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Pressure to perform

How do you know what your time will be at the bottom of the run, when you're still at the top strapping on skis? Marketing is under increasing pressure to quantify its performance...

Imagine this. Your team is competing with three other agencies to win a big PR programme. You've prepared for weeks and it's cost tens of thousands of pounds to get this far. On the day, the presentation is fantastic - everyone sparkles and, more importantly, you know that you have all the facts and some creative ideas that are going to work wonders for your client.

And then it happens. It's just you standing there, facing half a dozen people on the client side of the table. One of them asks a question: And what's the return on investment on your idea?

A few years ago, this question would have been met with bewildered silence. End of pitch. Nowadays, any good agency will at least attempt to demonstrate value for money - or it won't even get a look in. Why the change?

One stark figure tells the story. Share prices for the pharma industry have fallen by 20 per cent in the past year, according to Catherine Warne, director of Red Door Communications. This means there has been more emphasis on generating profit.

Warne is also a member of the Healthcare Communications Association's subcommittee on return on investment (RoI) and evaluation. The topic has been a major area of activity for the HCA in the past year, reflecting its huge importance to the industry and its suppliers alike. The HCA is currently developing a tool that will help agencies and companies analyse RoI for PR and medical education programmes.

The dilemma of RoI is far from being resolved but we are on the way to cracking it, Warne notes. Ten years ago, no one was evaluating PR programmes at all.

The emphasis on RoI has been increasing gradually in recent years, agrees Carys Thomas-Ampofo, director of Ash Communications and chair of the HCA's subcommittee on RoI and evaluation. It's not new but it's something that people are starting to focus on, as there is ever increasing pressure on industry to make sure every penny is spent as effectively as possible.

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Measuring marketing
Professionals in the pharmaceutical industry are spending more carefully than ever because myriad forces are squeezing earnings. R&D pipelines are not as productive as they once were. The regulatory process is longer and tougher, and products enjoy a shorter time of exclusivity. Parallel imports create more competition, and companies face tougher cost containment measures in the marketplace.

Alongside all of this, traditional salesforces are less effective than they once were. Over time, there has been a gradual increase in reps in the marketplace and for every call made, the number of sales is declining, confirms Jane Mackenzie-Lawrie, associate marketing director at Innovex, which provides the industry with personnel, such as sales people and nurses.

She observes that selling is harder than it used to be for a number of reasons: many new launches are now in secondary care, not primary care - a smaller market for which sales teams need specialised skills to sell specialised medicines. Yet, even when a launch is in primary care, customers are now harder to access.

Add these factors up, and it is easy to see why the drive to demonstrate clear return on investment for sales and marketing activities is getting ever fiercer.

In the face of these pressures, marketing is not the only part of the industry to come under the microscope, and RoI is not the only endpoint that pharma companies are trying to quantify.

Helen Bray, corporate affairs director at Schering UK, speaks of an overall emphasis on performance management. We're measuring absolutely everything. We've raised the game across all of our functions.

This is a key point, says Red Door's Warne. The pharmaceutical industry is really focused on corporate governance now and is looking at a much wider picture. It's not just about sales, sales, sales. That has been the big shift in the past few years. With RoI, you have to look at it in a much broader context.

One problem remains for the pharmaceutical marketer, however. If it isn't all about sales, just what is RoI actually about?

It is, quite clearly, impossible to measure sales in the pre-launch phase, and how do you put a price on necessities like issues preparedness or reputation?

A product manager might be asked to demonstrate RoI in a programme without being given a methodology to do it, Warne points out. I think that's why sometimes PR gets cut out of the budget. It's so daunting.

RoI readings are easier to take in some parts of a pharma company than in others, though, as Helen Bray notes, some of the things that are more difficult to measure and isolate are in the marketing function.

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ROI analysis: Ingredients for success
ï Be clear about who needs to be involved in agreeing objectives, and in planning. At what stage will their input be needed?

ï Make sure that everyone has the same definition of the activity (for example, does media include advertising or just press coverage?)

ï Ask an independent facilitator to moderate the discussion and keep the group on track

ï See that robust benchmarking strategies are in place, especially in relation to sales

ï Use watertight methods to generate reliable data and assess performance against investment

Source: Healthcare Communications Association
What does success look like?
There is clear evidence that people in the industry do indeed want to measure RoI. Last year, the HCA surveyed 58 senior PR and marketing professionals in pharmaceutical companies and consultancies. Nine in 10 respondents said measuring RoI was important. Yet, only a minority were actually doing it.

It's possible that people may know what they want to do, without knowing quite how to go about it, though they are trying a variety of approaches. Companies are using models in different ways, says Thomas-Ampofo at Ash. For example, some are using computer models, while others are relying on a more qualitative approach. There's no magic answer - in fact, the key is finding a way that works for the companies in question.

What is needed is a tool that is flexible enough to work for different people but is recognised by many: it guides but does not prescribe. The HCA has been consulting widely on RoI with a view to developing such a tool, and the group is leaning towards a grid that plots the cost of activities against their impact.

For example, top tier key opinion leader development might be a low cost activity with a high impact. Plotted on the same grid, advertising or direct mail might cost more but have a lower impact. The answers will vary depending on the product, the phase in its lifecycle and, of course, the end point that is being measured, which may be sales or something else.

Warne extols the benefits of agreeing RoI measures at the beginning of a programme. You can establish RoI after the event but it is far more important to be able to predict it so you know how best to decide your budget.

For some projects, however, predicting RoI is incredibly tricky. A CRM package is always complex and so it's not always easy to demonstrate out of the box what the RoI will be, says Emiliano Gummati, sales and marketing director at Dendrite Europe, which offers pharmaceutical sales and marketing services.

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An innovative product is even harder to sell unless you have an impressive business case, he adds. Dendrite believes its CRM system can help pharmaceutical companies use their resources more effectively by identifying key individuals and targeting promotional activities precisely.

Yet, it's a product that people are not overly familiar with, so for Dendrite, there is great pressure to show that it can deliver the goods.

Consultancies offering products and services that do not fit into traditional pigeonholes don't have a tidy allocated budget to go after, either. You really have to prove yourself first because you're moving budget from proven areas to new, innovative areas, adds Tiberio Catania, commercial director for Dendrite UK.

One way Dendrite aims to do this is by comparing sales in areas of the country where the system is applied, with sales in areas that have been left fallow, which acts rather like a control group in a clinical trial.

The company has made an opportunity out of a necessity, having developed a sophisticated system for measuring RoI on its own offerings.

Pharmaceutical companies can also buy the system and apply it across their other activities.

For Innovex, the growing emphasis on RoI is a good selling point because it increases the appeal of the company's differential resourcing philosophy. To maximise efficiency, pharmaceutical companies need to approach different customers at different times and in different ways, says Mackenzie-Lawrie. She notes that this can only be done with a flexible salesforce and a good historical CRM database.

In-house, Helen Bray at Schering UK says that having a good RoI analysis makes it easier to demonstrate the value of PR programmes to her colleagues on the board. She also works on the HCA's initiatives for RoI, which she says look promising.

Still fun
Yet is there a chance, on the flipside, that all this talk about measurement and RoI threatens to take the fun out of creating and pitching PR campaigns?

Most people go into sales, marketing and communications because they love the creative buzz, not because they want to be bean counters.

It doesn't have to be that way, says Thomas-Ampofo. PR and medical education are strategic marketing services that must be as accountable as others - it's key to the long-term integrity of these marketing disciplines.

She adds: Accountability should never mean a loss of creativity, as it should be possible to work with a client to agree some mutually meaningful measures against almost any programme.

Click here for: ROI & Evaluation: Salesforces

The Author
Colleen Shannon is a freelance pharmaceutical and healthcare journalist

2nd September 2008

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