execution for the following reasons:
• The primary research surveys are typically sent to a random sample of the entire prescriber universe, including physicians who do not appear on the company’s target lists. Therefore, insights derived from the research surveys may not accurately reflect the targeted physicians’ prescribing behaviors.
• The national view, represented by the research survey results, is too broad to be meaningful at the territory level where actual sales promotion activities take place.
• The lack of sales force involvement in developing the prescriber segments leads to skepticism and diminished motivation to participate, since sales has no vested interest in the segmenting process itself.
Compared to marketing’s approach to segmentation, sales departments want to know which physician groups offer the greatest value potential. This information is viewed as critical for determining the size of the sales force and for developing the promotion plan for reaching key prescribers. Specifically, sales needs information about the makeup of the prescriber segments at the physician level.
To obtain this level of granularity, sales departments frequently turn to large, secondary databases for physicians’ new prescription volumes and brand market shares. These data allow sales to make decisions based on what physicians do, not what they say they do. The resulting segments are generally “deciles” that sort physicians by their prescribing volume. But unfortunately they offer no insight into each physician’s motivation, information needs, communication preferences, and future strategic importance to the brand. Such segmentations, even at the individual physician level, do not allow the field sales force to operate with any degree of precision in executing the brand strategy.
Successful Segmentation: The ideal approach
Our experience indicates that creating such a segmentation strategy hinges on five broad considerations:
1. Organization support for segmentation
2. A well-defined and consistent approach
3. High quality data
4. Appropriate methodology
5. Constant involvement of the sales force
Each of these five elements provides a vital dimension for formulating a balanced, comprehensive, and effective segmentation methodology.
1. Organization support for segmentation
To ensure the development of one segmentation approach that serves the needs of both marketing and sales, the segmentation leader must involve a cross-functional team from the outset. Active participation by representatives from all relevant functional entities, such as sales analytics, the sales force, marketing, market research, and even ad agencies, is critically important. Properly executed, this team-oriented, collaborative arrangement contributes to building consensus, ensures the final segmentation details are rigorously challenged, and supports buy-in for implementation and execution.
Beyond involving the firm’s functional groups, full organizational support for segmentation is imperative because other sales and marketing decisions flow out of it. Corporate decision-making is also driven to one degree or another by its outcomes. Segmentation results, for example, impact resource allocations across brands, promotional channels, and ultimately across sales forces. Similarly, investment decisions may require trade-offs across brands. These types of executive-level decisions have far-reaching impacts across the organization, and underscore the importance for senior management to understand the segmentation plan and to support its implementation. By setting expectations, creating a collaborative environment, and communicating openly, segmentation leaders can foster organization-wide commitment to the selected segmentation approach.
2. A well-defined and consistent approach
A properly conceived segmentation strategy must be linked integrally to the brand strategy. Achieving this linkage requires a well-defined and consistent approach throughout the methodology development process, and such an approach is characterized by the following top-level actions:
• Integrate segmentation into the overall brand and sales force plans, including the creation of physician targeting and messaging strategies, action plans, and territory alignments. In the short term, a lack of such integration results in higher spending without generating commensurate sales growth. Longer term, the consequences manifest themselves in reduced brand equity and weakened customer relationships.
• Ensure consistency between the core messages provided to the field force and those delivered via other channels.
• Include segmentation-specific rules to guide all physician interactions. These prescriptive “rules of engagement” provide transparent guidelines for how representatives should interact with prescribers.
• Provide training on segmentation specifics, including the implications for promotion and messaging. This step is particularly important for the sales force, which is not always keen to adopt a new approach. Representatives must understand the value and benefits of the segmentation strategy—a sometimes challenging objective, particularly when it means changing representatives’ call lists.
• Rely on sales force automation/business information systems to support differential messaging by physician/institution segment. Segment information should be readily available for pre-call planning and territory performance evaluation.
• Track execution against the newly defined segments vs. other means of categorizing doctors (typically quintile). By monitoring the business at the segment-level, representatives and management can evaluate the impact of the new strategies and refine them as needed.
3. High quality data
The pharmaceutical industry is a data-rich industry. A great deal of information is available through both public and proprietary sources. In fact, many consulting firms offer data at the national and sub-national levels. Traditionally, prescriber-level data has been the primary data source for segmentation, but the increasingly popular anonymous patient-level data (APLD) provide some unique granularity not seen in other data sets. Such detail includes:
• New therapy starts, switches, and add-on prescriptions
• Patient information such as age, gender, concomitance, dosing, and disease severity
• Compliance and persistence
• Managed care access for the brand
• Group practice affiliation
In addition, transactional data from a physician relationship-management database can boost the power of a segmentation study by matching actual prescriber behaviors with physicians’ stated needs and wants from other primary market research studies. The assurance of data quality requires not only the use of a competent data supplier, but also the collaboration between different functional groups within the company, such as marketing, market research, sales and sales operations.
4. Appropriate methodology
Various segmentation methods are available, stretching along a continuum from the most rudimentary to highly sophisticated approaches incorporating multiple types of information and advanced analytics. While many in the industry recommend the higher-order approaches on the upper end of the continuum, we believe a good marketer should adopt the method that provides the best fit with the needs and goals of the business. The more complex a segmentation analysis is, the harder it will be for sales representative to implement. Any evaluation of trade-offs should include participation by all the key stakeholders. Table 1 summarizes the pros and cons for major segmentation approaches that have been used by pharmaceutical companies.
5. Continuous involvement of the sales force
As mentioned previously, the successful implementation of physician segmentation depends highly on the sales force. Therefore, to realize fully the benefits of a segmentation strategy, the organization must ensure the active involvement of the sales force throughout the life cycle of the segmentation analysis—in other words from the conception of the segmentation approach through its deployment and concluding with its performance assessment. Failing to close the loop and create an end-to-end view of the segmentation analysis makes capturing “lessons learned” more difficult and puts the organization at a distinct disadvantage for the next segmentation cycle. This is the point at which pharmaceutical companies most often falter.
In our experience, successful companies encourage sales force participation in at least two ways. First, they involve a small sales force team to participate in the segmentation project from the beginning. Since sales teams are responsible for the ultimate execution of segmentation, their enthusiasm and feedback are vitally important. By recruiting a small sales team, including district managers and sale representatives, up-front, their involvement provides a valuable source for gauging sales’ commitment and gaining insights into needed modifications for the segmentation and promotion plan.
Secondly, successful companies pilot the resulting segmentation and promotional messaging in one sales district. This approach enables the company to work out any difficulties, incorporate feedback from beta users, and gather success stories before rolling out the segmentation to the entire organization.
In both the initial formulation phase and the subsequent pilot phase, avoid recruiting sales superstars. This safeguard will ensure that decisions are based on the input and reactions of those representatives who will likely face more challenges applying the segmentation in the field.
Advances in primary market research, secondary data availability, and analytical techniques enable companies to adopt a seamless, end-to-end approach to segmentation that takes the brand strategy straight through to territory targets, call plans, and incentive compensation schemes. When accomplished correctly, segmentation becomes an effective cost-cutting vehicle, growth lever, and market differentiator.
Through a rigorous segmentation process, a pharmaceutical company can deliver the highest value service to its customer base with the intent of building, maintaining, and defending relationships. As a result, the firm can position itself with a competitive advantage and ensure its long-term success.
About the Authors
Partha Anbil is a Practice Leader at Wolters Kluwer Health Pharma Solutions (Partha.Anbil@source.wolterskluwer.com). Wei Zhang is Assistant Professor of Marketing at Long Island University, C. W. Post Campus (email@example.com). Joe Markmann is the Director for Healthcare Policy at Wolters Kluwer Health Pharma Solutions (Joe.Markmann@source.wolterskluwer.com).