Digital technology has reshaped the commercial models of numerous industries and shifted customer interaction preferences across the globe. In light of this digitalization trend, we feel compelled to ask what is the impact on commercial models in the Life Science industry: is the current commercial paradigm shifting? Is the iceberg melting? Or worse yet, has the ship already sailed? The following article explores these questions and the way in which Life Science organizations will answer them.
Sales and Marketing in Life Sciences may seem like one of the most conservative topics out there. It’s not “Mad Men” sexy, Coca Cola-style diverse or Google-enabled digitally shrewd, and is rarely referred to as “out of the box". By its very nature, Sales and Marketing in Life Sciences has always played it very safe and was focused on the product. However, given the current market environment and trends, the time has come to reassess the sustainability of this model.
The WHY: Current Market Trends
The buying process at Healthcare providers is changing, and has brought forward a significant number of additional stakeholders, each with different goals: state and private health funds, purchasing departments, nurses, pharmacists, administrators, GPOs, tender stakeholders, an increasingly involved payer and many others. The real challenge is therefore to establish who are the main decision-makers and influencers within the ever more complex stakeholder landscape.
Given this complexity, the traditional "face-to-face" model is simply too expensive and inflexible to deploy a truly systematic interaction plan across all stakeholders.
Changing customer value drivers:
Figure 1: Customer Value Drivers
Empowered by democratized access to information and motivated by the increasing share of cost they bear, patients claim their rightful place on the stakeholder landscape. However, Life Sciences companies are slow in answering. Today the level of patient engagement is so low that, if properly done, it will create a true differentiator with significant growth impact. How to capture this opportunity? Through digital technology.
While in the past patients' involvement with their healthcare providers may have ended at the doorway of their doctors' offices, today patients are using digital channels to interact with their providers. As shown in the graphic below, email and websites have become standard channels for patient information, surpassing personal visits to local services. If we take the Singapore data (as shown below) as an indicator of future trends in Europe, we see that Social Media and Mobile will catch up soon. Singapore paints the picture of a truly multichannel patient journey, where all forms of online and personal interactions are equal in importance.
Figure 2: Patient channel preference, frequency per year, %; Source: McKinsey Digital Patient Survey, 2014
Furthermore, specifically in the Health sector, technology breaks down the age barrier. Historically, older generations have a low adoption rate when it comes to digital channels, with the only notable exception being channels that have a direct impact on quality of life and well-being. These channels have a high adoption rate across all generations, thus creating an excellent marketing opportunity for Life Sciences to explore.
The Physician's specialty is also a factor in the adoption of digital channels, because of the differing dynamics and needs across fields: few long visits versus many short visits with patients or sessions in the Operating Room will condition each specialty on a different intake of information, different channels and content. Another factor is the overall dependence of the specialty on innovative technology, programming elements etc.
Figure 3: Physicians channel preference. Source: Eyeforpharma conference, Barcelona 2016
Next-generation commercial capabilities
Given the trends mentioned above, we are able to say that:
In order to be competitive in this environment, companies need to acquire a set of next-generation commercial capabilities:
Figure 4: Next generation commercial capabilities
While Life Sciences companies play a slow catch-up game, new players are entering the marketplace and creating substantial disruption by leveraging agility and superior digital capabilities.
Figure 5: Disruptive players with evolving business models
Summing up the current trends, the challenge to Life Sciences commercial models can be summarized as becoming evermore customer-centric to an increasingly complex stakeholder landscape, by effectively meeting evolving needs through new, technologically driven commercial capabilities.
The How: Designing a Multichannel Commercial Model: The vehicle to deliver customer centricity
Marketing departments in Fast-Moving Consumer Goods companies (FMCG) have pursued a multichannel strategy for so long that the term “multichannel” isn’t considered a buzzword anymore. However, Life Sciences cannot simply replicate this approach, given the extra layer of complexity: there is no single customer universe, segmented by behavior, preference, access etc. There are a multitude of very different and individual customer universes, each of them with a unique set of segmentation drivers. Maintaining consistency of message and orchestrating your interactions across these universes is the real challenge.
The Multichannel commercial model starts with customer preferences, which drive the customer experience, and, by aligning all the levels of the organization with the design, it feeds the insights back into the knowledge base.
Figure 6: Multichannel set-up framework
Understand your customer: meaningful insights
In Life Sciences, there are three barriers to information:
The backbone of the customer knowledge is the information from the field. Given that CRM adoption can often be problematic, an effective approach starts by accustoming sales representatives with functionalities they value, before gradually introducing information requests necessary for customer profiling. Then, based on the customer profiling, the next step requires understanding of how best to deliver the planned customer experience.
Figure 7: Available channels for Life Science companies
Design the customer experience
The customer experience is defined by a sequence of content and channels from the company to the customer with a final goal of conversion. There are three key success factors for effectively designing the customer experience:
Customer experience excellence is characterized by the ability to maintain consistency across channels: message, look & feel and timing. The role of the marketer is to ensure this consistency.
Align the organization to deliver customer experience
The Key Success Factors for the effective deployment of a holistic multichannel solution within an organization are:
Finally, the key to bringing it all together and the "buzzword" in the industry is Orchestration. Channels need to be orchestrated in order to coherently deliver the designed customer experience. As to who the Orchestrator should be (the Sales rep? the Brand manager? the CRM system?), the debate is ongoing.
Close the loop
Closed Loop Marketing within the context of Multichannel warrants an entire article in itself. If this element is missing, the potential of Multichannel is not maximized. All gathered insights must feed back into the leadership decision-making process as well as Marketing and Sales plans. Make sure to build or acquire CLM expertise. Multichannel is about content, not channels – it is about delivering the right content, to the right stakeholder, at the right time, through the channel they prefer and CLM enables this.
Establish a scalable foundation
The Multichannel model is built on a foundation that allows and enables its effective implementation. This foundation is dual: technological and cultural.
Master the Technology
Multichannel Excellence can only be achieved through a solid technological foundation. Getting it right will push insight collection beyond CRM (e.g.: digital analytics, big data) and will facilitate its immediate feed into customer profiling and, ultimately, account planning.
The industry is experiencing a substantial shift toward digital platforms – on par with the shift to ERP systems a few decades ago. It is not straightforward or cheap – there is no clear end objective and it requires an experimental approach, which often does not come naturally to Life Sciences companies. However, there is one major advantage: Life Sciences are starting late and there are very few legacy systems, resulting in space to invest in state-of-the-art technology rather than patching up old ones. As major corporations have pioneered through partnership with technology providers, there is a good deal of solutions on the market. What’s left, you may ask? One thing – extensive change management.
Instill the culture
Multichannel is likely to fail should it be seen only as a separate Multichannel department, rather than an inter-departmental approach that benefits everyone. It must be embedded in the organizational culture and it must describe the way the organization operates. Leadership should aim to establish a culture of digital innovation and sharing of best practices.
The What: the 360° view of the customer
Ultimately, success in the new sales and marketing paradigm will depend on the company’s ability to achieve a 360° view of the customer. Do not miss any interaction, be it on your own channels (sales force, customer portals, emails, educational channels, SAP etc.) or third party ones (e.g.: social forums). The key is to acquire all available information, analyze it and feed it back into the process as per the CLM design. The ideal state is having one single source that provides the 360° profile.
Figure 8: Integrated Commercial System
This mechanism is not only technological; it combines all channels, tools and content in a perfectly synchronized and complementary manner. This new integrated commercial system is at the heart of the Multichannel model.
By Mariana Miron, Senior Consultant, and Chiara Garavaglia, Partner
Life Science and Healthcare Industries Sales & Marketing Expert