What Pharma Brand Managers Should Know About ecrm

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1 What Pharma Brand Managers Should Know About ecrm by Stephen E. Sweeney CEO, Montage Media Customer Relationship Management (CRM) technology is beginning to make significant inroads into the pharmaceutical industry. This is due primarily to a shift in focus the pharmas are no longer putting their primary on gaining market share and floating broadbased customer initiatives to ensure customer satisfaction. Rather the pharmas are adopting CRM to better understand their customers and devise targeted strategies that maximize their ROI as well as boost customer value and loyalty. Like many other technologies that make use of the Internet, Web-based versions of CRM have been tagged with the ubiquitous prefix e. But in this case the e in ecrm has a double meaning. In the more limited, and usual usage, e stands for electronic and refers to a CRM system that uses the Web to interact with customers, partners and other parts of the enterprise. But ecrm can also stand for Enterprise CRM, a far more encompassing concept. This ecrm includes the company s business strategies, core business processes and total IT infrastructure (including the Web) as well as both front and back office systems. Enterprise CRM is the subject of this article. Benefits of ecrm a Matter of Perspective Web-based enterprise-wide CRM systems can dramatically improve the organization s ability to promote its brands, run Web-based promotional campaigns, track and convert leads into sales, understand its customer base, and segment this base according to each individual s and sub-group s relative value to the enterprise. A well-implemented ecrm strategy can benefit the pharmaceutical company, its customers, employees, suppliers and partners by allowing the organization to understand and improve the entire customer value chain. Not only is the customer s experience enhanced, but the pharma is able to share vital customer information across the organization, from the customer representative to the back-office researcher. By providing both qualitative and quantitative ways to assess the relative value of each individual customer, ecrm allows brand managers and others within the company to allocate resources efficiently. To put it simply, ecrm allows big ticket, repeat customers who provide high profit margins to be treated differently as compared to intermittent or one-time customers who provide a low level of return ecrm benefits are perceived in various ways depending on who is doing the viewing: 1

2 For example, by understanding the advantages and pitfalls associated with implementing and using ecrm, brand managers can maximize their productivity, figure out how they can use the technology to improve brand recognition and marketplace acceptance, and learn how their actions fit into and impact the company s overall ecrm systems. The analytical capabilities of ecrm can provide them with a clear picture of their customer base and the effectiveness of branding initiatives. It helps them reduce paper-based transactions to a minimum, speeding time-to-market. A well-conceived and welloperated ecrm system can be a powerful differentiator in its own right, giving the brand a substantial leg-up on its competition. From the customer s point of view, ecrm provides quick answers and solutions, including powerful self-help features. No more holding on the phone for what seems like an eternity, listening to tinny music or infomercials; no more navigating phone trees that lead nowhere. At its best, ecrm allows customers to get the help they need quickly and easily a physician, for example, can call up information on a drug s efficacy with a few mouse clicks and then, if needed, initiate a phone conversation with a pharma representative by clicking a button on the Web site. This click to talk function connects the user directly to a customer rep using Voice over IP (VoIP) technology that allows voice to be transmitted over the Internet. The pharma s customer representatives (CRs) see ecrm as an efficient way to deal with customer requests, including quickly retrieving information from the enterprise s knowledge base. It allows CRs to route problems to the appropriate resource within the company, no matter where that resource is located. From an IT perspective, ecrm allows the system s users real-time access to critical information. The system should be reliable, easily maintainable, scalable and, as much as possible, based on open standards that support integration efforts. From a management point of view, ecrm allows the pharma to provide its customers with top-quality service at a reasonable cost. It provides the tools to access and analyze past and present customer and company activities. And it contains alarm thresholds notifications that alert management when major problems are beginning to brew. ecrm Problems and Pitfalls Despite the many benefits of ecrm, implementing, operating, maintaining and scaling these systems is hardly problem-free. Fortunately, the benefits outweigh the headaches. One problem is just convincing senior management to take the plunge. In a recent presentation, Dave Hanaman, EVP and co-founder of C 3 i, a CRM provider for the life sciences, quoted some top managers commenting on the likelihood of their implementing ebusiness, including ecrm. Some typical responses: I still don t see how the Internet does anything for us. We work in silos. Teams and integration sounds good, but it doesn t work for us. We are regulated and can t benefit from the Internet s potential. Fortunately, managers with these attitudes are beginning to be in the minority, but they are more common than one might think given all favorable PR that ecrm has received in 2

3 the past year. But, as ecrm systems become more sophisticated, easier to use, and less expensive, resistance is crumbling. For example, Siebel Systems, the market leader, has just introduced Siebel 7.5 that includes its most powerful, yet affordable CRM system to date. This is a multichannel solution that allows organizations to manage, synchronize, and coordinate customer interactions at all touchpoints across all channels-over the Web, in the call center, by field sales and service personnel, and through channel partners. This integrated approach allows organizations to establish a common view of the customer, leverage all customer interactions, dramatically increase productivity, maximize revenue and profit, and significantly enhance customer satisfaction. Another reason the pharmas are a little gun shy regarding ecrm stems from the complexities associated with managing a system that includes multiple data sets. Individual databases can contain information on doctors, customers, employees, vendors, and regulatory agencies. But these data sets can make a major difference in the way an organization conducts its CRM activities. For example, company researchers can analyze the pharma s customers in order to develop new markets, target new marketing initiatives, and more effectively sell to the existing customer base. Customer sales reps can be kept posted on customer trends and preferences, making their upsell efforts more rewarding. A Cautions Approach Despite the many benefits of ecrm, in these tough times management is understandably wary of making major investments in large, complex systems. And their caution is justified. Project failure rates among Fortune 500 companies and large consulting operations is often cited as 60% to 70%. However, the reason they fail often has less to do with technology and more with making classic mistakes instead of best practices, the implementers adopted worst practices with predictable results. These worst practices range from common strategic mistakes such as lack of executive sponsorship, a lack of clear vision and poor communication to people mistakes such as dearth of management and leadership skills. Despite these problems, ecrm is making rapid inroads into the pharmas it is a mustdo initiative according to Forrester Research, Cambridge, MA. In a recent pharmaceutical industry survey, Forester found that 60% of the respondents are now involved with CRM technologies, with sales force and marketing programs topping the list of functions. Physicians are the primary CRM audience for 37% of the companies with 27% addressing multiple consumer groups. Managers, the survey reports, are taking various tacks to measure CRM initiative success with 42% relying on the extent of internal utilization and cost reduction. Others are looking to increased revenues as their measure of success. But consultants who specialize in ecrm emphasize ROI. They recommend that the pharmas establish their ROI goals up front before setting out on the complex series of steps that will eventually lead to a functioning ecrm system one that can help retain customers and boost the company s competitiveness and profits. 3

4 Steps to Success The first step to a successful ecrm initiative is setting realistic ROI goals. This requires close coordination between IT and marketing, including brand management. Marketing has always been responsible for ROI on its own programs, but these days it is also becoming responsible for the infrastructure ROI associated with these programs as well. The infrastructure includes all the IT resources needed to support the CRM initiative the network, ecrm software, workstations, web browsers, etc. IT and Marketing need to closely coordinate their activities to make sure the infrastructure reflects the CRM initiative s ROI goals. There are two sides to the ROI equation, both of which include quantifiable calculations: On one hand there are the anticipated financial benefits such as cost reductions and increases in revenue; on the other, the expenses people, capital and infrastructure costs. Depending on the size and complexity of the CRM initiative, the ROI model takes into account quantifiable revenues and costs such as general overhead expenses, campaign costs, and expenses associated with data integration and management. Also part of the equation are those harder to quantify but equally important factors such as building customer loyalty, moving into a new marketplace or creating a new distribution channel. Brand managers should be providing input on all these considerations from the very beginning. And they must have a say in what constitutes a successful outcome. For example, Branding wants to boost campaign results. Brand mangers work with IT to build an ROI case for an infrastructure that enables more sophisticated targeting and response analysis. From an ROI perspective, marketing spends the same amount of money but better targeting means higher response rates. The result is a positive impact on the company s bottom line. Or Marketing may decide that the more sophisticated targeting of its key prospects allows it to mail fewer campaign pieces and make fewer calls to achieve a satisfactory response. And, as ROI increases, the investment in IT infrastructure can be rapidly amortized. To create a ROI model that has a good chance of actually reflecting reality, the ecrm initiative task force depends on extrapolations based on similar past programs, relevant industry metrics and research published by credible industry research houses and associations. If they already have an analytic CRM system up and operating, a lot of the information and analysis needed to extrapolate ROI for the specific initiative already exists. (See sidebar Analytic CRM, Seeing New Patterns) It s lot of work up front and there is always an element of guesswork involved but a well-constructed ROI model creates the firm bedrock on which an entire CRM initiative can be successfully constructed. Brand managers are also involved in the next step finding out who the company s customers really are. Customer information is usually scattered across numerous systems and databases ranging from massive historical files hidden deep within a terabyte-sized 4

5 data warehouse to information stashed on a desktop computer s hard drive in the Marketing department. Part of this process is to map all contact points between the company and its customers, prospects, employees and trading partners. Finding, organizing and analyzing this information provides the company with a clear picture of its prospects and customers, including their identity, their demographics, what they buy, and what channels they use to make these purchases. For example, physician data will tell the pharma which doctors are using its products and which doctors are using a competing or generic brand. When this information is combined with other data about each physician s location, background, specialty, years in the field, etc., the company can make use of CRM analytics to better understand its marketplace and be far more effective in targeting its prospects, making the best use of its marketing dollars and moving ahead of its competitors. Creating the Infrastructure In the meantime, the IT organization, an integral part of the ecrm task force, is creating the technical infrastructure needed to carry out the ecrm business goals articulated in the ROI model. This may include strengthening the company s communications infrastructure by adding secure Virtual Private Networks or wireless capabilities for detail reps and other field workers. IT may also propose investing in enterprise application ecrm software from one of the major firms in this space e.g. Siebel, Peoplesoft, SAP or Oracle as opposed to attempting to build the application in-house. In the final analysis, the architecture and functioning of the technical infrastructure should be entirely transparent to the ecrm users. Blissfully unaware of the underlying technology, users should be able to work with the ecrm system easily and even enjoyably. At this point, the level of complexity surrounding the ecrm initiative is growing rapidly, but as long as the business goals remain clearly articulated, turf wars kept to a minimum, and everything the ecrm task forces does is documented and made available in a common repository, success is right around the corner. Next the task force makes sure that data on customer activity is coordinated and available across all touch points such as the, call centers, , direct mail, customer-facing web sites, the sales force and even deep into the back office. Capabilities for crossdepartment and cross-system sharing of ecrm information are in place. Customer preferences are taken into account for example, the task force may note that a growing number of physicians are using edetailing capabilities and other self-help features available through the pharma s Web portal. Responding to this increasing physician acceptance of the Internet, the pharma may decide to increase the level of self-help initiatives accessible over the Web and mount a marketing campaign to acquaint its customers with the new features. 5

6 Pilot, Test, Learn, Revise At this point, with all this hard work behind it, the task force may feel its time to roll out the ecrm initiative across the enterprise and start reaping the rewards. But that would be premature. Best to stick a toe in the water in the form of a pilot program in order to determine if the CRM system does, in fact, actually meet the business goals that were established during the creation of the ROI model. The pilot lets the task force respond to unanticipated changes such as a shift in the economic environment or competition from an unexpected source. You also want to make sure that your internal business users will use the application. Equally important is determine that the ecrm system is integrated the enterprise s legacy applications. If you overlook application integration and this sometimes happens you wind up with siloed applications with limited functionality. This is where your hard work on the ROI analysis pays off. By comparing the pilot results to the quantifiable expectations contained in the ROI analysis, brand managers can validate the return of the new service or offering enabled by the ecrm system in terms of their expectations. The pilot provides invaluable insight into what other modifications or additions may be needed before rolling out the initiative across the enterprise. Finally the big day has arrived and the application goes live across the entire company. But the task force s work is far from over. The success of the ecrm initiative depends on its acceptance and use by the target audiences the physicians, customers, employees and partners. There s serious PR work that needs to be done at this point. Crossfunctional corporate processes and compensation structures have been impacted and conflicts must be resolved. Policies and procedures have changed and the changes must be explained and sold to the users of the system in order to enlist their enthusiastic support. User training is a must. ecrm systems are a lot like living entities: they constantly evolve and change. Assigning clear cut responsibility for on-going measurement and refinement of the system will go a long way to ensuring its effective functioning over time and bring an even greater ROI. Even if your system uses CRM software from a company like Siebel or SAP, the initiative that finally sees the light of day will be unique to the pharma that made it happen. The new ecrm initiative provides a clear-cut, proprietary competitive advantage, allowing the pharma to gather, analyze and leverage data in ways that are unique to the company. The ecrm measure may be planned and implemented on an enterprise basis, but the actual execution of new sales and marketing initiatives will be carried out at the brand level. A properly planned and implemented ecrm initiative allows brand-specific information to be gathered and integrated into the corporate systems, creating a feedback loop that benefits both the pharma and the individual brands themselves. # # # 6

7 (sidebar) Analytical CRM Seeing New Patterns Analytical CRM transforms raw customer data into information that brand mangers and other marketing functions within the pharma can use to maximize customer value. The analytical CRM system allows the company to track, gather and analyze highly complex patterns and trends. Analytics include segmentation analysis studies, Lifetime Value Modeling, cross-sell/upsell analysis, customer migration analysis, new customer models, customer contact optimization, merchandising analysis, branding analysis, customer attribution and churn, and much more. Analytical CRM allows brand managers and marketers to more accurately predict shifts in the marketplace and in customer value either upward of downward and take action accordingly. It makes the company s execution of its current ecrm initiatives more effective by providing new, actionable insights and perspectives into the pharma s customers and processes. In short, analytical CRM is the technology foundation that drives ecrm ROI and it s indispensable. # # # 7