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Customer relationship management may be adapting from local to regional concepts, but does the philosophy still work when used in multi-country marketing?

If you were searching for an analogy that befits the pharma industry in this day and age, you could look quite simply at a society of sea anemones: an interconnected and reactive network woven of allies, partners and guardians.

Survival and growth top the agenda and, much like pharma companies, they are on a tireless quest to constantly improve on performance and reap the rewards. Their strength is in being able to reach several places effectively at once; in a competitive environment, their many tentacles reach out to probe their immediate surroundings and protect their assets.

You could say that there are some similarities to pharma and its customer relationship management (CRM) tools. Success rests on the ability to reach out to your markets to test the water, so you can find out about, and react to, what is happening.

CRM in Europe is still a relatively new concept with regard to pan-European, or multi-country activities. Systems were first developed for the industry in the late 1990s, really as a result of head offices' desire to keep in touch with their salesforces and understand better what was happening in the field. Developers of CRM systems were keen to stress the customer-centric nature of their database offerings, promising pharma firms added layers of reporting, analysis and segmentation which would give them not only more flexibility, but also easy, instant access to information on customer profiles, contacts, prescribing and preferences.

However, the transition to a technology-driven utopia of efficient, tailored medicine-selling has not been smooth, and there is much debate within the industry as to how much CRM has managed to live up to the hype.

Research from international analysts suggests that, across all industries, as much as 80 per cent of current CRM programmes will fail to deliver satisfactory returns for the companies that have bought into them. With the original CRM systems evolving out of call centre and salesforce automation tools, staff at pharma companies were initially disappointed when their new software `solution' failed to integrate well with their working practices.

Accusations were rife that the earlier systems were `retro-fitted' from old designs built for different industries and, thus, failed to cater for the unique aspects of pharmaceutical marketing.

Moreover, some sales representatives were suspicious of CRM systems, seeing them as a means for head offices to check up on employees' activities. A 2004 study, conducted in the US by Dendrite, found that many reps saw little value coming out of CRM systems and were annoyed at the significant amounts of time they had to spend entering the data.

Evolution period

In spite of the criticisms, however, CRM is still big business. Nowadays, the larger providers, such as Siebel, Dendrite and Cegedim, stress that their systems have been built specifically for the industry and take into account the unique nature of pharma's customer base, as well as the complex network of interactions between patient, doctor and payer.

Despite resistance from some quarters of the industry, the emerging message is that CRM should be viewed more as a philosophy of transforming uninspiring data into crucial customer-centric information to help boost sales, rather than as a quick-fix IT application that firms bolt on to their back-office system and then conveniently forget about. According to research from industry consultants, White Whale, many pharma companies have been guilty of automating existing processes, or even adapting them to meet the requirements of the software involved.

Dario Ghoddousi, vice-president for regional accounts and marketing, Europe, at Dendrite, says one major problem, in the way in which CRM was originally sold to the industry, is that a revolution was promised.

The perception was that you simply had to buy and install this wonderful piece of software and everything would change for the better. Yet, my impression is that pharmacos bought CRM systems but, in the end, used them merely to do co-reporting as they were doing before.

Ghoddousi is of the opinion that companies need to invest time and effort in managing the development and deployment of a CRM programme if they are going to unlock the commercial benefits. This involves formulating a coherent business strategy before implementing the software, deciding what the financial objectives are, and then carefully and systematically aligning the different marketing channels to build a targeting platform.

My belief is that it is much more evolutionary, which takes time, and not just a case of shipping out computer equipment, he adds. Moving from a system that concentrated on sending out sales reps armed with samples and a script to doctors, and moulding it into a greater understanding of which doctors prefer a sales rep visit, which prefer visits from two reps, and which are most suitable for e-detailing and direct marketing will not happen overnight.

He says that there can be great rewards, but notes that pharma firms need to recognise how integrating the various channels, measuring the results and evolving can be a slow process.

Indeed, pharma is seemingly to be wholly-convinced of what the rewards might actually be. CRM was built on the promise of more easily retaining those customers that firms went to such great expense to acquire in the first place. Its underlying logic is that improved customer retention rates will inevitably have a positive impact on both profits and shareholder value.

Yet, some within the industry see nothing new in CRM. David Impey, European marketing director at Eisai, argues that to a large extent, the concept of CRM is merely an extension of what every individual rep was doing years ago.

Reps used to keep record cards on customers, finding out what their preferences were and selling to those needs and interests. Obviously, CRM is a bit more sophisticated than this, but in my particular role I wouldn't use a CRM system because I believe that actual customer management should be dealt with at affiliate level - it's not something I would particularly interfere with.

Providers of CRM software solutions have doubtless heard such views before, but remain committed to spreading the word that their offerings are well-suited to European multi-channel marketing. Their argument is that pharma firms have yet to fully realise the significant competitive advantage and cost-savings that can be harvested from multi-channel CRM, and therein lies the rub.

Reaping the rewards demands that companies not only invest the required effort, but also that they put the customer at the centre of the equation. In short, if CRM is to be a success it needs to cater for the needs of not just the company that is adopting it, but also its customers.

Ghoddousi insists that this two-way relationship is essential: Putting the doctor at the centre is the key. In order for pharma companies to do this, they need to listen to the doctor, not only talk to him. They also need to interact in the way he wants them to interact with him.

He gives the example of a trend seen in Finland and Greece. More and more doctors are refusing sales calls, or are reducing the number of calls they accept, he explains. Having said that, it does not necessarily mean that we should come to the conclusion that doctors do not want to listen to the industry anymore. Perhaps they are simply seeking another form of dialogue, or more of a variety of touchpoints. CRM starts from data and the capability to understand physician needs and behaviour. Part of this is understanding how your customer would like to speak to you.

The value debate

However, there is still a significant question mark over whether CRM can truly be deployed for multi-country marketing. Naturally, the solution providers are optimistic that there is a growing trend of European-based pharma companies consolidating salesforce automation (SFA) solutions, enabling them to perform more consistent product launches across the entire region by means of a unified sales methodology.

Dendrite claims to have signed or deployed, in 2005, four multi-country agreements for large- and mid-tier Europe-based pharmacos, servicing more than 3,400 sales reps in the region. It says its SFAs are a way of gaining a global view of sales and marketing activities taking place across the Continent while maintaining the flexibility to accommodate local country needs.

Impey, at Eisai, is adamant that the concept of CRM does not fit into his idea of how European multi-country marketing should be carried out. My fundamental philosophy with regard to the role of European marketing, within an overall marketing matrix, is that the function should only concern itself with developing the core strategies, communications, positioning, branding and pricing, he comments. The actual implementation of those core attributes, which are the ingredients that turn a product into an asset, should be managed at the local level and not on a pan-European basis.

Ghoddousi accepts that the CRM process has been slow to take off in multi-country scenarios, which is due chiefly to the traditional argument that it is difficult to draw parallels between prescribing behaviours in different European markets and is, therefore, regarded as a local management issue.

Yet, he argues that, in the last five years, marketing has taken on a more regional than local flavour and more firms have instigated simultaneous product launches in most European markets.

The European marketing manager used to be an undefined function, but with the mutual recognition process and globalisation, the role has really taken off, he says. CRM is now accelerating away from the local concept and has become a pan-European multiple country concept, and that has been borne out by those firms that have purchased a pan-European system.

Multi-channel crm in practice

Bigger pharma firms have actually been testing the water with regard to pan-European CRM for years. At the recent eyeforpharma Annual Marketing RoI for Pharma Congress, in Amsterdam, Eli Lilly & Co's customer operations manager, Juergen Guenther, expounded the virtues of regional, customer-centric sales and marketing approaches in Europe.

Lilly has created a pan-European specialist care organisation to pilot a new business model, which involves two products sold to hospital-based customers. Guenther said that Lilly had created a virtual marketing organisation, with team members spread out across Europe, and a customer service centre in Geneva. Sales reps report directly to the pan-European operation, rather than through the affiliate structure.

Central to this regional approach is a multi-country, multi-channel CRM application, an internal communication portal and a 24-hour/365-day customer service centre providing emergency medical information for the two products.

Integration emerging

The current signs are that, whether European marketing directors individually feel that multi-channel CRM is feasible and appropriate to apply to their own multi-country projects, pharma in general is taking CRM seriously.

One need only look at the array of job titles that now include the term `CRM' to realise that the bigger companies, at least, have bought into the idea. Several pharma firms now employ one or more people under the `CRM management/implementation' banner - suggesting that the solution providers should find it much simpler to peddle their wares.

On the other hand, Ghoddousi contends, many executives with a CRM title come from the IT environment and do not always embrace the idea of CRM as the wider philosophy of effective customer relations.

Technology is by no means the only challenge, so we tend to speak with the brand managers and those responsible for the commercialisation process of specific brands, he says. The CRM job title doesn't necessarily make our lives any easier.

Henceforth, the jury is still out on whether, in the eyes of the industry, pan-European CRM will ever become the norm rather than the exception.

The Author

Gareth Carpenter is assistant editor on Pharmaceutical Marketing Europe and Pharmaceutical Marketing magazines

2nd September 2008


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