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Spreading the word

As the role of CRM continues to evolve, analysts are keen to communicate the importance of defining what CRM means to pharma

The unfolding of NHS reforms means that the chance for pharma to understand its customer has never been so manifest, and the need to foster true partnerships in healthcare management so imperative.

As the UK ushers in a fresh epoch of closer, unsullied, more 'mature' partnerships between its pharmaceutical industry and healthcare system, it seems ever more vital for drug companies to invest boldly in customer relationship management (CRM) processes.

Expert sources point out that the market for CRM - support services in particular - is expanding already, on track to develop markedly throughout and beyond the next five years. This will be in response to demand; CRM services and outputs are expected to become lynchpins in central marketing strategy.

According to an executive presentation made by Datamonitor earlier in 2007, the market size for software and services in CRM for EMEA, North America and Japan is forecast to swell by around USD 1.4bn by 2012; at current exchange rates, it equates to just over GBP 174m-worth of growth a year. Pharma's total spend on CRM in the UK is anticipated to increase dramatically over this period, with related services ñ systems integration and tailored, continual support ñ delivering the major impetus for growth.

What is more, the rate of this growth is set to accelerate as new organisations enter the fray, opening up the services market, alongside the 'merge and expand' moves already being undertaken by existing providers as competition hots up. It would not be off beam to say that as pharma's attention on building partnerships within the NHS intensifies, the need for CRM to inform, direct and measure progress will be greater than at any time in its lifespan.

However, it is key that CRM products are perceived clearly for how they work and what they can offer, and not considered to be out-of-the-box solutions in themselves. It seems that many in pharma have fallen broadly into the same trap as has snared countless consumers urged to buy new PCs, Macs and other innovative IT equipment for the sake of improved connectivity and communication.

The vendors show how simple and sensible it is to buy such a system; and it is. The problems, headaches and swearwords come shortly thereafter, away from the point of transaction, in attempting to set up the new server and email protocols, get the printers on side and connect to all of the other various and mismatched gadgets of modern business lying around the office ñ plus, in due course, those yet to sweep the market. It's not in buying the system where help is required so much, it's in setting it up swiftly along with ensuring ease of future adaptability.

Yet, do CRM products and support services meet these needs, and, if not, how do they need to adapt and evolve? Is it even possible for pharma companies to perceive CRM clearly for what it offers, or does it still lack a firm, universal definition?

When CRM was originally mooted at the start of the millennium, there was little focus on actually deriving detailed analytical information and not very much effort placed behind mining the data, looking at patterns of customer behaviour, analysing customer value and so on, says Jason Bryant, pharmaceutical business unit director at Binleys. CRM was intended to glue together the customer-facing functions of a pharmaceutical company. Typically these would have been sales, marketing, medical and med info. Since then, as sales teams have had to be re-aligned, the customer base has changed beyond recognition and accessibility has decreased significantly, the need to understand CRM-derived data in as much depth as possible to drive competitive advantage has become paramount.

CRM: a philosophy

In general terms, CRM includes all aspects of interaction a company has with its customers and, regardless of how investment is levelled at the challenge, the goal is to increase marketing efficiency in the long term. Yet, since its inception and throughout the initial periods of uptake, 'customer relationship management' has encompassed various meanings and been attributed to several distinctly different processes across the industry.

The very nature of the dynamic equilibrium encompassing all interaction between the NHS (in both structure and sentiment) and pharma companies means that CRM must likewise be flexible and adaptable on a rolling basis. Therefore, CRM may require
(to a degree) redefining in terms of how it enables pharma to foster better relationships.

A 2007 report by Cutting Edge Information claims that 'this lack of clarity has negatively impacted many companies' efforts'. This 'missing definition' has, the report adds, resulted in several extra challenges, including garnering buy-in from senior managers and salesforces, therein compounding the periodic difficulties and disappointments in implementation, lack of clear-cut return on the investment and the seeming overall 'misfit' as an in-house tool. This last point is particularly salient.

Cutting Edge's report, which is based on primary interviews with CRM leaders, marketing directors and managers at 13 established pharma companies (including AstraZeneca, Britsol-Myers Squibb, Johnson & Johnson, Merck Sharp & Dohme, Roche, sanofi-aventis and Wyeth), found that even benchmarking CRM efforts was difficult because of the diverse range of definitions across the board. Lead author, Amanda Zuniga, discovered that while CRM had been considered by the industry initially to be a hot topic, implementation had proved to be thorny, with limited
value-added output.

The research reveals that the average time required to develop a CRM programme is 16.2 months, with less than four in 10 companies running pilot programmes prior to launching initiatives fully. Only 62 per cent of companies asked considered their CRM programmes to have 'met or exceeded expectations'.

Zuniga explains: In many cases, CRM lost its lustre because it was not delivering the value believed to be inherent with the term, so over time I think that pharma has been a little disappointed with CRM, but this has been due, in part, to the unrealistic goal pharma placed on CRM and companies' inabilities to execute the programmes. I think now pharma is beginning to realise the limitations CRM has and is recognising that CRM cannot be a one-off deal to deliver the type of results it would like to experience.

Cited in the report as being pharma's topmost CRM challenges are 'persuading stakeholders of CRM's value' and 'demonstrating RoI'. The root of the major problem, however, is not necessarily one of user-unfriendly product design or a short-sighted view regarding a system's requirements and harvests, but more of a failure to adapt corporate culture.

The abbreviation 'CRM' should not refer merely to a 'software system' or be seen purely as a 'tool for the sales and marketing people', but should be sewn into the strategy of a company, as an element of business practice which pervades all departments in spirit and many departments in a way that affects how they think about and conduct their day-to-day activities.

In order to deliver fully on its long-term promises, CRM should be built into the garage wall, not merely occupy a position as a handy garden shovel, or any other lone tool leaning by the door. It is only through the perception and process of interlocking CRM as a core strategic (rather than tactical) element that the next-generation systems will bear fruit.

Xavier Rutya, senior director, CRM sales development life sciences and healthcare, EMEA, at Oracle, emphasises this importance of positioning CRM centrally within a pharma company and ensuring that buy-in to its needs and benefits is universal. If a CRM strategy is to work, it's all about change management. If a CRM project fails, it is rarely down to the technology but, instead, a lack of willingness to align business processes and to change the culture within an organisation. About two-thirds of our pharmaceutical customers around the globe place CRM at the very epicentre of all sales and marketing activities.

On the requisite adaptations for the UK's changing landscape, he adds: CRM is the true way that the NHS and the pharmaceutical industry can help each other operate more efficiently. Providing that both parties are willing to adapt to change, CRM can provide the platform needed for that interaction.

Next-generation CRM

Keeping in mind the 'mature' pharmañNHS relationship based more explicitly on partnership, how far will CRM systems need to change in order to support and enhance what is deemed to be the way forwards for pharma to work with a multitude of NHS interfaces?

Jason Bryant at Binleys expresses certitude that CRM in its current guise is not where it needs to be. Based on discussions with our clients, there appears to be a long way to go if CRM is to underpin these new ways of working. Some clients are setting up separate systems and key account management dashboards to capture new information required from the new landscape, while others are trying to adapt their CRM systems.

I see this as a major opportunity for CRM vendors to re-engineer the basics (activity management, analytics, customer list management) into a more cohesive key account management approach. Of course, this will not work unless the system objectives align completely with the commercial sales objectives, a step which is all too often missed.

In answer to the question, 'what changes are required?', he adds: The main opportunity for CRM is to present the end-user, be they regional account director, sales rep, account manager or medic etc, with a view of the local health economy as it really exists - rather than the traditional 'account' based in primary, secondary or PCO land. The challenge here is that the local health economy will vary by locality, brand, product life cycle and also as the NHS realigns its resources to meet the local needs agenda; it's a moving target. CRM investment, then, should be directed at presenting a variable but 'real world' NHS view of the marketplace and its end-users. In order to get maximum RoI for pharma, companies should be coached through this new landscape.

Author of a 2007 report on the sector and analyst at Datamonitor, Justin Davidson believes that to get the best out of any investment on CRM, companies should have a unified, enterprise-wide system from which information is pooled from all parts of the organisation. He notes too that the provision of 'additional support services', from CRM vendors in their progression from software providers to wholesome relationship management partners, will be the major driver of growth in the sector.

What's important is partnership between CRM vendors and pharma companies to ensure there's a good mutual understanding of the issues. It shouldn't necessarily be seen as one company selling a CRM system and another buying it, with that being the end of the relationship. It should be seen as an ongoing partnership to see how it could be developed. It is important that, when purchasing a system, pharma companies ensure that the vendor provides ongoing training. It's only as good as its users, so should be simple to use and easy to pick up, given the often large turnover of staff in the salesforce.

Further development

Cutting Edge's Zuniga feels that CRM - as an element in strategy - is still in a relatively immature phase of development. Best practices are emerging, but overall there is still a lot of room for improvement. However, her research identified several habits common across companies whose CRM has added value:

  • Invest adequately at the outset but see CRM as a long-term commitment in terms of resources and measurements
  • Create an internal champion (a CRM department, team or ad hoc group) and define what CRM means to the whole company to ensure buy-in
  • Share knowledge across the entire company through a centralised database - plus, build the use of this into standard business practices.

As CRM's role continues to evolve from data collection and distribution to a more central, strategic constituent in healthcare marketing, some providers/vendors are sure of their service provision as the UK pharma industry tries to grapple with the unknowns of a morphing customer. Yet, while in agreement that the requirement for effective CRM is intensifying, analysts are keen to highlight the importance of establishing and communicating a definition of what CRM means to a company and ensuring that adequate resource is there both at point of purchase and over the longer term.

CRM can bring greater depth to what's going on, Davidson notes. But it is not an off-the-shelf solution and it does need to be worked at and developed.

The Author: Rob Skelding is a freelance pharmaceutical and healthcare journalist

11th October 2007

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