What is Geo-Tailoring?
The principal function of geo-tailoring is to optimise sales force efficaciousness, to create a sales force that is intelligently constructed, and as productive and efficient as possible. Traditionally, pharmaceutical companies adopted a ‘footprint’ method of distribution, whereby a team are deployed evenly across the country; geo-tailoring, or geo-alignment focuses instead on the areas of the country with the highest potential, leaving the remaining areas dormant. These changes are a reaction to the way in which the pharmaceutical industry has evolved; in these tough economic times, pharmaceutical and healthcare companies have found themselves needing to adapt to survive.
Previously, it was thought that the key to success lay in the sheer volume of sales representatives out in the field. Consequentially, many companies are now footing huge marketing and sales expenditure costs, in many cases greater than the budget allocated to their research and development. The paradigm shift that has ensued in pharmaceutical and healthcare sales has first and foremost displaced the emphasis from volume, to strategically placed sales teams and differential resourcing.
Strategies in response to the fluxing industry have taken many different forms; the focus has shifted away from volume to productivity, and a more stringent approach to the performance of those representatives out in the field. Training, superior targeting, compliance, efficiency benchmarks and call quality are more crucial than ever before, demonstrating a renewed accentuation on the basics of selling.
So what are these allusive changes in the pharmaceutical industry that have instigated a revision in the way companies operate? The first of several factors is the tougher and more stringent regulations that govern the pharmaceutical industry. In 2007, only 19 drugs were approved by the Food and Drug Administration (FDA), the lowest in 24 years. Whilst these restrictions cause headaches for current sales models, they also present opportunities for the most agile, innovative, quick-off-the-mark companies in the industry.
The marketplace has also become increasingly competitive and more aggressive, and exacerbated by escalating, global financial pressure. Annual price reductions mean that year upon year, pharmaceutical companies are faced with lower margins to work from. This financial pressure is intensified by increasing competition from generics companies, at a time in which a number of high profile products are coming off-patent. It has been speculated that as financial pressure is set to continue, some pharmaceutical companies may look to more cost effective promotional channels to reach their market, such as direct mailing and e-mailing. To further complicate matters for pharmaceutical companies, Primary Care Trusts in the UK have also been offering incentives to reduce branded prescription.
Pharmaceutical companies are finding that their customer base is changing, and the existing pharmaceutical models, which focus very much on frequent and persistent selling to physicians, are no longer viable options. In some areas, physicians have considerably less sway into what is dispensed; meanwhile, GPs are under continued pressure to prescribe cheaper drugs. Hospitals are tending toward a more professional approach to procurement, thus have a propensity to be looked after by key account managers. The Association of the British Pharmaceutical Industry (ABPI) introduced a new code of conduct on January 1 2006 which stipulates further restrictions on access to health professionals. To ease the strain on doctors, nurses have been granted more power to prescribe drugs. Moreover, heavy investment from the National Health Service, has brought about a higher number of hospital-based physicians, whilst conversely, the number of GPs remains the same. Payers are steadily emerging as a core customer group. This diverse, evolving group exemplifies the need for tailored, adaptable, geo-tailored and specialist sales models, to accommodate not just one type of customer, but several. Flexibility in the industry is more important than ever before.
The Sales Force Effectiveness (SFE) strategy tends to heavily emphasise the importance of the first line manager in achieving sales objectives. Decentralisation of SFE practice is encouraged; instead of limited SFE programmes being carried out, and best practice shared regionally if at all, an efficient SFE model maintains a high level of geographic integration; geo-tailoring fits directly with the pragmatic, simplified approach of new business models, which favour basic tools and strategies. Instead of blanket coverage, sales force effectiveness will focus on the areas and the customers with long term, profitable potential; the relationship between these customers will then be carefully cultivated, informed by training and call quality measures.
These adjustments have naturally instigated changes in the recruitment industry. Contract Sales Organisations (CSOs) are becoming more popular as they reduce the inherent risks that recruitment poses for pharmaceutical companies. Contract Sales Organisations can assist during particular peaks in activity, covering specialist pilots, product launches, and providing hot spot coverage. This resource also allows a pharmaceutical company to be 100% confident in the ability of a sales representative before taking them on to permanent headcount.
If you would like to know more about geo-tailoring or contract sales, please give one of our recruitment team a call on 01225 336 335, or alternatively, please email star on solutions@starmedical.co.uk
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