CRM: Connecting the Dots…

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Taren Grom, Editor

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CRM requires a multilevel, enterprisewide view of customers — thereby demanding a strong customer data management business practice . A 5% increase in customer retention can lead to a 25% to 85% profit increase,depending on the industry. — HarvardBusinessReview . 82% of global 2000 companies have an incomplete view of their customers. — MetaGroup . It costs up to five times more to replace a current customer than to retain and satisfy that individual. — Business andEconomicReview These statistics drive home the importance of customer relationship management — a business philosophy that allows compa nies to enhance relationships with their customers by under standing and responding to their needs. CRM is a horizontal strategy that lies across every single subprocess, or silo, throughout the enterprise. Only by retaining customers and increasing loyalty can a business meet its goals. While CRM is driven by technology,it is not an IT strategy but a business strategy that requires process change. According to HarteHanks, CRM involves capturing customer data from across the enterprise, consolidating all internally and externally acquired customer related data in a central database, analyzing consolidated data, distributing the results throughout the enterprise, and then using this data when dealing with customers via any “touch point” in a way that provides value. CRMrequiresthecaptureofdatawithinallchan nels andwith all stakeholders,including but not limited to healthcare pro fessionals, patients, medical researchers, wholesalers, pharmacists, payers —virtually anyone involved in theprocess.At its verycore,adoptingaCRM philosophy mandates that a company shift all thinking and processes to transform itself from product focused to customercentric. 10 J u l y / A u g u s t 2 0 0 2 PharmaVOICE Relationship marketing is based on the premise of a TWOWAYDIALOG. It’s not just getting the patient to opt into a database, it’s about constantly TALKINGTO THEPATIENT OVER THEIR LIFETIME. . . . . . . . . . . CHIDESTER Connecting the dots … CRM focus CRM — What’s the Buzz All About? PARREO. HarteHanks conducted an infor mal, qualitative survey with 12 product man agers late last year and not one of them was able to elaborate on what customer relation ship management (CRM) meant, beyond the buzzword. The power of CRM lies in the amazing new technology that allows the one toone integration across multiple audiences and touch points. By personalizing communi cations, CRM permits companies to have rele vant and ongoing conversations with individ uals over time. The major shift is moving from the traditional product focus to a customer/patient focus or share of customer vs. market share. CRM is permission based mar keting or personalized marketing in action. The overriding concern regarding the effective implementation of CRM initiatives is privacy. HIPAA is getting a lot of attention and appro priate optin devices are mandatory to ensure that patients and customers allow companies to communicate with them. This issue needs lots of attention. Some of the other features and benefits of CRM are that it allows for bet ter measurement of ROI; maximizes lifetime value of customers and patients; can increase companies’ share of medicine cabinet; can optimize brand revenue during the patent protected period; enhances patient compli ance, persistence, and loyalty (company and product); helps minimize adverse events through proper use of medications; can dis courage wrong dosing, skipping doses, and selfimposed drug holidays; and can provide realtime intelligence. BOGAN.The reality is that any company that has customers has customermanagement issues. Any company that thinks about how to optimize its economics inevitably has to ask, what is the best way to optimize the cash flow from different customers? As soon as that question is asked, companies have to delve into issues of relationships and relationship management. They have to think about how to do business other than as a onetime prod uct transaction or event sale. As soon as com panies start asking these questions and wrestling with these issues, they are into CRM. The CRM movement was not born whole cloth, it was an extension of multiple generations of customerfocus, customerfeed back, and customermeasurement models. CRM took off because of the marketing power of the software and technology companies that were selling products and services for the THETOUCH POINTS … . GUYAMATO. Senior VP, sales and marketing, Access Worldwide, Boca Raton, Fla.; Access Worldwide provides a variety of sales, marketing, and education services to physicians, pharmacists, and patients on behalf of pharmaceutical clients, educating them on new drugs,prescribing indications, medical procedures,and disease management programs; the company’s services include product stocking, database management, and teleservices . NANCYBARLOW. President,The Xchange Group, Parsippany,N.J.;The Xchange Group, the relation ship marketing division of CommonHealth,spe cializes in designing and implementing consumer and professional relationshipbuilding initiatives for the healthcare industry . NAILESH A.BHATT.Managing director, Proximare Inc., Franklin Park,N.J.; Proximare is a strategy and management consulting firm that exclusively serves the pharmaceutical,biotech,medical products,and related industries on issues related to sales, marketing, technology, licensing, and R&D . CHRIS BOGAN.President and CEO,Best Practices LLC, Chapel Hill, N.C.; Best Practices conducts work based on the principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics, and winning strategies of worldclass companies . JIM CAIN. Senior VP, global marketing and customer development,SYNAVANTInc.,Atlanta; Synavant guides biopharmaceutical and healthcare companies globally to greater business success by accelerating the adoption of advances in healthcare around the world by designing, building, and supporting a wide range of knowledgebased solution sets, that bring together leadingedge technology, proven datamanagement competence,a full range of specialist services, and more than 30 years of healthcare expertise . BECKY CHIDESTER.CEO,RTC Relationship Marketing,Washington,D.C.;RTC Relationship Marketing is a marketing communications firm that creates and executes complex relationship marketing programs that typically require most or all of the following RTC disciplines: account man agement,creative,marketing information and analysis, production,interactive,and teleservices; RTC is a wholly owned subsidiary of the WPP Group Plc. along with sister agency and health care specialist, Sudler &Hennessey . DAVIDW.HANAMAN.Executive VP and co founder,C 3 i Inc., Morristown,N.J.;C 3 i, the market leader in customer relationship management services for the lifesciences industry; in partner ship with Siebel Systems, the global leader in CRM application software,C 3 i delivers 100% of the services a pharmaceutical company requires to deploy and manage its CRM solution . FRED LITZKY.President,Database Network Associates,Oakland,N.J.; Database Network Associates provides pharmaceutical and health care marketers with the most complete and accu rate mailing lists, email lists, and enhancement data to develop and manage onetoone relation ships with physicians, patients, and consumers . GERRY MCGOLDRICK.VP,media services, Insight Interactive Group,Philadelphia;Insight Interactive is an interactive marketing agency that focuses on strategically creating valuable relationships between brands and customers and provides professional services to help clients create, implement, and promote interactive strategy for the Internet and other interactive media . JULIAN M.PARREO.SeniorVP,sales and marketing,pharmaceuticals,HarteHanks Inc., San Antonio,Texas; HarteHanks is a worldwide marketing company that provides endtoend CRM and related solutions for businesses and organizations in both consumer and businessto business markets across North America, Europe, South America, and the Pacific Rim . ROBREBAK.President,SimStar Internet Solutions, Princeton,N.J.; SimStar maximizes opportunities for the discipline of pharmaceutical emarketing . PAUL RODWICK.VP of market development and strategy, E.piphany,San Mateo,Calif.; E.piphany is the leading provider of intelligent software for the customer economy,providing CRM solutions . RICK ROSE.VP,corporate sales and marketing, Dendrite,Morristown,N.J.; Dendrite is a world wide leader in salesforce effectiveness, CRM,ana lytical,clinical trial, and eLearning solutions for the global pharmaceutical industry . LORINESWEENEY.CEO and president,Quovadx Inc.,Englewood,Colo.;Quovadx provides endtoend business infrastructure and integration solutions enterprise. In essence, these systems were databases and datamanagement products designed to manage cus tomer accounts. The good news is that these technology product companies helped extend certain issues, the bad news is that these software and technology companies have completely oversold and overpromised on what their piece of it can actually deliver. REBAK. The letters CRM are a buzz term, but the theory for CRM has sig nificant advantages for pharma. The the ory of capturing, analyzing, and build ing customer sales and loyalty clearly is key for pharma, especially now. The need for pharma companies to better connect to their customers is becoming more real. But, pharma has a long way to go until it gets to be a “Charles Schwab.” HANAMAN. CRM is both a real trend and a buzzword. Companies run into prob lems when they view CRM as a panacea or as a technology quick fix for what is really an underlying business process issue. Quite sim ply, CRM — the process — is absolutely required for pharmaceutical companies mov ing forward. Today, however, few companies are using CRM to its full advantage, and many are struggling with how to achieve a customer relationshipenabled organization. CAIN. Gartner Consulting puts CRM as a multibillion dollar industry in the next five years, so CRM is not just a buzz. In life sci ences, CRM is more challenging, because it’s not a transaction business like banking, finance, or other vertical industries where multiple touch points into a customer can be leveraged. The primary customer for pharma ceutical manufacturers is the physician. The physician is primarily touched by a sales rep. So CRM in the lifesciences space tends to be viewed as unidimensional. Most pharmaceu tical companies, when they are implementing CRM, first focus on the sales rep and the sales rep’s interaction with the physician. Salesforce automation systems, which help manage information, are being replaced for the most part by CRM systems. AMATO. CRM has been around for some time, most predominately in some of the con sumer goods and financial services industries, According to recent studies by Harte Hanks, onethird of top executives who were polled currently implement a CRM strategy, representing a crosssection of vertical indus tries. More than four out of five companies implementing and building CRM solutions rely on the support of external software providers or consultants to help move the companies to customercentricity. And 72% of those polled expect to invest a minimum of one year to the development of a CRM process, with 36% reporting that their initial efforts already have been completed. With a vast portion of the business world planning to implement — or already imple menting — a customer relationship manage ment strategy, it’s not a question of whether the pharmaceutical industry must follow suit, but how soon. Source: HarteHanks Inc., San Antonio,Texas While new to pharmaceutical marketers, the concept of CRM is not new to datadriven marketers across other industries. The busi ness philosophy has been in existence for some 20 years, starting with the launch of American Airlines’ frequenttraveler loyalty program. But technology has breathed new life into CRM, increasing its accessibility and application in many industries. Technology makes customercentricity easier to manage in today’s complex multichannel operations environment. Just as FedEx has changed expectations for how long it takes to deliver a package, or ATMs have changed the way we bank, or the Internet has altered the world’s expectations for 24hour access to information, customer centricity “best prac tices” across all industries are changing the expectations that consumers have about doing business with just about anyone. Going Horizontal in aVertical Market CRM focus 12 J u l y / A u g u s t 2 0 0 2 PharmaVOICE Pharma companies are SPENDINGBILLIONS OFDOLLARS AYEAR on consumer promotion, reaching out to physicians,on their salesforces, yet at their call centers there is a disconnect — they are LOSINGTHE CUSTOMER AT THEMOSTBASIC CONTACT. . . . . . . . . . . . . . . BHATT CRM focus but CRM is fairly new to the pharmaceutical industry. The pharma industry always has known that it needs to extract as much value from a brand as it possibly can, in a finite period of time. The industry always has looked at patent expiration as the terminal end of a brand. Over time, companies have realized that they need to establish two things. No. 1 they need to extract maximum value beyond what is possible dur ing the brand’s patent life, and No. 2 potentially extend that life beyond patent expiration. One way to achieve this is to retain some brand equi ty on the prescription side after patent expiration, and then potentially move it over to the consumergoods world, i.e. as a RxtoOTC switch. Traditional pharmaceutical marketing focused on the physician and how to influence his or her prescribing habits. Brand management, as it were, didn’t really exist historically in the way we may think, because there wasn’t a consumerfocused brand effort. DTC’s introduction in the last six or seven years is really what ushered in an increased focus on CRM. An influx of marketing talent from outside the industry has brought a renewed focus to CRM.There’s a traditional consumergoods focus com ing into pharma, and this has opened up the possibility of digging deep, and building onetoone relationships beyond the physician by going directly to the consumer, and then trying to build loyalty through the life of a brand. LITZKY. To some extent the term CRM has become a buzzword, but there are companies that have made the investments and are realizing gains from adopting a CRM marketing mindset. What CRM attempts to accomplish is to improve ROI of individual campaigns, and customer lifetime value by developing an understanding of the individual cus tomer’s and prospect customer’s needs and then meeting them. CRM can help the marketer identify prospects’ needs before they ask for some thing. CRM can also make fulfilling these needs as cost effective and efficient as possible. BHATT. Initially CRM, just like ERP and ebusiness, was a buzzword. But today, CRM is not an option, but a vital component for the phar maceutical industry, especially in the sales and marketing divisions. Pharma companies are under tremendous margin, regulatory, political, economic, and media pressures. Senior executives don’t have enough resources and are having to make do with a lot less. This is where CRM becomes a critical component of the whole equation. Chief information officers at pharma companies, as well as product managers and VPs of sales and marketing should be looking at CRM, if they are not already doing so. CRM is not just another technology to increase efficiency. Pharmaceutical companies don’t have visibility or management of cus tomer data, customer needs, or customer pain points — this is what pharma executives need to look at when implementing any technolo gy. At the end of the day, any technology should eliminate pain points. CRM — HowDoesYour Company Rate? WHICHDIMENSIONSAREFORMALLYDEPLOYED SUPPORTINGYOURCRM SYSTEM? Senior leadership owns CRM Incentive compensation supports CRM Integrated CRM technology Integrated customer databases Crossfunctional governance structure Clearly defined roles & responsibilities Clearly defined specialist jobs Performance reviews reflect CRM Rewards & recognitions support CRM Structured customer relationship managementprocess 80% 60% 60% 60% 40% 40% 40% 20% 20% 0% WHICHOFTHESEMETRICS DOYOUUSETOTRACK CRM PERFORMANCE? Customer retention rates Savings from operational efficiency Market share Share of wallet for each customer Products per customer Revenue per employee 80% 60% 40% 20% 20% 20% Table shows percent of respondents reporting the above metrics. CRM focus In a recent informal survey of 15 top pharma companies’ help and cus tomer service centers, 75% of the pharma companies failed to provide adequate or satisfactory response or answers. Pharma companies are spending billions of dollars a year on consumer promotion, reaching out to physicians, on salesforce activities, yet at their call centers there is a disconnect — they are losing the customer at the most basic con tact. If companies do a proper job of managing and maintaining their customer relationships, they will be sure to turn every customer into an ambassador. BARLOW.CRM is gaining momentum because marketers are looking for initiatives that can give them an edge that perhaps they did not have before. I would define CRM as customer relationship marketing. There are a lot people who talk about customer relationship management — what they are talking about is a multibillion dollar technological system designed to pull together their salesforce call activity. Customer rela tionship marketing is onetoone marketing. The fundamental princi ples behind customer relationship marketing are not new; it’s oneto one marketing, and always has been. First it was called direct marketing, then integrated marketing, then relationship marketing, now customer relationship marketing — it’s really the same basic discipline that has evolved over time and has become more sophisticated as technology has evolved. But CRM is not a technology in and of itself. The technology enables the marketing discipline. CRM is much more of a mindset of how companies market to their customers, rather than a tactic or a sys tem. It’s really about moving the customer through a behavioral con tinuum that begins with acquisition and is sustained through repeat purchase. As companies come to understand the value of TRx’s they are more willing to adopt CRM as a marketing strategy. CHIDESTER. Often in the pharmaceutical industry when we speak about customer relationship management, it has been embraced as a salesforce automation tool against physicians. A number of companies now are beginning to embrace relationship marketing to the patient. When a company decides that it wants to develop a relationship with the patient it has to be permissionbased, because of privacy issues. The first step of the process is to get patients to opt into a relationship pro gram. And when patients do opt in they are given information, educa tion, and support. Hopefully, what the pharma companies get in return is greater loyalty through compliance and persistency, or greater loyalty in terms of migration to other products, advocacy, etc. Relationship marketing is a simple concept — maximize the value of each consumer so that a company can maximize the value of the business; it’s a value exchange between both parties. Relationship marketing is based on the premise of a twoway dialog. It’s not just getting the patient to opt into WHICH OFTHE FOLLOWING LEADERSHIP STEPS HASYOUR SENIOR MANAGEMENTTAKENTOBUILDYOURCRMSYSTEM? Monitor CRM progress Provide resources Set CRM goals Set CRM as priority Communicate CRM benefits Build alliances around CRM Build managerial fabric Involvement with customers 100% 100% 67% 67% 50% 33% 33% 17% Table shows percent of respondents reporting the above leadership steps. WHICHOFTHEFOLLOWINGTOPLEVEL GOALS ARE REFLECTED IN YOURBUSINESS UNITLEVEL CRM STRATEGY? Increasing customer satisfaction Increasing customer penetration Increasing customer retention Crossselling Compliant reduction Customer repurchase intent Positive referral rates 100% 67% 67% 50% 50% 50% 33% Table shows percent of respondents reporting the above goals. Source:Best Practices LLC,Benchmarking Survey 2001,Chapel Hill, N.C. CRM focus a database, it’s about constantly talking to patients over their lifetime. We need to con stantly get information about patients, how they are using the product, what their other needs and issues are, and use that infor mation to tailor the next com munication or the next service. The top goal of relationship marketing is to increase rev enue, and the way to increase revenue from the customer base is through loyalty. In the pharma category that means compliance and persistency, migration and crossselling. LITZKY. The challenges of CRM are great. If one peruses the trade journals and publica tions, one will find the CRM landscape is littered with land mines. One of the most com mon mistakes is making an extravagant investment into a CRM program without an understanding of if it has the capability to pay out. Many companies would be better suited to establishing “train ing wheels” with a marketing database in line with traditional direct mar keting databases. A great deal of knowledge and marketing gains can be made from archiv ing alone. However, a system is only as good as the data it holds. Shockingly, many clients simply do not have their customer base coor dinated into a central repository. The guiding concept in CRM is building relationships. Those relationships have no way to grow if a company does not have a true understanding of who its customers are. Sim ple data appending and enhancing alone is sufficient to bring a significant level of improvement in customer marketing programs. CRM is the next step, and should be considered only after the database has matured to han dling more complex analysis and testing. Once that obsta cle is removed, another con siderable challenge is chang ing the corporate culture. Many large companies with the resources to fund a CRM program have multiple prod uct managers with potentially conflicting objectives. There needs to be buyin from the entire organiza tion, and complete participation. Organizational Structures — Breaking DownThe Silos RODWICK. There are two major barriers to implementing CRM — one is technology, and the second is the organization itself. To get a complete view of the customer involves bring ing together information from a large number of data sources — from the sales automation systems, the marketing systems, the advertis ing agencies, the outside branding agencies, the customerservice hot line, the clinicaltrial data, or government documents, etc. Bringing that diverse information together is a chal lenge. That’s the same challenge that every enterprise CRM customer faces, regardless of industry. The philosophy should be think big, start small, and grow quickly. Companies need to determine why they want to implement CRM, what end business benefits they expect to yield, and then start small and tackle the problem bit by bit. Companies don’t need to boil the ocean to cook a fish, but rather they should take the process step by step, that’s where technology can help. This relates to the second barrier, which is the organizational impediment. Pharmaceutical companies tra ditionally have been organized around product lines and around functional departments, often with the result that each of those differ ent groups has made its own purchase deci sions, its own technology decisions, and often even has a different view or understanding of who a customer is. Companies need to have an understanding of what the end goal of CRM is. What does it mean to become customer focused? Why is it important to understand the customer better? What is the goal of cus tomer loyalty or retention? Once a company has that understanding philosophically stated then it’s easier to agree across organizations about how each department within the corpo ration plays its part. Industry analysts now are observing that the most successful enterprise wide CRM initiatives have a crossfunctional team that calls the shots and gets people involved and makes sure that there is a good information flow throughout the corporation. In some cases, companies have created the role of chief customer officer. HANAMAN. It is ironic that pharmaceutical companies were important early adopters of salesforce automation and electronic territory management systems for sales. But that same early adoption, combined with their large, 16 J u l y / A u g u s t 2 0 0 2 PharmaVOICE CRM is both a REAL TREND and a BUZZWORD. Companies run into problems when they view CRM as a panacea or as a technology quick fix for what is really an underlying business process issue. Few companies are using CRMTOTHEIR ADVANTAGE,and many are struggling with how to achieve a customer relationship enabled organization. . . . . . . . . . . HANAMAN The challenge at the highest level is that PHARMA COMPANIESARENOT PHILOSOPHICALLY CUSTOMERCENTRIC COMPANIES. They are productcentric companies — that’s the philosophy of the way they market their products, it’s the way they are organized.Even though some executives are speaking out from the top of the pyramid, buyin throughout the organization isn’t there yet. . . . . . . . . . . . . . . REBAK sophisticated, and wellestablished sales pro cesses, today prevents many companies from expanding their CRM footprint. Simply put, they have entrenched processes and silos that need to be challenged to successfully adopt CRM strategies. Companies have built very successful marketing groups, clinical groups, and so forth. But, now companies are being challenged to share information and build pro cesses that form the matrix of those groups. So their early adoption, now entrenched, makes it difficult for them to bridge those silos. This is the single biggest challenge for estab lished pharmaceutical compa nies as it relates to CRM today. ROSE. CRM is not about tech nology, it’s about changing the way pharmaceutical companies interface with their consumers. That’s the greatest challenge currently facing the pharma ceutical industry. At the present time, their interactions with cus tomers vary by disease state, therapeutic class, and enduser popula tion. Pharma compa nies face the challenge of being able to aggre gate customer data and draw inferences from the information. They need to be able to build a repository of data that enables them to quickly and easily access cus tomer information and gain valuable insights about customers and their use of pharmaceu ticals to drive future promotional efforts. HANAMAN. Once the CRM footprint is estab lished, then the strate gic challenge is to move to the next phase and aggregate data into busi ness intelligence. In many companies a CRM strategy doesn’t have an owner until the CEO level, the level at which functional groups that make up a CRM strategy come together. Companies that are successful at CRM are building a solid CRM vision across all busi ness units. It may take them awhile to get there, but they are establishing that vision, and putting in place an internal program management group that will establish the vision as corporate doctrine. REBAK. One of the biggest challenges in pharma is that there is no clear person to sell CRM to. CRM is a big idea, if it’s not for a niche application. Who’s the buyer of CRM? It’s not the president or CEO. That’s one of the big questions that is limiting its success. If CRM is done right it’s going to change the business model, then it’s got to be the CEO or president who is purchasing it. But, presidents and CEOs are not in the mindset right now to make CRM purchases one of their primary charges. BARLOW. One of the biggest challenges to selling CRM to pharma clients, whether or not it is enterprisewide, is that to a large degree they think of CRM as a lineitem tac tic. CRM has to be a mindset, it has to be a business strategy of how the company wants to relate to its customers at every point along the continuum. BHATT. Before a company implements a CRM tool or software or solution there has to be an overall consensus across the enterprise as to why the CRM tool is being implemented. This should be determined at the highest level — chairman, CEO, senior VP, executive VP. Everybody needs to understand why there is a need to spend the money to buy and imple ment a software solution. If there’s not true buyin and a proactive vision, CRM won’t work. This has to be filtered down especially to those people involved in direct interaction with the customers. There has to be a cooper ative acceptance and usage of the CRM sys tem. The initiative has to make sense at all lev els, especially at the lowest level. REBAK.The challenge at the highest level is that pharma companies are not philosophical ly customercentric companies. They are prod uctcentric companies — that’s the philoso phy of the way they market their products, it’s the way they are organized. Even though some executives are speaking out from the top of the pyramid, buyin throughout the organization isn’t there yet. It is hard to do enterprisewide anything in pharma. Pharma companies are organized along silos — they are very complex organisms. BOGAN.Most companies are in kindergarten at managing longterm relationships effective ly. That in itself is remarkable — that compa nies that can grow so large, and be so success ful, and have such extraordinary resources but It’s really the SAME BASIC DISCIPLINE that has evolved over time and has become more sophisticated as technology has evolved. But CRM is not a technology in and of itself. The technology enables the marketing discipline. CRM IS MUCHMOREOFA MINDSET in how companies market to their customers, rather than a tactic or a system. . . . . . . . . . . . . BARLOW CRM focus 18 J u l y / A u g u s t 2 0 0 2 PharmaVOICE CRM focus still have such a relative level of immaturity on these types of management issues. HANAMAN. Companies are realizing that there is an increasing importance in the data coming from research and development, and that latestage clinical trials are a presales opportunity. There are data that transcend most of the functional groups. For example, a physician is viewed by a sales rep as just a pre scriber, but he also may be an important inves tigator. Those are two very important views of that physician that need to be shared by both a sales rep and a clinicaltrial manager. A third important view of that physician might be as a thought leader working with medical affairs. One physician is, in fact, many things to a pharmaceutical company. One patient can be many things to a pharmaceutical company. So there is a very complex relationship between physicians and pharmaceutical companies, and one that demands complex and sophisticated systems and processes to manage all of those data and to coordinate all of the interactions. SWEENEY. Developing customer relation ships is really about the integration of many different kinds of systems, and that’s a key aspect. Many companies can provide a reposi tory of data that can be helpful in terms of interacting with the customers, but where does that information live in a pharmaceutical company? The answer is in many, many dif ferent systems — in productbased systems, clinicaltrial applications, documentmanage ment systems, etc. The CRM process is about providing a workflow and connectivity to get at that information in a very effective way. The major challenge is getting all of that data extracted and put into a usable format so that the customer process can be managed. BARLOW. One of the challenges is that cor porations tend not to be integrated between brands. Every product has its own P&L and that’s where the focus is. Companies that think of CRM as a business strategy tend to do more data sharing and knowledge sharing among brands or franchises. If there can be a vision for how all products can contribute to the intelli gence pool, where learnings can be combined, the entire organization can benefit. There are few if any companies that are there yet. There are a few clients who look at CRM from a fran chise perspective, which is very effective depending on the franchise. For products in multiple forms or doses, for example, it makes sense to take a franchise point of view. Or if the company has several products in a particular category such as hypertension, for example, a franchise perspective makes sense. Even if products aren’t closely related, there are going to be overlaps in the audiences, and there are tremendous learn ings that can be lever aged across multiple brands. CAIN. Pharmaceutical companies are orga nized around therapeu tic areas. For example, one brand team might focus on asthma, another brand team on cardiovascular, another on neurosciences. Bud gets, functions, staffs, and structures are cen tered around these therapeutic teams. CRM basically turns these silos on their side and now separate brand teams have to share processes and informa tion. CRM links information across these structural silos, which causes people to operate and behave differently. That’s where a lot of the challenge is going to be for most pharma companies in implementing fullscale CRM. They are going to have to change the way they do business internally. There is significant cost associated with that. While many pharma com panies conceptually buy into the notion of leveraging all the information across all of the key stakeholders, at the end of the day all they do is trade out the existing salesforce automa tion system, and put in a CRM software system and over time they hope to migrate to a more comprehensive strategy. The technology infras tructure is then in the company should it decide to evolve the CRM strategy beyond the sales force. There are very few pharmaceutical com panies today that have implemented fullscale CRM beyond the salesforce automation system. AMATO. Pharma tends to be very brand focused or division focused. Companies have silos and they don’t share across brands and divisions. For CRM to be effective, the com pany has to know how many brands a particu lar customer is a prospect for within the orga nization. At that point, privacy becomes an issue. The other piece in the puzzle for suc cessful CRM implementation is access to transactional data in addition to data that the 19 PharmaVOICE J u l y / Au g u s t 2 0 02 The power of CRM lies in the amazing new technology that allows ONETOONE INTEGRATION ACROSS MULTIPLE AUDIENCES and touch points. By personalizing communications,CRM allows companies to have RELEVANT ANDONGOING CONVERSATIONS WITH INDIVIDUALS over time. . . . . . . . . . . . PARREO CRM focus company gets from its brand efforts. Transac tional data are the biggest limiting factors for pharma, because patients have to personally volunteer the information. Loyalty — Developing True Blue Customers CHIDESTER.The customer wants companies to treat them from a more holistic perspective. If patients are struggling with compliance issues, they don’t need help for just one product, their behavior needs to be changed across everything they are doing. The more pharma companies understand how to talk to a cus tomer holistically, about their entire lifestyle rather than a specific product, the better the outcome. This is the direction relationship marketing is heading for pharmaceutical compa nies. It used to be brand by brand, but pharma companies are starting to look at the patient as an individual across their entire portfolio of brands. PARREO. The overall goal of CRM is to build and maintain relation ships over time and to help patients improve their quality of life through ongoing educa tion and communica tions. It’s not just a con sumer or patient initiative, it’s an approach targeting all stakeholders in the pharma industry, including physicians, nurses, phar macists, MCOs, sales representatives, etc., motivating them to do more business with specific companies and to use products as directed/for as long as they’re indicated. At the core of CRM lies “data” and its power can be harnessed via datadriven initiatives that involve the integration of multiple touch points or communications channels (online and offline). Data is power. LITZKY. Companies first need to know who their customers are, what they buy, how often, etc. There needs to be a centralization of knowl edge throughout the organization. CRM takes all of the consumer touch points, transactional data, and brings them into a central database. Once this is accomplished, trends can be iden tified both from a demographic/segmentation perspective as well as a microcustomer view. From there, the CRM engine can execute microtargeted, onthefly initiatives for a select group in an attempt to maximize sales. AMATO. CRM goes beyond the brand, and that’s where pharma has fallen short. CRM definitely involves building onetoone rela tionships with customers and learning as much as possible about those customers. If a company makes consumers feel as if it under stands them, makes them think they are understood, then the pharmaceutical company has reached a great milestone in marketing. The consumer is more likely to identify with the brand and the company and feel loyal to both. LITZKY. Companies need to establish loyalty programs with their highprofile customers. Companies need to maintain contact with those prospects on a rolling basis. Perhaps equally importantly, marketers need to identi fy through the database what is the most effi cient frequency of mailings. Once trends are established, companies can begin to customize offers on a prospectbyprospect basis. Each customer has different triggers for what and why they purchase, and CRM can highlight those triggers. If the right mix of incentive, discounted pricing, and frequency can be obtained, ROI will be maximized. BARLOW. CRM has to relate to content, tim ing, frequency, and media channels, putting the customer at the center of the focus. The idea is to find out what customer’s needs the brand can fulfill as opposed to “I have a brand to sell, who’s going to buy it?” That’s the fun damental difference with CRM. PARREO.CRM is not an event — it’s a pro cess that has to have the endorsement and leadership from senior management. On the patient side, the goal is to convince patients to opt into specific programs so companies can communicate with them over time about spe cific therapies, teaching patients how to live productive lives, and how to use products effectively. The objective is to communicate on an ongoing basis not just via ads in the print or broadcast media. Surveys are a very valuable tool that can be used very efficiently to gather relevant data about patients: age, socioeconomic status, comorbidities, etc. 20 J u l y / A u g u s t 2 0 0 2 PharmaVOICE CRM can help the marketer IDENTIFY PROSPECTS’NEEDS before they come and ask for something. CRM can also make fulfilling these needs as COST EFFECTIVE AND EFFICIENT AS POSSIBLE. . . . . . . . . . . . . . . LITZKY CRM focus This will ensure that all communications are targeted and personalized and that the right communications channel is used according to individual preferences. It’s not one message for all but specific messages for individuals. In the end, CRM is a much more effi cient way to invest promotional dollars, but the real benefit lies in improving the overall quali ty of life of individuals. REBAK. Pharmaceutical com panies are not really incen tivized to deeply understand the customers’ needs and then to act on fulfilling those needs. They are really incentivized to sell more products. Pharma companies don’t hold dialogs with consumers, this is discour aged at every turn, with very few exceptions. But how can a company know what the con sumers’ needs are if it isn’t entering into a dialog with them? The motivations for organizations have to change. The pharmaceutical industry can learn a lot about developing customer loyalty from indus tries outside of pharma, industries that really tap into needs, attitudes, and beliefs. Through that, they can develop a combination of mes sages, servicing, etc., that will evoke the type of emotional loyalty that transcends rational decision making. BOGAN.The dynamics of the pharmaceutical market are changing. The role of the consumer is gaining in importance. The Internet, DTC, and managed care are making information more accessible to patients, and patients understand that they have not only the right, but the responsibility to be involved in their own care. As that happens, they are beginning to evaluate treatment options and question their physicians more aggressively. They are specifically asking for products that they are interested in and think might be appropriate. This is making the patient relationship to the pharmaceutical companies much more direct. These converging forces lead to the impor tance of CRM. Understanding customers, having a relationship with them, and then moving them appropriately into the right therapies entails developing a relationship. BHATT.The majority of influence — 85% to 95% — is the physician. By 2010, this trend will reverse. Patients are becoming more in charge of what types of treatments they want and how they want to be addressed by pharma companies and how they want to be advertised to. Patients are becoming equipped with tools that allow them to make the best possible healthcare choices. Pharma companies need to implement CRM tools and really collect infor mation and address these customers on an individual basis. If they do that, they will have a customer for life. RODWICK. Long term, every company has to focus on its customers — that is never going to go away. Companies have to work harder to approach the nirvana of understanding who their customers and prospects are, and then customizing the message to each customer, being able to address each customer’s needs, and predicting what customers’ needs are before they know what they are. Companies can then give the customer a great experience regardless of whether the customer is going to the Website, the call center, visiting with the sales rep, or seeing an ad in a journal or maga zine. This touch with customers is vitally important, since that’s the moment when cus tomers are giving the company their atten tion. They’ve taken time out of their day and they are interested: companies had better make the most out of that contact. BARLOW. Information needs to be personal ized. The healthcare marketplace has become increasingly impersonal. Customers feel the squeeze of managed care influencing their healthcare. They don’t get a lot of time with physicians. The Internet has opened up a tremendous amount of information, and they can’t figure out what’s right for them. So what companies can do for customers is help them navigate the information and the education that’s relevant for them by personalizing con tent. Another thing that can be done is man age patient expectations. Drugs are given to patients, and they may not always understand what to expect about potential side effects, the time it takes for the drug’s onset of effica cy, etc. So if a brand can help customers understand what to expect, patients are more likely to remain on the brand, or at least stay on through the early stages, when most of the falloff typically occurs. If companies want to generate ongoing product use they have to provide valueadded information. One way to do that is to think of patients as people, not as disease states — help them understand how the drug, the disease, or the condition fits into their life, rather than the other way around, and then give them tools they need to manage 22 J u l y / A u g u s t 2 0 0 2 PharmaVOICE Any company that thinks about how to optimize its economics inevitably then has to ask, what is the BESTWAYTO OPTIMIZETHE CASH FLOW from different customers? As soon as that question is asked, companies have to DELVE INTO ISSUES OFRELATIONSHIPS and relationship management.They have to think about HOWTO DO BUSINESS other than as a onetime product transaction or event sale. As soon as companies start asking these questions and wrestling with these issues, THEY ARE INTO CRM. . . . . . . . . . . . . . BOGAN CRM focus the condition. To do these things effectively, the brand must initiate a relevant, actionable dialog. CHIDESTER. The best way to engage cus tomers is to give them relevant information. If we can capture information about their partic ular issues, their lifestyle, family structure, and provide them with solutions, that is the best way to get patients to opt in and get them to engage in a dialog. The goal is to maximize value to customers across all the different points of interaction. It is important to map out where the critical moments of truth are to best optimize that interaction. AMATO. As part of the process of CRM, the customer has to be asked how often do they want to be communicated to, what subject matter are they interested in, what medium of communication they would prefer. That’s part of the relationship. It’s not, `consumer you opted in so we are going to send you the monthly newsletter with your name and your address and something about your age group.’ If a company, over the life of the brand, could build a loyalty program that would enable it to continue the onetoone relationship through a costeffective medium, then the company could continue marketing directly to customers after the patent expires. LITZKY. Lifetime value is not always reached from a ramping up of sales so much as a reduc tion of costs and waste. Certain segments of the database, such as thirdparty payers, will be more price/offer sensitive. Quite often in loyalty programs, subscribers or house records become trained to respond only when the product is discounted. Through the course of time, this can drain profits significantly. The key is to identify those price sensitive cus tomers, and make a determination where the ideal cost/revenue price point is reached. Other database segments will not be as price sensitive and discounting offers can be counter productive. MCGOLDRICK. Companies are beginning to understand that CRM is not a oneanddone type relationship. They want to reach the patient early in their condition and then grow with them. The real challenge is to get patients to raise their hand. Even though the Web is anonymous, people still are a bit hesi tant to give out their information. AMATO. Companies are trying to figure out how to resuscitate a brand beyond its normal life, which is only one dimension. The other dimension is retaining the lifetime value of a customer. A company needs to look beyond the brand and start to identify other opportu nities that it can offer to a particular customer once he or she becomes a customer. That’s how a strategic, broadbased CRM system that integrates all the brands could expand portfo lio opportunities. But, therein lies the prob lem. As a brand manager, the responsibility is to drive performance for a particular brand. The trick is how to best incentivize brand managers beyond their own performance. A lot of compa nies give lip service to this, but at the end of the day don’t do it because they need the brand to perform. ClosingThe Loop — Linking Customer Audiences HANAMAN. The buy ing and selling processes at the heart of the phar maceutical business are complex, and are get ting more complex. The challenge is to under stand — and deploy sys tems to support — a multifaceted selling pro cess that is not just the sales rep and not just the physician — but the sales rep, the physician, the patient, as well as the thirdparty payer organization. If one thinks of the customer in CRM as both the patient and the physi cian together in a buying process, then all of the various influences on them have to be addressed and coordinated. Technology can enable that, but no technology is going to do that for a company that doesn’t first have solid business processes. SWEENEY. The term CRM has different meanings to different organizations — but CRM is really about streamlining the whole process between a healthcare entity, such as a pharmaceutical company, and its customers. CRM provides a set of functionality that allows that relationship to be handled more effectively and efficiently. It’s a very important 23 PharmaVOICE J u l y / Au g u s t 2 0 02 Pharma tends to be very BRAND FOCUSED or DIVISION FOCUSED. Companies have silos and they DON’T SHARE ACROSS BRANDS and divisions. For CRM to be effective, the company has to know how many brands a particular customer is a prospect for within the organization. . . . . . . . . . . . . . AMATO CRM focus process with regard to healthcare. Because pharmaceutical companies have to work with different entities, having that strength of rela tionship is key in terms of managing the whole business. To be able to have a more effective process, to be able to improve the communications between a company and its customers, and to have a new and deeper understanding of the customer relationship is what fuels growth. And phar maceutical companies today are looking for ways to have that closer relationship, with both buyer groups as well as consumers and having more of an impact on how their products are utilized effective ly in this environment. CHIDESTER. CRM is about connecting all the dots — pharma companies are look ing at all their constituents from managed care to the physician to the patient. They are looking at where there are potential breakdowns and where there are potential opportunities. The more companies can link different initiatives the better. CAIN. The value, or the promise, of CRM is that all information can be linked from all of the different constituents across all of the channels. The reps call on the doctors, the doc tors call into the company’s help desk to get information, researchers con tact the company on the clin ical side — today, there’s real ly no way to link all of those activities into one customer record. The goal is to link that information and leverage data to provide better customer service. AMATO. Pharma companies can get transactional data on payers. There’s a little bit of an adversarial relationship between the two, but pharma is getting better at under standing how to communi cate the value proposition of their products to payers than it did in the past. Before companies would try to tout the features and benefits of their products to the payers the same way they did to the doctors. They don’t do that anymore. They are now coming up with a value plan showing ret rospective analysis of how the value proposi tion of a product really benefits patients and managedcare organizations at the same time. CRM has more complete potential on the physician and payer side because transactional data can be obtained along with analytic data. ROSE. Consumers are becoming a more important part of the equation. Traditionally, pharmaceutical companies have been unable to speak directly to their end users — patients — and have therefore focused their attention on educating physicians and trying to prove to them that their drugs are the appropriate treatment for their patients. With the advent of the Internet and the emergence of DTC advertising, companies now can directly reach consumers and influence their buying deci sions. As a result, pharma companies must better understand consumer activity. More importantly, companies must understand how to communicate appropriately what they learn from consumers with physicians. With cur rent HIPAA regulations, only two groups of people — doctors and pharmacists — can talk directly to patients and know their line of therapies. So the role of pharmacists is also growing; they are becoming a lynchpin in effectively managing what happens with patients after they have been prescribed medi cations. AMATO. Bringing the pharmacy into the loop would be a huge asset, because a compa ny might be able to get transactional data. Pharmacies and pharmacists are fighting to retain a viable place in the value chain. If phar macies don’t watch out, pharmacists could become just pill counters, and that’s their worst nightmare. They are trying to get into patient consultation, valueadded exercises, disease management. The pharma companies would have eager partners to help them. If we want a portal through which to enroll patients into programs, and continue the information, the pharmacists and the pharmacy may pro vide good access to these patients. SWEENEY. CRM is a business strategy, a business process. A company’s relationship with its customers is just as important, if not more so, than anything the company does from a scientific or technical basis within the corporate enterprise. That’s one of the things that’s important in evaluating CRM. When we talk about working with customers, com municating with customers, the entire initia tive has to be viewed as a process. All of the 24 J u l y / A u g u s t 2 0 0 2 PharmaVOICE Companies are beginning to understand that CRM IS NOTA ONEANDDONE TYPE RELATIONSHIP. They want to reach the patient early in their condition and then GROWWITHTHEM. The real challenge is to get patients to raise their hand. . . . . . . . MCGOLDRICK CRM LINKS INFORMATION across structural silos, which causes people to OPERATE AND BEHAVE DIFFERENTLY.That’s where a lot of the challenge is going to be for most pharma companies in implementing fullscale CRM.They are going to have to CHANGE THEWAYTHEYDO BUSINESS internally. . . . . . . . . . . . . . . . CAIN CRM focus touch points that have to be made with a cus tomer, and how those touch points interface back into the core business, have to be evalu ated. REBAK.It is 100% evident that pharma com panies have to develop onetoone relation ships with physicians on the salesrep level. The challenge for a broader CRM implemen tation is how to institutionalize that type of thinking to understand the needs and motiva tions for all their customer groups. I’m not sure that we’ll get to the same level of rela tionship intensity with consumers as with physicians. And that’s because with con sumers, pharma is just a part of the overall healthcare pie. CAIN. CRM is a good strategy, but pharma companies are going to struggle to realize the complete vision of CRM because of the busi ness process change that is required to imple ment fullscale CRM across multiple brands. CEOs look at multichannel marketing, cus tomer data integration, and integrated busi ness strategies across brands, as really great. But moving past the salesforce, and linking in the call center, the marketing organization, and the clinical group, the value for software providers goes way down. RODWICK. Almost all companies are strug gling to get a handle on who their customers are. With pharmaceutical companies, this is trickier, because often the manufacturer does n’t touch the consumer directly. Because many of the products are delivered through doctor written prescriptions, it’s hard to connect the dots and understand what’s going on. One of the major interests of pharmaceutical compa nies is to pool all the information they get from their distribution channels, from end customer surveys, from results and costs of their massive broadcast advertising spend and try to integrate all the data to get a picture of who the real customers are and who they should be targeting. ROI — MoreThan Just The Basics LITZKY. I often draw the analogy of CRM/Database marketing to predicting the weather. Customer behavior can be as unpre dictable as the weather. Archiving and trend analysis are two keys that have improved both fields. The weather reporter on the news will sometimes quote a record high occurring more than 100 years ago. The record itself is not as important as the archiving of past phenomena, or in CRM terms, performance. Once a company has performed the archiving and has a solid sam ple size it can begin to estab lish trends. When a company doesn’t archive and analyze the data, it never sees the blizzard coming. CRM takes this a step further, offering the satellite capabilities to identify the microtrends. Often with win ter weather, meteorologists try to predict the nor’easter path. Will it go out to sea or hug the coast? How do they decide? They use statistics and past performance to try to identify the most likely scenario. CRM allows the client a mechanism to alter the marketing mix and measure changes in perfor mance. Through the course of time and archiving performance, a company can begin to see trends and opportunities to improve. The key to this experimentation is having complete and accurate data so the proper conclusion can be reached. CHIDESTER. We have to edu cate pharma companies that relationship management is not a tactic, it’s a strategy. When companies first adopt relationship marketing, they very much look at it as a tactic — direct mail or another type of direct communication to the patient. When companies begin to see the potential and realize the impact that rela tionship marketing can have across the entire business, they start to look at CRM much more from a strategic perspec tive. At this point, they recog nize that CRM is a way to help them allocate and focus resources. All patients are not created equal, so efforts should be focused on those people who can provide the greatest return and the great est payback. These are the strategic drivers. We have to teach pharma companies a new way to look at metrics. Metrics change. It is not just the number of new customers or total product sales, but customer lifetime value, share of customer spend, and repeat purchase activity. 25 PharmaVOICE J u l y / Au g u s t 2 0 02 CRM is not about technology, it’s about changing the way pharmaceutical companies INTERFACE WITHTHEIR CONSUMERS. That’s the greatest challenge currently facing the pharmaceutical industry. Pharma companies face the challenge of being able to AGGREGATE CUSTOMER DATA and draw inferences from the information. . . . . . . . . . . . . . . . ROSE The philosophy should be THINKBIG,START SMALL,ANDGROW QUICKLY.Companies need to determine why they want to implement CRM,what end business benefits they want to yield, and then start small and TACKLETHE PROBLEMBIT BYBIT. . . . . . . . . . . . RODWICK CRM focus CAIN. When pharma companies look to CRM they are basically looking for a salesforce automationsystem replace ment. One of the barriers for imple menting CRM is ROI. To implement a CRM initiative in a pharma company can cost anywhere from $20 million to $100 million, depending on the size of the initiative and the number of sales reps and the number of users in the sys tem. It’s an incredibly expensive infras tructure project. But, the cost of the software and implementing the soft ware is only a part of the overall cost of CRM. Most of the hidden costs are in the process changes that need to take place within the pharma company. And most pharma companies aren’t sure that they are going to get the return equal to, or greater than, the cost of the disruption to their business to implement fullscale CRM. LITZKY. One of the biggest challenges is price. It can be expensive to inte grate all the data, establish links from a call center or Website to the database, and keep a staff to maintain the program. Combined with the technology piece the toll can become lofty. A “Cadillac” CRM program does not make sense for all organizations. It is high ly dependent on the nature of their product or service and the margins they operate under. RODWICK. CRM, when properly done for all industries, including pharma, can yield real return on investment in terms of improving the velocity of marketing campaigns, reduc ing the cost of marketing, providing higher customer satisfaction, and presenting a more unified image of the company so the people in the demand chain are more inclined to have a longlasting relationship with the company. REBAK. ROI is one way for pharma to priori tize spending, since pharma has more projects to implement than it has money to spend. Therefore shorterterm ROIs keep coming to the top of the list. CRMwill have an enormous fiveyear to 10year ROI, but a sixmonth to oneyear ROI won’t happen. Pharma is not in the mindset, at least on the marketing and sales side of the house, of that ROI lifecycle. But, they are on the R&D side. If sales and marketing were to start thinking more like R&D, then there would start to be a shift in CRM philosophy. One of the biggest hurdles for CRM is ROI. Because CRM can’t be proved it prevents pharma from moving forward. RODWICK. One analyst firm found that CRM implementations failed to deliver mea surable results. ROI from CRM is achievable, but processes must be put in place early to col lect all necessary metrics, so results have a yardstick to be measured against. ROSE. CRM plays different roles during the various stages of a product’s life cycle. During a product launch, the salesforce must intro duce the product to physicians and record their questions and reactions to the new drug. When the product matures, salesforces must properly identify and reach the right physi cians with the appropriate patient population, delivering timely, relevant information, influ encing physician prescribing behavior, and ultimately drawing sales and marketing intel ligence from that data. When a product’s patent expiration approaches, the pharmaceu tical company’s CRM needs change yet again and different types of data must be collected. Pharmaceutical companies with multiple products at different stages have the challenge of managing and balancing these various CRM systems. HANAMAN. Pharmaceutical companies need to define what they are asking for when they ask about ROI. When a company is asking about ROI, is it actually looking for a classic return on investment dollars? Or, is it looking at business drivers that impact the system or process that it put in place? Calculating ROI for CRM is, and will remain, a difficult challenge. Are pharma ceutical companies looking for true ROI, which will remain elusive and open to challenge, or, are they looking to understand how technology can optimize the performance of the people they have who interact with customers? That’s where the more exciting promise is. Do CRM systems enable pharmaceutical companies to have a cohesive view of their customers, which then allows them to execute marketing pro grams and sales strategies that they wouldn’t otherwise be able to execute? If so, it is not a matter of ROI but of whether the company now can do business in a way that it couldn’t before. Can the company run more sophisticat ed marketing campaigns? And, can the organi zation integrate multiple marketing campaigns to target its highest potential pharmaceutical products to the most relevant audience? Perfor mance optimization of the system, of the sales force, of the marketing effort are more impor tant factors than simply ROI. F PharmaVoice welcomes comments about this article. Email us at 26 J u l y / A u g u s t 2 0 0 2 PharmaVOICE The CRM process is about providing a WORKFLOWAND CONNECTIVITY to get at information in a very effective way.The major challenge is getting all of that DATA EXTRACTED and put into a USABLE FORMAT so that the customer process can be managed. . . . . . . . . . . . SWEENEY

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