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I had compiled a working paper on Sales Force Effectiveness some time back on demand. While writing this paper, I researched and tapped several resources whom I gratefully acknowledge. It is not possible for me to acknowledge all of them separately by name, but it neither diminishes their contribution in it, nor my gratitude for them.
1. Understand what really defines sales performance and be able to distinguish truly high performance from average performance
Across all industries, On-Target-Performance (OTP) is the most significant outcome-based KPI; but not in Pharma. The root cause of this difference is the absence of customer prescribing data.
In the Pharma space two methods are being used for measuring sales performance generally.
One; focus exclusively on OTP. While this may validate the accuracy of forecast, it does not show how successful the effort was at individual customer. For example, it is not known how many prescriptions for Esomeprazole were written by a customer and what share we could get.
Two; use multiple data sources comparing output with input, activity etc. While mentioning ROI on every customer service request looks objective, but this is hardly ever qualified and varies from customer to customer. If this method is emphasized, it may lead to some confusion as to what exactly is expected of them; market share? Prescription share? ROI? Target achievement?
It is still critical to differentiate between high performers and average performers. One way of doing it may be to measure CAGR of individual reps. Another way may be to draw current performance versus future performance. The following performance profile, developed by a consulting firm, is a good model.
High performers demonstrate both high OTP and territory growth.
Pharma companies have been working on it since long by articulating the company segmentation and targeting process they expect the reps to use (selection of customers for products and selection of products for customers).
Target Doctors and Selected products / Call Coverage and Frequency Plan / Achieved Call Coverage and Frequency
The assumption is that this segmentation and targeting process manifests itself in the planned call coverage model. This however does not play out as intended because reps have varying levels of belief in its utility and therefore varying degrees of adherence to plan.
Research says that the sales reps can be divided into 5 categories on the basis of belief and adherence to coverage plans.
- True Believers – those who follow the defined segmentation and targeting process as they consider that it actually enables them to achieve high performance. If the plans are sound, these reps will be able to give predictable, repeatable and sustainable performance. In high performing organizations, True Believers may constitute 50-60% of sales force. It can be considered the other way round as well; the presence of high percentage of True Believers contributes to high growth.
- Compliants – those who do not have the buy-in but follow the plan as much as they can. They do not believe that the coverage plan will enable them, and do not commit to results, their results remain highly variable. Pharma industry is considered to have around 15% Compliants in their sales force.
- Mavericks – those who, even if they agree to the usefulness of coverage plan, still use a mix of company plan and their own plans. While this may not always be bad, but it may lead to business growth in a rather uncontrolled fashion. Mavericks constitute about 20% of sales force
- Self-reliants – those who actually do not believe in the usefulness of coverage plan at all and therefore do what they consider is more appropriate. Many of them are actually above-average to good performers but they may be totally out of line. These may be 5-10% of sales force.
- Clueless – about 5% have no clue as to what the plan is and what is it all about. They are lost and most likely, poor performers.
The important point is that 40% or more sales reps do not fully implement company’s marketing/sales plan for one or the other reason. This is an extremely grave concern. In organizations with relatively loose controls, this percentage may even be higher.
In continuation of the above distribution, we see that high performers are dispersed among all categories. It is of interest to note that Mavericks have the second highest percentage of high performers and thus have a significant share in volume of sales.
Two things need to be considered here.
One; it should be identified what the high performing mavericks are doing to become successful. Those strategies may be adopted and embedded in the sales model.
Two; Pharma sales model is linear. Plans are designed at the top and cascaded downward. If half the people are not following it, it is a lot of wastage. Fixation/alteration of linear sales models is desired to streamline, channelize, regulate and stimulate performance.
Performance management is always challenging. Within Pharma, it is amplified by the unique industry dynamics. As mentioned above, the absence of prescription data and goal diffusion complicate the performance management process. The sales management objective must be to unlock and exploit the potential of each salesperson and support their team to continually improve performance.
Performance management in mature sales organizations is supported by a mix of organizational policy lines (non-negotiable) and sales management processes and practices (flexible, dynamic). Within this framework, performance management is driven in a three-stage process.
- Setting Objectives
- Supporting and Guiding Progress
- Evaluating Performance
The concept of Tight-Loose management framework arises from the fact that policy framework is Tight while management practices are Loose. Tight-Loose framework may be applied in various combinations to drive performance.
Following is the relationship of Tight-Loose framework to Performance Trajectory. The concept had been described and discussed by several authors.
The strongest motivators for salespeople are financial incentives. They are critical in ensuring an effective, high performing sales culture. Performance culture cannot be built without positive and negative consequences of over- and under-performance.
The difference between rewards of high performers and low performers is generally not very significant. Even more disturbing is the fact that ‘consistent high performance’ and ‘patchy high performance’ often ends up getting similar recognition and reward.
In order to encourage positive behaviors and discourage negative behaviors, incentives should be designed accordingly in terms of actual value, perceived value, recognition value and effect longevity.
Sales Force Effectiveness in its concept and application has been around for quite some time. The importance and need have never diminished; rather, it has become more critical, looking at the growth plans and market environment.
CCL at this stage of its evolution needs to have an SFE system in place. Stakeholder should discuss and decide about methodology, timelines and responsibilities.
Following steps are recommended.
- A dedicated manager and team be assigned to get trained and implement SFE
- A consultant be engaged to facilitate the discussion on SFE and advise on implementation plan
- Role of technology and selection of an appropriate software should be worked on
- Program should be rolled out taking into confidence all tiers