Multi-Channel Management how to unlock the potential

Multi-Channel Management how to unlock the potential

Requirements for efficient Multi-Channel Management The pharmaceuticals and medical devices industry has been subject to fundamental changes in the recent years and will be facing even more pressure in the future. As growth in the established western markets is stagnating or even declining due to new regulations, patent expiry, empty product pipelines and increasing access hurdles, cost reduction and efficiency increase are on top of today s agenda. Especially marketing and sales cost as one of the major expense factors are under review. The traditional Share of Voice model designed for marketing blockbusters seems to be outdated and companies are forced to find alternative strategies to efficiently approach the changing customer landscape. Therefore, Multi-Channel marketing and the proper management of various channels has come into focus in many pharmaceutical companies as a means to develop and establish new ways for customer communication.

Although the process of establishing Multi-Channel Management in the pharmaceuticals and medical devices industry has already started some years ago, commercial successes of such initiatives are still behind expectations. Reason for that is that most companies so far have equated Multi-Channel Management with an operational approach to establish online activities such as websites, customer portals or social media. These activities have mostly been established in parallel to traditional sales and marketing channels but have not been integrated into one common approach, often even leading to increasing sales and marketing efforts. Therefore the major question today is how companies can establish Multi-Channel Management to realize aspired results? In order to fully exploit the potential of Multi-Channel Management, it has to be set up based on a clear strategy to intensify customer interaction through an efficient coordination of all contact channels across the whole organization. An intelligent balance between customer needs and individual product requirements is crucial to enhance ROI through increasing process efficiency and decreasing marketing and sales costs. Based on an integrated strategic approach, Multi-Channel Management can increase company value significantly (Figure 1). Status quo in Pharmaceuticals and Medical Devices today From the industry s perspective today, several market conditions in pharmaceuticals and devices market are heavily asking to prepare for an efficient and comprehensive Multi-Channel Management: Access to physicians is more and more limited Importance of alternative information channels is strongly increasing Cost of marketing and sales need to be more stringently controlled than in the past Strong shift from push to pull marketing is ongoing Different communication behavior is requested by customers with changing preferences Relevance for margin contribution of the tail-end portfolio is increasing The concluding question for healthcare companies is rather how than whether to implement Multi-Channel Management. However, so far many companies do not have a satisfying answer at hand (Figure 2). Potential of integrated Multi-Channel Management Spread of quality in social media activity Integrated Multi-Channel Management H H H H @ Potential Quantitative Potential Reduction of sales and marketing costs Reduction of sales force Balanced and less costly channel mix Increased customer self-service Sales increase Use of pull-strategies Need based customer communication Efficiency increase Integrated approach across all channels Organizational alignment Qualitative Potential Increased customer satisfaction Individualized communication Simplified access to information Better knowledge on customers Integrated approach across departments Share information across channels Figure 1 Figure 2

Challenges for healthcare companies The major challenge of Multi-Channel Management in Pharma and Medical Devices, as in many other industries, is to integrate all communication channels across several internal departments and to tailor this approach according to both product requirements and customer needs. The ability to respond to changing customer needs plays an important role, as the communication behavior of major customer groups such as patients and physicians has changed tremendously over the last years. For patients the internet has become a major and reliable source when searching for health information. Recent studies have shown that: >60% of all patients search the internet for health information >70% of patients using the internet say their treatment decision has been influenced by it >80% of chronic patients use the internet to find information concerning treatment options Physicians see more and more patients asking for concrete treatment options But patients increasingly using the internet in return offer a great opportunity for companies to trigger a pull effect for selected products within their respective portfolios. Patient involvement in specialty indications As shown in Figure 3, this pull-strategy is particularly promising in specialty medicine and chronic indications where patient involvement is high. The potential of such initiatives has been specifically proven by Merck & Co. during their Gardasil campaign. They achieved to increase awareness of connection between HPV and cervical cancer from 5% to 55% and had almost 120.000 fans on their Gardasil Facebook-site. Based on this patient support, Gardasil has become one of the best-selling products in many countries shortly after the launch. But not only patient behaviour has altered. Also physician s communication patterns and needs have run through constant change during recent years. Using sales representatives as more or less the only active communication channel towards physicians is no longer cost efficient nor is it fulfilling customer expectations. Today, physicians actively ask for e-channels, allowing them to profit from information whenever they need it, and higher quality and personalization in existing channels (Figure 4). Physician s expectations regarding channel mix Internet penetration in key pharma markets 1 100% 90% 80% 70% 60% 50% 40% 30% 83% potential for 77% 78% 80% influence on 69% decision 63% markers via digital 52% channels 29% 2010 What physicians want today 2 More Virtual reps 5 More ecme 3 More HCP-spec. product websites 3 More HCP-spec. disease websites More esampling 6 More EBM 58% 64% 73% 79% 82% 89% 20% er quality reps 81% Oncology when seeking information on cancer 49% go to the Internet first 1 10% 0% US JPN UK GER FR ES IT Global 2000 Fewer reps 52% 90% 4 Inflammatory Diseases 47% of teens had used the internet to learn about their illness 2 68% of the parents had used the internet to research their child s illness 2 1) Internet World Stats, penetration in 2010 (upper green bar) and 2000 (lower gray bar) 2) Touchpoint survey 2010 3) Healthcare provider specific 4) Previous survey in 2008 5) electronic Continuous Medical Education 6) Evidence based medicine Figure 4 Chronic CNS Diseases Diabetes 63,5% performed MS-related searches understanding the disease and treatments are most viewed topics 4 42% search for diabetes information on the Internet 3 1) Oncology times (2010) 2) Stanford university (2005) 3) www.portal.acm.org (2005) 4) Multiple Sclerosis International ( 2010) 5) Central retinal vein occlusion Figure 3 Looking at these changes and expectations it becomes obvious that integration and balancing of different channels in a common approach is the key differentiator for a successful Multi-Channel Management in the future. It is now time for companies to define and execute an integrated strategy to capitalize on the recent efforts.

Internal organizational alignment will be a key success factor in effectively operating this new business model. Healthcare companies have to overcome current organizational silos when dealing with different channels and customers. Successful Multi- Channel Management will require a common contact planning across channels and departments. Furthermore, all channels need to be coordinated in a way that they can support each other, e.g. sales force resources may still be required for collecting information necessary to individualize online content. All in all, companies need to define communication needs by product and decide upon communication channels based on push or pull strategies in a systematic but nevertheless differentiated approach across the portfolio (Figure 5). New wave of integrated Multi-Channel Management Past Future ø 1) self-help groups & patient associations Figure 5 Share of voice & direct channel for cost containment Choose right channel based on: Channel affinity Objective of communication Push (initiate) vs. Pull (deliver) Nature of Information Profitability / ROI Push Pull Physicians Patients (incl Other (incl. assoc.) SH 1 groups) stakeholders Mobile Services (SMS, ) Social Media ecme / edetailing Website email Direct (Mail / Fax / Outbound calls) TV / old media Press / PR Print / Ads Nursing Service / Homecare Events (Congress / Training / Exhibition / ) Customer Service / Call Center Sales Force channels Concerted approach across relevant & complementary Key objectives of this approach are: Identification of future communication needs and channels based on customer preferences and product specifics Definition of an efficient channel allocation per product in order to maximize customer ROI and to reduce sales and service costs Description of organizational changes required (resources and interfaces) to implement a new Multi-Channel approach Building a key differentiator for companies vis-a-vis their clients Overview Multi-Channel Strategy approach 1 2 3 Define offerings and channels framework Figure 6 Adapt to product specifics Define future channel mix within budget As illustrated above, the definition of a balanced Multi-Channel Management should follow five phases. After clustering channels and communication needs for evaluation, product specifications and budget limitations need to be aligned. Finally offerings can be allocated to channels and necessary organizational changes have to be derived. 4 Align organization 5 Develop roadmap CEPTON provides a proven methodology In order to support companies when defining a balanced Multi- Channel Management, CEPTON Strategies has created a pragmatic approach combining expertise from many projects in a well proven project methodology (Figure 6). Define offerings and channels framework As a first step, potential channels and offerings - i.e. different needs for communication - will be clustered by the project team to prepare for evaluation. During this first step it will be crucial to be as precise as possible when describing offerings/communication needs (e.g. providing product dosage characteristics to physicians or supporting patient referral to specialists ) as well as communication channels that should be taken into account (Figure 7).

Clustering Offerings and Channels Offerings / communication needs Company/ Product Information Product Characteristics for physicians Study results for stakeholders Adverse event reporting for authorities Services Support practice organization Support networking and patient referral Enable patient-doctor communication Disease Management Improve interaction concerning compliance Therapy guidelines Figure 7 A reasonable amount of clusters is critical to enable the organization to match offerings and channels. Not more than 15-20 different clusters of offerings and appr. 10-15 clusters of potential channels have proven to be a pragmatic but nevertheless differentiating number. According to previous experiences the granularity of offerings and channels needs to be selected carefully since they serve as basis for the further evaluation. In order to identify which channels are appropriate to support which offering, a next step should be to define a set of criteria based on the most important communication requirements. Both, the offerings and the channels have to be profiled along these criteria and to be evaluated for their fit (Figure 8). Profiling Offerings and Channels Offering Channels Sales Force Online Static Website Interactive Customer Portal Social Media Messaging E-Mail SMS/ MMS Phone Inbound Call Outbound Call T-Detailing Print AD... Channel If, for instance, the requirement for a given offering is to communicate at low cost to a broad target audience corresponding channel-criteria might be cost of communication and breadth of coverage. Based on the defined criteria, all offerings and channels will then be systematically assessed for their mutual fit (Figure 9). Matching Offerings and Channels Cost Cost of communication Reach Breadth of coverage Multiplication factor Accessibility Flexibility & speed Time to spread Time to change content Comm. Direction Lateral comm. Direction Modality Synchronicity Interactivity Figure 9 Offering 2 Study results for stakeholders Offering 1 Product characteristics for physicians Fit along Breadth of coverage +1 0 Low -1 2 Book 4 Product Training Static Website -1 Low 0 +1 Fit along Cost of communication 1 3 Social Media Inbound Call The results of this assessment can be consolidated in an attractiveness matrix, indicating for each possible combination of offering and channel whether it is suitable or not. In order to identify gaps, current Multi-Channel activities can then be compared with the strategic framework developed. This will point out urgently required changes to better align for Multi- Channel Management already at this early stage of the project. Sales Force Outbound Call Channel Personalization Personalization Information flow (push vs. pull) Message complexity Depth/complexity of message Technology Media complexity Technology driven Experience Human factor Entertaining factor Objectiveness Future relevance Future relevance Innovativeness Offering 3 Enable patient-doctor communication Channel 3 Print AD Offering 2 Support practice organization Offering 1 Provide product characteristics for physicians Communication related to providing standard information on product characteristics (i.e. classical label information, like efficacy, safety, indication, etc., and use information to prescriber physicians Channel 2 Interactive customer portal Channel 1 Sales force call Personal visit of sales rep detailing information to physician Adapt to product specifics Future relevance Future (low relevance - (low - high) Innovativeness of medium Innovativeness (low of medium - (low - high) Human relationship factor Human relationship (low factor - (low - high) Entertaining factor Entertaining (low factor - (low - high) Objectiveness (low Objectiveness - (low - high) Media complexity (simple Media complexity - (simple - complex) Technology driven (classic Technology - driven (classic - technology) Personalization (standardized Personalization - (standardized - personalized) Information flow Information (push flow -(push - pull) Synchronicity (synchronous Synchronicity - (synchronous - asynchronous) Interactivity (low Interactivity - (low - high) Lateral (between customer) Lateral (between communication customer) communication Direction (outbound - bidirectional Direction (outbound -- bidirectional - inbound) Depth complexity of message Depth complexity of message (simple - Multiplication factor Multiplication (low factor - (low - high) Accessibility for target audience Accessibility for target (low audience - (low - high) Breadth of coverage (narrow Breadth of coverage - (narrow - broad) Time to change content Time to (short change content -(short - long) Time to spread message Time to spread (short message -(short - long) Cost of communication Cost of communication (low - (low - high) Figure 8 FIT Future Future relevance (low - high) relevance (low - high) Innovativeness of medium (low - high) of medium (low - high) Human Human relationship factor (low - high) relationship factor (low - high) Entertaining factor (low - high) factor (low - high) Objectiveness (low - high) (low - high) Media Media complexity (simple - complex) complexity (simple - complex) Technology driven (classic - technology) driven (classic - technology) Personalization (standardized - personalized) (standardized - personalized) Information flow (push - pull) flow (push - pull) Synchronicity (synchronous - asynchronous) (synchronous - asynchronous) Interactivity (low - high) (low - high) Lateral Lateral (between customer) communication (between (low - high) customer) communication (low - high) Direction Direction (outbound - bidirectional - inbound) (outbound - bidirectional - inbound) Depth Depth complexity of message complexity (simple - complex) of message (simple - complex) Multiplication factor (low - high) factor (low - high) Accessibility for target audience (low - high) for target audience (low - high) Breadth Breadth of coverage (narrow - broad) of coverage (narrow - broad) Time Time to change content (short to - long) change content (short - long) Time Time to spread message to (short - long) spread message (short - long) Cost Cost of communication of (low - high) communication (low - high) After having achieved a general agreement on how to best match certain channels with defined offerings/communication needs, the strategic framework needs to be adapted to match productindividual requirements and TA-specifics for each given portfolio. In order to proceed, product characteristics such as reimbursement, pricing, target group, patent expiry, etc. need to

+1 2 0 Static Website Social Media Inbound Call Low -1-1 Low 0 +1 1 3 Book Outbound Call Sales Force be reviewed. Based on these characteristics the team will be able to adjust the initial framework of the multi-channel strategy to fit with product needs for the respective brands. Such needs could be manifold, like increase compliance, combat patent expiry or advertise disease management program. Define future channel mix within budget The next step will be to integrate identified channel-mix and product campaign into existing budget planning. Matching the LRP (long range plan) per product with the suitable offerings and channels will lead the team to precisely allocate budget to the different channels for the years to come (Figure 10). Budget allocation per product Product specific channel mix Offering 3 Support practice organization Offering 2 Study results for stakeholders Offering 1 Product characteristics for physicians Fit along Breadth of coverage 4 + Fit along Cost of communication Long Range Plan (LRP) Figure 10 Channel Having finished this, the team will be proud to present a clear and balanced Multi-Channel Strategy across the defined product portfolio, including all customer specific needs. However, the organization will realize by time that a strong need to change exists. Align organization Channel Mix and Budget Allocation Product n Channel Mix and Budget Allocation Product 3 Channel Mix and Budget Allocation Product 2 Channel Mix and Budget Allocation Product 1 100% 50% 40% 0% Sales Sales Force 30% 40% 10% 70% 5% 80% 15% 85% Online Phone Phone Messaging Print Print Therefore, implementing a new business model by rolling out a multichannel approach will unconditionally require organizational adjustment. Besides the necessary organizational interfaces, reporting requirements etc., concrete resource planning is a key task, as one of the major goals of Multi-Channel Management is to decrease sales and marketing costs with the need to invest into new activities and offerings in parallel. Stacking resource requirements for all offerings on top of each other will allow the team to derive FTE requirements, interfaces and organizational reporting lines etc. (Figure 11). Resource and interface requirements Resource requirements per defined offering Offering 1: Support practice organization Offering 2: Adverse Event Reporting Offering 3: Compliance Interaction Offering n: Figure 11 Multi- Channel Management Sales Marketing Organizational requirements FTE requirements Sales Force: xy FTE Marketing: xy FTE Multi-Channel Mgmt.: xy FTE Interface Requirements Common resource allocation Common contact path planning Organizational consequences Reporting lines Alignment Based on the strategic approach described above, a roadmap to lay out deliverables, timelines and responsibilities will ensure a consistent and pragmatic realization of the venture. To summarize, defining a balanced Multi-Channel Strategy requires companies to step back and to answer few but important questions. Only that will allow replacing opportunistic and fragmented activities by a well-prepared and thoughtthrough strategy, leading to significantly reduced cost in the near future. It is a paradigm-shift that companies have to prepare for, not a short-term fashion. Today, Marketing & Sales still is often organized by channel and not fully aligning and integrating activities across the entire organization leading to loss of efficiency and reporting conflicts.

Important questions to answer What communication needs will our customers have? How can we identify channel preferences per customer? How do product/ta specifics influence our channel selection? How can we direct our communication through the most suitable channels? Can we create a pull-effect for products instead of pushing? What do we need to do to dissolve existing channel silos? Which organizational changes do we need to make? How can we embed sales force activities into other channels? Which customer information will we need to proceed? About CEPTON CEPTON is a globally acting strategy consulting firm. Our company was founded to provide a new consulting approach and advice to clients who are seeking pragmatic solutions for their strategic questions. We believe in small teams of senior executives with many years of experience in strategic issues and operative management gained hands-on in the industry or major other consulting firms. CEPTON relies on the in-depth knowledge of a specific sector of activity as its mainstay. It is not generic methods but knowledge matured over the years in a given national and international industry environment that will generate success. Our services are built on partnership with our clients and rely on the quality of our executives who are time-tested in finding customized solutions together with our clients rather than for them. We offer experts to work as interim managers of our clients companies, if desired, where they take an active responsible part in driving the implementation in a timely and effective manner.

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