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In the loop

For closed loop marketing to succeed there can be no real division between marketing and sales

Rollercoaster loopUsing technology to increase the effectiveness of the sales force makes sense - you had hundreds of people running around out there on their own. You hoped they were advancing your strategy but it is difficult to be sure - particularly because pharma reps don't walk away from a sales visit with an order in their pockets. So you gave them a laptop with some fancy software on it to try to keep track of everything and coordinate it all a little better. This led to the era of sales force automation (SFA) and then electronic territory management system (ETMS).

This all changed, at least theoretically, with the advent of customer relationship management (CRM). CRM is not technology, it is a way of doing business; technology just makes it easier. Many companies experienced serious implementation problems with CRM because they treated it as yet another IT issue - as an upgrade from ETMS.

This is why so many CRM implementation initiatives ended up being longer, costlier and more painful than anyone had foreseen, with reps bemoaning the disappearance of their old, reliable system in favour of a new, complicated one that offered little added value.

The bad news is, if this is the way you approach the next step - closed loop marketing (CLM) - it is going to be even worse.

Closed loop marketing
In a recent report IMS explained the idea of CLM: At the core of closed loop technology is the real time application - and tweaking - of customised content to customers. These interactions, at the minutest level, are captured and returned to a centralised data set - with the assumption they can be duly mined to create new strategies and therefore competitive advantages.

If CRM means putting the customer at the centre of your philosophy, your marketing and your systems, then CLM can be seen as a more dynamic CRM. It simply means that every interaction with the customer will be driven by the CLM system and will provide feedback into that system. The result is an approach tailored to each customer, with a specific mix of channels, a specific presentation of the company offering, and a specific set of value-added services. It is the interplay and the real-time management of three distinct elements that come together in an integrated customer experience.

Data engine
The data engine gathers together all the data available, from three primary sources:

  • internal - from the sales force or other internal sources
  • external - primarily purchased from data suppliers
  • feedback loop - from the system itself.

  • The data engine must be flexible and it must be capable of accepting continual real-time adjustments.

    Insight engine
    The insight engine will manage all the analysis and segmentation. It is here that all the information at the system's disposal will be used to study the customers, refine their segmentation, and create specific segment strategies. These strategies will be driven by marketing and sales management, but they will also be informed by sophisticated marketing decision support systems.

    Brand assets engine
    Here all of the campaigns, communications assets, creative materials and channel management is centralised. A major part of the brand asset engine is the detailing approach, which must be flexible and appropriate for each segment and, ultimately, for each individual.

    Closing the loop
    All that remains is to close the loop via a feedback process, so that every new interaction between the customer and the pharmaceutical company helps to refine the insights and the assets and therefore the ultimate customer experience.

    What this means is that the days of walking tape recorders delivering a single monotonal message to hordes of undifferentiated customers is over. Forget about differential detailing - this is personalised marketing.

    The online retailer Amazon has been employing closed-loop marketing from the beginning. Everything a customer does on the Amazon website is noted and is run through sophisticated algorithms so that every customer is the target of a completely personalised communication strategy. In my experience the suggestions made by Amazon almost always interest me, leading not only to increased purchases, but to actual added value. They inform me about books and CDs that I would not necessarily have known about and this makes me happy to be subjected to their promotional activities.

    One can say that it's easy for them, their business model is entirely technology driven, but pharma should be even better able to benefit from closed-loop systems, because of its high rate of human contact and input.

    CLM in practise
    Consider this rather idealised example. Dr X is a valued customer. She has a lot of patients who are in need of treatment in a therapy area in which company Y has a product. She does want information from the pharmaceutical industry, but has a policy whereby she only sees reps twice a year. Furthermore, she has some very specific interests in this therapy and is particularly concerned about drug interactions, because she has a lot of elderly patients with multiple therapies.

    Under company Y's traditional system, Dr X has been identified as a 'B'  doctor, on the basis of her relatively high potential and her medium level of use of their product. As a B doctor, she is supposed to get six calls a year, which is against her policy. When she does agree to see a rep she will get the same product presentation as everyone else, which happens to focus on the product's superior efficacy.

    Under a CLM system, she becomes a member of one of many subsegments, taking into account her potential and the product penetration, but also her interests and her needs in this therapy area. The system knows she can't be seen six times, but it also knows that she is open to e-detailing and would be happy to engage in a more detailed discussion with someone from the medical department. When the rep does make that call, he or she can use a laptop to present to Dr X information that is interesting for her while keeping in line with the company's brand strategy. The system will learn as it goes from her activities, without the rep having to enter this information, and eventually will suggest different approaches tailored to her.

    Barriers to implementation
    Despite all of these advantages CLM is not yet the norm in the pharma. Unfortunately, the same barriers to successful CRM implementation are amplified in CLM which necessitates an organisational change in the company. A few years ago 'see anyone and everyone' was the approach and it was a big departure to do any segmentation at all. The industry then started moving towards a linear, ABC-type segmenting, and over the past few years this has evolved into a two-dimensional approach focusing on market potential and product penetration. The process is reviewed only once or twice a year and this does not always involve sales and marketing sitting down together. If you want a real CLM system then you're going to have to accept that there can be no real division between marketing and sales. You can still have separate managers for products and sales but interaction between the two must be maintained.

    Slow take off
    CLM has taken off much faster in the US but this has been driven by the availability of personal data and the need to get input from customers in order to deliver samples. In Europe, there have been pilots of CLM approaches, but very few full-blown initiatives.

    According to Jan van den Burg, Head of Proscape Europe, the difficulty lies in a tendency to look for quick technological fixes:

    Companies that have failed to transform pilots into full-fledged operations have likely fallen into pitfalls by implementing point solutions to address specific issues, rather than mature, robust systems to help them achieve all of the critical success factors.

    Jim Sale, Managing Director of Skura in Europe, agrees: In most cases, there was too much eagerness to start the pilots and not enough focus on clearly defined business objectives. CLM processes were not well defined or clearly understood and therefore the companies were ill-prepared and ill-equipped to take advantage of the potential benefits.

    He adds: Companies were trying to roll-out the technology, instead of using it to enable well defined and well-understood CLM processes.

    Morten Hjelms¯, CEO of Agnitio, believes critical mass must be reached to ensure further implementation: In Europe the CLM market has mainly been driven locally - and often by innovative marketers and sales managers. It is more the rule that once one therapeutic area in a country has experienced its first success, their colleagues join in.

    The biggest single reason for failure when implementing CLM in a pharmaceutical company is that they are actually not implementing closed loop marketing, but closed loop control. CLM at the core is about tracking customer behaviour and response and then employing this information to direct and refine your marketing strategy. That can of course only be done if you are focusing your CLM programme to track your customers' behaviour - not your sales reps' behaviour.

    When the first SFA systems became available, they were used, primarily, as a way of monitoring and controlling reps. Previously this had been achieved through good field management and a degree of wishful thinking. As Hjelms points out, it seems too many companies never break that mould. If want reps to be more innovative and use more sophisticated systems, you must demonstrate the business rationale for it and the benefits to them.

    More than detail
    Product presentations that can be customised to individual clients are an important aspect and provide significant value. CLM allows differential detailing without having dozens of aids; it allows cost savings for materials and it makes it far easier to change presentation materials. These benefits are by-products of the technology, not its reason for being - yet many pharma executives associate CLM with flexible detailing systems alone.

    Hjelms uses an analogy to describe this technology, and its role in monitoring the salesforce and providing value to customers: The difference (between flexible and paper-based detailing) is like comparing a bus to a taxi - the bus is following a predefined route, and by tracking the bus you will only get told about the driver's ability to follow the route. The taxi on the other hand is also being driven by your driver... but where the car is going is totally up to the customer - if you track the taxi you will not only learn about the customers' preferred destination, you will also monitor your driver's ability to find the fastest way.

    Of course, good taxi drivers learn about the preferences and habits of their regular customers: which routes they prefer, how to make them comfortable, which topics of conversation to avoid. A CLM system will do this automatically, inferring client interests by noting the way each detail unfolds and providing feedback to reps about their own skills. The CLM is a sophisticated system, but one that enhances and simplifies the role of the rep by providing crucial insight and solid support.

    Closing the loop
    We all know that the mass-market approach is finished in pharmaceutical sales, and we also know that the industry is going to have to juggle more channels, more messages of greater sophistication, and a customer base that includes more than just prescribers. All this must be accomplished with fewer reps in the field. By definition, this means a race towards salesforce productivity as opposed to numbers in the field, and CLM, when done right, is by far the best way to achieve productivity.

    The Author
    Kevin Dolgin is senior principal at IMS Learning Solutions & Change Management

    To comment on this feature please email

    4th July 2008


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