Pharmaceuticals Sales Force Effectiveness
Upcoming SlideShare
Loading in...5
×
 

Pharmaceuticals Sales Force Effectiveness

on

  • 798 views

Sales Force Effectiveness is Dead ... or is it? ...

Sales Force Effectiveness is Dead ... or is it?

Five opportunities for pharma to get ‘back to basics’ and immediately lift sales performance.

Blackdot are a full service benchmarking, consulting, training & advisory firm exclusively focused on lifting sales force effectiveness & efficiency. Blackdot exist to assist their clients to achieve more predictable, repeatable, and sustainable sales performance.

What makes them unique is their total fixation on the use of data-driven, evidence-based techniques to understand what does (and does not) drive sales performance.

By viewing the ‘sales engine’ holistically, as an ecosystem of component parts that work interdependently to impact sales results, Blackdot are able to identify the root cause of what’s inhibiting and enabling your current performance, including quantifying the payoff in actually getting it right.

Armed with this knowledge, Blackdot stand alongside their clients who engage them to define, implement and embed change programs that bridge the gap between ‘hoping’ and ‘knowing’ they’ll deliver top and bottom line performance improvement.

Statistics

Views

Total Views
798
Views on SlideShare
798
Embed Views
0

Actions

Likes
1
Downloads
179
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Pharmaceuticals Sales Force Effectiveness Pharmaceuticals Sales Force Effectiveness Document Transcript

  • Sales Force Effectiveness is Dead ... or is it? Five opportunities for pharma to get ‘back to basics’ and immediately lift sales performance SFE
  • “The rumours of my death have been greatly exaggerated” Mark Twain SFE is Dead! For many pharma sales leaders, this phrase has become an industry mantra over the last few years. For believers of this mantra, the era of blockbuster drugs, which represents the space in which SFE (Sales Force Effectiveness) was originally born, has run its natural course and has now come to an inevitable end. Enter the generics. How best to respond? Shift towards quick-fix solutions in the search for more efficient ways to engage HCPs (Health Care Professionals). At this year’s leading conference on pharma SFE, participants were presented with two session options for the afternoon agenda. The first session focused on how the digital age has changed the pharma-doctor relationship. It promised attendees an understanding of how to best use digital channels and tools (think iPads and Closed Loop Marketing) to optimise HCP engagement. The session was delivered to a full-house, with not an empty seat to be found in the room. Next door, was the alternative afternoon session - a panel discussion on what five doctors most valued and benefited from the pharma-doctor relationship. The consensus takeaway across all of the doctors was that the myopic focus on tablet devices and social media was simply a distraction that stood between them and their ultimate concern: Patient outcomes. These doctors all agreed that all of this ‘noise’ did nothing to enhance or support the integral role pharma can play in assisting themselves to drive true patient outcomes. The session was delivered to a near-empty room. Conference attendees were too busy next door listening to the technologists, to take the time to listen to their most important stakeholder the customer. In contrast, high performing sales organisations both within and outside pharma have come to recognise the significant upside opportunity in eliminating as much noise as possible. They have elevated the focus on core principles of SFE to address business challenges that persist across economic and product lifecycles. So what are the fundamentals of SFE that high performing pharma companies simply need to get right? Let’s begin by defining what we actually mean by getting it right. Firstly, high performing sales organisations do the right things. This refers to their core strategic marketing and sales leadership capabilities. These organisations are effective at sizing the prize, ruthlessly prioritising organic growth opportunities, and getting organised for success through the appropriate allocation of resources (see Figure 1). Benchmark sales organisations: “Do the right things” 1 SIZE THE PRIZE & RUTHLESSLY PRIORITISE ORGANIC GROWTH OPPORTUNITIES 2 “Do things right” GET ORGANISED (& ALLOCATE RESOURCES) FOR SUCCESS 3 RUN TO A FIT FOR PURPOSE ‘HOW WE SELL AROUND HERE’ FRAMEWORK 4 RUN EXCEPTIONFREE SALES MANAGEMENT DISCIPLINES 5 MINIMISE RAMP UP, MAXIMISE THE SWEET SPOT & ELIMINATE DECLINE Via … TARGET MARKET SEGMENTATION GO-TO-MARKET STRATEGY SALES PROCESS / MODEL MANAGEMENT RHYTHM TRAINING / NEW CAPABILITIES IDEAL CLIENT PROFILING OPERATING & COVERAGE MODEL SALES ENABLEMENT TOOLS GOVERNANCE / REPORTING PERFORMANCE / SUCCESS PROFILING CUSTOMER VALUE PROPOSITION GOAL & ROLE CLARITY TECHNOLOGY / CRM ENABLEMENT PERFORMANCE MANAGEMENT REWARD & RECOGNITION Relative Pharma Strength (v Cross-Industry Benchmark) Variable for Pharma (v Cross-Industry Benchmark) Relative Pharma Weakness (v Cross-Industry Benchmark) FIGURE 1 Elements of the sales framework that represent SFE fundamentals 2
  • High performing sales organisations also do things right. This refers to their sales management capabilities. These organisations possess a fit-for-purpose how we sell around here framework, complimented by exception-free sales management disciplines. When it comes to capability building and talent management, these organisations are incredibly effective at minimising new-hire ramp up, maximising the employee ‘sweet spot’ and eliminating performance decline. Sales Leadership is about doing the right things. Sales Management is about doing things right. What truly defines these high performing sales organisations however, is their refusal to think of these elements in isolation. By viewing the ‘sales engine’ holistically - as an ecosystem of component parts that work interdependently to impact sales results – they have been able to accurately conceptualise what SFE is all about, and identify the root cause of what’s inhibiting and enabling their current performance. High performing pharma organisations have steered clear of quick-fix solutions that consider things like multichannel marketing as the panacea to their industry sales execution woes. They similarly reject CRM (Customer Relationship Management) and CLM (Closed Loop Marketing) strategies as the be-all-and-end-all silver bullet for achieving true HCP engagement. Instead, these companies have a tempered and holistic appreciation of what sales force effectiveness is actually all about. These organisations develop an explicit go-to-market strategy. They all activate an effective sales enablement function. They run to an integrated management rhythm, and they possess a strong execution spine. Unfortunately, these are (as yet) not features to be found on the latest iPad. Over the last five years Blackdot have benchmarked more than 40,000 frontline sales representatives and leaders, spanning more than a dozen industries across more than 160 countries to build an independent fact-base of what a high performing sales organisation actually looks like. Through this process, we’ve been able to understand the relative strengths and weaknesses of the pharmaceutical industry across a hollistic sales framework. We’ve identified five pharma-specific, immediately-actionable opportunities that represent a return to core SFE fundamentals required to drive more predictive and repeatable performance: 1. 2. 3. 4. 5. Understand what really defines sales performance (in the absence of prescribing data) Optimise the call coverage model (based on product maturity) Fix broken linear sales models (in favour of a dynamic buyer-centric dialogue) Manage your teams’ performance dynamically (vs. a one-size-fits-all approach) Incentivise to drive behaviour change (and acquire a true performance culture) SFE is far from dead for pharma. For many, the failure to recognise the benefits to be gained in getting back to basics represents a significant missed opportunity. For high performing pharma companies, these universal, enduring and proven principles bridge the gap between hoping and knowing they’re going to hit their sales targets. Adopting these high-impact and immediately-actionable opportunities will differentiate your organisation through its response to the unique challenges of pharma and HCP expectations, and enable you to take advantage of the opportunity that this industry fluidity actually represents. 3
  • Opportunity #1: Understand what really defines sales performance Why is this an opportunity? Across all industries, On-TargetPerformance (OTP) is by-and-large the most significant outcome-based KPI (Key Performance Indicator) of any sales team. Pharma is an exception. The lack of doctor prescribing data is the root cause of this dynamic. This is a non-issue in transactional sales organisations such as banks, where the ability to focus on pipeline or other deal metrics is present. Furthermore, relative to other industries, underlying product demand is highly predictable. Pharma Benchmark 50% 40% External Benchmark 30% 20% 10% 0% 0% 50% 100% FIGURE 2 Distribution of On-Target Performance (Pharma vs. the External Benchmark) In the pharma space, this seemingly leaves pharma with two methods for measuring sales performance: Method one is to focus exclusively on OTP as the ultimate measure of performance. As Figure 2 demonstrates however, this fails to illuminate performance variance across your sales teams, and thus prevents you from objectively identifying who your high performers are or what they do differently to the core. A singular focus on OTP as your sole KPI offers little insight beyond simply validating the effectiveness of your company’s abilities to forecast. Method two is to utilise alternative, input and activity-biased compensatory data sources. When this method is elected, it results in creating an environment of goal diffusion for pharma reps who are left unclear on what their ultimate goals and measures of success actually are. This scenario has left pharma companies largely in the dark and in search of another method to meaningfully define sales performance. What do high performers do differently? At any point in time, a salesperson’s financial performance should be evaluated across two key dimensions: 1. Current performance: Are they above or below their sales target? (the typical metric used is Year-To-Date OTP); and 2. Performance Trajectory: Is overall sales performance improving or declining? (the typical metric is CAGR (Compound Annual Growth Rate) or any growth rate measure over successive time periods) By considering sales performance in this way, high performing pharma companies have gained a more accurate and insightful perspective on what actually defines high performance in pharma sales. Measuring a rep’s CAGR addresses the limitations and shortcomings of alternative methods of sales performance measurement without creating goal diffusion or impacting perceptions of role clarity. 4
  • Assessing performance in this way enables you to gain an early indicator of later performance, and thus categorise each salesperson into one of four Performance Profiles: Current Performance vs. Performance Trajectory Improving EXCELLING™ Below Target, Performance Improving Above Target, Performance Improving DEVELOPING™ PLATEAUING™ Below Target , Performance Declining Performance Trajectory EMERGING™ Above Target, Performance Declining Declining Below Current Performance v Target Above FIGURE 3 The four Performance Profile quadrants acquired when considering a salesperson’s current performance and performance trajectory In introducing this second dimension of performance trajectory, companies are able to determine which Performance Profile each of their reps fall into, and thus objectively segment their high performers from the core. 25% % Volume Growth High Performer reps demonstrate both high OTP and territory growth Introducing CAGR as a proxy for performance trajectory illuminates the performance variability otherwise hidden within pharma when only OTP is considered   0% -19% 90%      100%  FIGURE 4 Scatterplot of Territory OTP and CAGR for Benchmarked Primary and Specialty Care Pharma representatives (2012 data) 110% Average OTP 5
  • From here, these companies are then able to analyse and understand what their high performers are actually doing differently. When sales performance was considered using this two-dimensional approach, many benchmarked pharma clients that had historically only utilised OTP were frequently surprised by what they saw: not only had the performance variance snapshot changed dramatically, but reps previously considered to be high or even core performers were in many instances challenged. In many cases, reps that were previously thought to be high performers emerged as being in a plateauing state, with little indication that their on-target performance would continue to rise. In other instances, the fact that core performers were demonstrably on-the-up had been totally overlooked throughout previous sales quarters: yesterday’s laggards were tomorrow’s leaders! Clarity around who your high performers are is a prerequisite to ensuring all other SFE priorities are set for success. Whether it’s shaping your sales models to high performer best practices (see Opportunity #3), dynamically performance managing to the identified bespoke strengths and weaknesses of your reps (see Opportunity #4), or driving the desired behaviour changes by rewarding higher performance with higher pay (Opportunity #5) - none of this is possible until you’ve identified who your high performers actually are. On-Target Performance becomes a highly effective measure of performance when combined with Compound Annual Growth Rate Using the right metrics to correctly define sales performance is imperative, given the breadth of decision-making and business implications that flow from accurately defining sales performance. So, what can you action immediately? 1 Build a sales culture that elevates Compound Annual Growth Rate to being a joint KPI that stands alongside On-Target-Performance 2 Integrate consideration of your reps’ performance trajectory into performance management processes and BAU (Business As Usual) coaching conversations 3 Utilise Compound Annual Growth Rate as a key mechanism for identifying performance variance across your teams and reward, recognise and incentivise appropriately 6
  • Opportunity #2: Optimise the Call Coverage Model Why is this an opportunity? A goal without a plan is just a wish. High performing sales organisations operationalise their call coverage models off a clearly defined plan that begins with clarity on customer segmentation and targeting. This is not a new concept or management construct for pharma. Pharma organisations have long done this by defining and articulating the company segmentation and targeting process they expect their reps to use. The assumption is that this segmentation and targeting process manifests in the planned call coverage model, which is then executed by the rep. 1 HCP segmentation & targeting Which doctors represent the largest opportunities with the greatest probability of success? 2 Call coverage and frequency plan What call coverage and frequency best aligns with our strategic objectives? 3 Actual call coverage and frequency Which doctors will we actually visit and with what intensity? FIGURE 5 The three stages required to execute a Call Coverage Model that reflects the company’s defined HCP segmentation & targeting process This however, does not always play out as intended, with varying levels of adherence to both the process and belief in its ultimate utility. These issues are best illustrated by thinking about your sales team as being made up of the five tribes outlined in Figure 6. T��� B��������™ C��������� S���-R������ ��������� C������� Don’t follow any process yet recognise the lack of process hinders them Don’t know a segmentation and targeting process exists, and work it out for themselves Defy the defined segmentation and targeting process and do their own thing Follow the defined segmentation and targeting process, but don’t see it as enabling Follow the defined segmentation and targeting process and see it as enabling FIGURE 6 The five tribes of segmentation and targeting process adherence within all sales teams Building an army of True Believers™ - those that follow the defined segmentation and targeting process and see it as enabling - is your path of least resistance to guaranteeing predictable, repeatable and sustainable performance. The recipe includes not just adherence, but also buy-in to the process to ensure that the fruits of those processes are institutionalised within and across your organisation. What is interesting is that as an industry, pharma has more True Believers™ than the high-performing External Benchmark (62% vs. 56%) - on the face of it, a great situation. Want to learn more about True Believers™? hClick?ca/mo.bto.wy u u e c w t h featurehered729Djv&dedbmeryl=pa e _ e = 5 f F b8 or scan the QR Code. ttp:/ w 7
  • However before we pat ourselves on the back, it’s important to recognise that pharma also have twice the number of Mavericks (20% vs. 10%) than the External Benchmark, plus a not insignificant (15%) Compliant population. This means that over one third of pharma reps and managers do not fundamentally see their segmentation and targeting methodology as enabling. This represents an enormous missed opportunity, especially when we remember that relative to other B2B industries, the pharma prescribing universe is relatively static and well known. Operationalising the call coverage plan into the call coverage model your reps actually run to requires them to understand the underlying HCP segmentation and targeting methodology that gave shape to the plan in the first instance. It also requires them to hold the belief that the plan will actually enable them to hit their numbers. Over one third of pharma reps and Managers do not see the segmentation and targeting process as enabling More than any other benchmarked industry, it should be possible for pharma to convert their Mavericks and Compliants into segmentation and targeting True Believers™. Remember – this army of True Believers™ is your ticket to guaranteeing predictable, repeatable and sustainable sales outcomes. What do high performers do differently? To build this Army of True Believers™, you need to have your sales reps not only understand the defined segmentation and targeting process, but actually see it as enabling. They need to truly believe. High performing pharma companies not only make these processes known, but ensure that their reps perceive the utility in adhering to them. To do so, reps need to see how following the process will translate into real results. Client Large Size In one pharma company that undertook the Blackdot Benchmark™, the stated strategic goal was to grow market share with high prescribing doctors that typically favoured competitor products. Vision and practice however, were fundamentally misaligned. Referring to Figure 7, we see that 58% of all call activity was in practice directed to visiting HCPs where call objectives were to defend existing prescribing habits and market share. Prescribing Preference DEFEND GROW 58% Competitor 34% 5% Small KEY: 1% Actual Execution (DEFEND) 2% Stated Goal (GROW) FIGURE 7 Pharma client example illustrating misalignment between the stated Call Coverage Plan and actually-executed Call Coverage Model. Percentages allude to the percentage of total sales calls made throughout the quarter. In contrst, only 34% of call activity was directed towards visiting HCPs that aligned with the stated goal of growing market share. Is it any surprise that the number of True Believers were at sub-benchmark levels when there existed a variance of 24% between who reps were being told to visit compared to who they felt they really needed to visit? 8
  • In addition to better aligning their call coverage plans and models, high performing pharma companies also begin with better HCP segmentation and targeting. Across any industry, prioritisation of customers fundamentally comes down to three principal questions: Are they big? Do we want them? Can we win them? When it comes to growing market share, high performing pharma reps will over-weight the latter two of these criteria: prioritising the upside potential and probability of conversion with HCPs within their territories. This means they will often go after mid-level prescribing doctors with a strong competitor prescribing predisposition, so long as they believe the potential for changing prescribing preferences exists. When it comes to defending market share, these high performers shift their priorities to focus on the size of the opportunity being defended, coupled with the attractiveness of the opportunity (the HCP’s prescribing predisposition towards their company’s drugs). So, what can you action immediately? 1 Build your army of True Believers™ by ensuring that the call coverage model activated by your sales teams reflects the call coverage plan that correctly prioritises HCPs against the right segmentation and targeting criteria 2 Ensure your call coverage plan remains the dynamic and adaptive tool it is intended to be – ruthlessly disqualify HCPs based on the probability of success determined throughout the sales quarters and reflect this back in future call coverage and frequency of visits 3 Prioritise the upside potential and probability of conversion to grow market share. To defend market share, prioritise the size and attractiveness of the opportunity. 9
  • Opportunity #3: Fix broken linear sales models Why is this an opportunity? We’ve just reflected on the five tribes of segmentation and targeting process adherence, and the criticality of building an army of True Believers™ to drive predictable, repeatable and sustainable performance. Within pharma, the role of Mavericks also tells a very interesting and important story – though this time with respect to your sales model (ie the methodology organisations expect reps to follow when face-to-face with HCPs). Mavericks are those who know there is a sales model, yet choose to defy it and do their own thing instead, based on the conviction that their way is better. Whilst a small number of Mavericks provide a healthy agitation across any organisation, too large a number of these folk indicate there is something materially wrong with the defined sales model, or signal negative perceptions of its utility. Within Pharma, this problem is compounded even $500,000 further: not only are there more Mavericks (more than $400,000 2.5 times the External Benchmark), but their revenue contribution also materially exceeds that of any other $300,000 tribe by a minimum of 4%. These Mavericks are also the $200,000 tribe most likely to hit their targets (see Figure 9). 5% Revenue Contribution 4% 3% 2% 1% $100,000 The message coming from the industry’s highest contributors is clear: we get these results by defying the model you’ve been training and embedding. $(100,000) 0% -1% -2% -3% FIGURE 8 Mavericks defy the defined sales model and do their own thing On Target Performance FIGURE 9 Mavericks’ revenue contribution and OTP materially exceed that of any other sales tribe’s $(200,000) So where exactly is the opportunity? Pharma possess 2.5x more Mavericks than the External Benchmark Pharma Maverick revene contribution exceeds any other sales tribe by at least 4% Firstly, $(300,000)understand what your high performing Mavericks are doing differently. Then, get everybody on-board to systematise and replicate their success. Finally, Embed. Embed. Embed. Undertaking this process is truly the recipe for converting the remaining four tribes and begin to build out your army of high performing True Believers™ (your ticket to the predictable, repeatable and sustainable results game). Understanding what your high-performing Mavericks are doing is the first step to building your army of high-performing True Believers™ Are Mavericks part of your sales model problem or solution? hClicke?hcta f ature=here47aN5Xs0_t=v&de k or scan the QR Code to learn more. t p:/ www.youtube.com/w player_embed 10
  • What do high performers do differently? It should come as no great surprise to learn that high performing pharma companies have started to shift away from traditional and linear ‘selling-focused’ models towards more fluid and buyer-centric sales models. These sales models are further underpinned by new capabilities and a culture that dynamically prioritises the HCP universe. They do so through continual and active (dis)qualification of HCPs based on upside potential and probability. They also increase or decrease their call coverage and frequency based on the perceived return on effort (see Opportunity #2). The Blackdot Benchmark has also revealed key insights into what individual high performing reps are doing differently during their sales calls. When it comes to dealing with HCPs who predominantly prescribe competitor products (ie. attempting to grow market share), here are a few of the headline high-performer differentiators: LONG CALL TACTICS High performers ask twice as many questions to overtly understand the HCP’s historic prescribing habits and rationale, as well as perceptions of (their) products’ efficacy. This is in contrast to core performers, who choose to simply focus on questions that help them understand the HCP’s typical patient profile. INFLUENCE AND EDUCATE HCPs High performers identify the relative weaknesses of competitor products almost twice as much as core performers, who focus more so on illustrating the patient profile they believe is most likely to derive therapeutic benefit. CLOSING TACTICS High performers focus (38% more) on gaining commitment to follow-up with an educational meeting. They are more effective at sequential selling that builds incremental continuity within and between calls. When dealing with HCPs that predominantly prescribe competitor products, high performing reps ask twice the number of questions to understand historic prescribing habits and rationale, as well as perceptions of product efficicacy So, what can you action immediately? 1 2 3 Identify the mix of sales people across each of the five tribes within your organisation Determine where amongst these tribes your high performers are concentrated Diagnose what this is telling you about the effectiveness of your organisation-wide sales model Have you got a critical mass of True Believers™ in your sales model? http:/ w Click?ca/mo.bto.wy u u e c w t h featurehereG7B1G=v&dedbmeryl=pa e _ e L Z v 1t8 or scan the QR Code to find out more. 11
  • Opportunity #4: Manage your teams’ performance dynamically Why is this an opportunity? Performance management is challenging at the best of times. Within pharma, it is amplified by unique industry dynamics such as the lack of prescribing data and resultant goal diffusion. A salesperson’s performance should be evaluated as a function of both their current performance (ie. whether they are above or below their targets), and their performance trajectory (ie. whether their overall sales performance is improving or declining). The ultimate goal of a Sales Manager when managing performance should be to unlock the potential of each salesperson and support their team to continually improve performance. With that in mind, the Tight-Loose™ performance management framework outlines the optimal approach to coaching and managing salespeople to achieve higher performance. The Tight-Loose™ framework acknowledges that performance management in mature B2B sales organisations is supported by a mix of organisational ‘non-negotiables’ (driven top-down by the business and enabled by HR) as well as manger-determined processes and practices. Ultimately, armed with this knowledge, Managers can adopt the management style that best suits each individual salesperson’s development needs and performance management requirements. They do so across the three stages of performance management, by applying a ‘tight’ or ‘loose’ approach within each respective stage. 1. SETTING OBJECTIVES 2. SUPPORTING AND GUIDING PROGRESS 3. EVALUATING PERFORMANCE Communicate and agree on SMART objectives that detail the right mix of individual activity, pipeline, behavioural, learning and performance goals The approach used to provide feedback and optimise the focus, formality, frequency and depth of coaching provided (with the salesperson’s input) Periodic review against the defined SMART objectives and agreed activity, pipeline, behavioural, learning and performance goals For each rep, Sales Managers can elect to take a ‘loose’ or ‘tight’ approach to optimise performance management, with the optimal approach dependant upon the individual salesperson’s Performance Profile. FIGURE 10 The three stages of the performance management management cycle The Manager’s Tight-Loose™ adaptation of their management style across these three stages will influence the frequency and intensity of the coaching and performance management each individual rep should receive. For each of the four Performance Profiles, there’s both a right and wrong Tight-Loose™ mix, determined by the current performance versus performance trajectory balance. 12
  • The Tight-Loose™ Performance Management Framework Improving EMERGING™ Performance Trajectory TIGHT LOOSE TIGHT EXCELLING™ TIGHT LOOSE LOOSE “Expand their horizons” “Let them go for it” DEVELOPING™ PLATEAUING™ TIGHT TIGHT TIGHT “Keep them focussed Declining Below TIGHT TIGHT LOOSE “Reign them in” Current Performance v Target Above FIGURE 11 The Tight-Loose™ Performance Management Framework outlines the right ‘tight-loose’ mix for each of the four Performance Profiles At each stage of the Performance Lifecycle, there is an optimum mix of Tight-Loose™ that can be used to manage performance. If people are managed in this way, individual rep performance is able to be optimised. As an industry however, pharma are getting the mix wrong. In fact, in 79% of cases, pharma have deviated from the optimal mix of Tight-Loose™ and have failed to manage their reps in in the way they should be managed based on their Performance Profile. WRONG 68%WRONG 79% RIGHT 32% RIGHT 21 % The performance management style utilised within pharma is wrong in 79% of all instances FIGURE 12 Pharma vs. External Benchmark comparison of the frequency with which the optimal Tight-Loose™ performance management mix is utilised by Managers across the four Performance Profiles Pharma What do high performers do differently? High performing managers (across all industries) consider the current performance trajectory of each of their frontline reps in addition to their On-Target Performance. As discussed in Opportunity #1 (understanding what really defines sales performance), it is essential to gain clarity on the KPIs that truly demonstrate performance within pharma. This requires thinking beyond just OTP to consider KPIs like CAGR as a relevant measure of performance trajectory. In doing so, high performing managers are able to effectively categorise their frontline reps into the Performance Profile (Developing™, Emerging™, Plateauing™ and Excelling™) that is relevant to them. These managers then embark on the journey of transitioning each and every one of their reps up the curve. They do this by setting the right Tight-Loose™ objectives across each of the three stages of performance management (setting objectives, supporting and guiding progress, evaluating performance). 13
  • So, what does right look like across each of the stages? SETTING OBJECTIVES • Salespeople should always have clearly defined goals and objectives • Setting objectives should always be ‘tight’ SUPPORTING & • If performance trajectory is declining, a tight (hands-on, GUIDING PROGRESS high-touch) approach to supporting and guiding progress is required • If performance trajectory is improving, a loose (hands-off, low-touch) approach to supporting and guiding progress will be more appropriate EVALUATING • If current performance is below target, a tight (consistent and PERFORMANCE specific) approach to evaluating performannce will be required • If current performance is above target, a loose (ad-hoc and general) approach to evaluating performance will be more appropriate So, what can you action immediately? 1 Identify whether each of your reps are developing, emerging, plateauing or excelling by considering their current performance as well as performance trajectory 2 Based on the Performance Profile each rep falls into, understand what the correct Tight-Loose™ mix is across all three stages (setting objectives, supporting and guiding progress, and evaluating performance) of performance management 3 Provide your reps with individually-relevant performance management and coaching with the correct focus, frequency and intensity based on their profile needs 14
  • Opportunity #5: Incentivise to drive behaviour change Why is this an opportunity? Across our entire Blackdot Benchmark™ database, the number one motivator for sales reps is financial incentives. They are a critical building block in ensuring you possess an effective, high-performing sales culture that drives the right sales behaviours. Bonus as a % of Total Compensation 40% Yet the average pharma reps’ incentive scheme is significantly smaller than those of non-pharma reps in absolute dollars. A pharma rep stands to gain only 3-12% of their base salary, compared to 11-32% of the base salary of a rep in a non-pharma industry (see Figure 13). Non-Pharma 30% 20% Pharma 10% 0% On Target Performance Deciles FIGURE 13 Pharma vs. Non-pharma comparison of bonuses as a percentage of the total Representative’s compensation Even more puzzling is that within pharma companies, when compared to non-pharma industries, higher performance is not rewarded with higher pay. This has significant repercussions. For your high performers there is no incentive (or positive consequences) to outperform. These individuals will consequently often seek out organisations that do reward and recognise their high performing attributes through various discretionary bonus and incentive schemes. These flight risk consequences have the potential to materially impact future top and bottom line results. For your core performers, it simply reinforces the perception that there are no consequences for mediocre or poor performance (see Figure 14). The average pharma rep’s at-risk incentive scheme is on average 14% smaller than that of a non-pharma rep Pharma’s poorly aligned incentive schemes thus reinforce the wrong behaviours for both high and core performers, and undermine a central platform required for possessing a true performance culture. It creates additional organisational inefficiencies (through higher cost-to-outcome ratios), and results in allocating from the pool of discretionary funds to salespeople that aren’t necessarily generating you comparative uplift. You cannot have a performance culture without positive and negative consequnces of over and under performance The following pharma client example (see Figure 14) demonstrates the risk posed by an incentive compensation scheme that’s poorly aligned to performance. IS THE INCENTIVE COMPENSATION SCHEME … … FAIR AND EQUITABLE? … DRIVING THE RIGHT FOCUS & BEHAVIOURS? … BASED ON MERIT? 33% 67% 33% 100% 100% 33% 33% High Performers 67% 100% Poor Performers 33% High Performers Agree Disagree Poor Performers High Performers Poor Performers Strongly Disagree FIGURE 14 Pharma client example of high vs. poor performer pereptions on the incentive compensation scheme 15
  • When it came to perceptions of whether the incentive compensation scheme was considered fair and equitable, the vast majority disagreed. When asked if it was based on merit, that same number now strongly disagreed. Finally, when asked whether it drove the right focus and behaviours, each and every high performer disagreed. These numbers are in resounding contrast to the company’s poorest performers, all of whom believed the incentive compensation scheme was fair and equitable, based on merit and drove the right focus and behaviours. What do high performers do differently? High performing pharma companies recognise that to have a market-competitive incentive compensation scheme that is perceived as fair and equitable, based on merit, and drives the right focus and behaviours is an absolute non-negotiable to being the high-performing sales organisations they aspire to be. These companies know they cannot expect to have a true performance culture unless there are known consequences for both under-performance and over-achievement, and reflect this understanding through the incentive schemes applied throughout their organisations. As evidenced by the External Benchmark, high performing companies implement incentive compensation schemes that are larger in both absolute dollar terms and the relative extent to which they reward higher performers with higher pay from the pool of available discretionary incentive dollars. Whilst some operating environments are more regulated than others, and result in an institutionalised cap on the absolute amount able to be invested in the pool of available discretionary funds, the principle of rewarding higher performance with higher pay remains unchanged. So, what can you action immediately? 1 Determine the extent to which your company has an ‘at risk’ incentive scheme that reflects cross-industry levels of performance pay 2 Ensure your performance management framework is able to effectively reward over-achievement and incorporate mechanisms for dis-incentivising under-performance 3 Communicate new BAU (Business As Usual) incentive scheme principles and performance management frameworks to gain frontline buy-in and promote an organisation-wide performance culture 16
  • Summary Technology vendors are busy preparing their eulogy speeches and sales collateral signalling the sad, yet timely departure of SFE. Efficiency-focused solutions like downsizing field forces will be legitimately implemented, and budgets will be re-shuffled to acquire the flavour-of-the-month point solution. Distraction risks will be aplenty, with an excessive focus and commensurate investment dollars spent on digital solutions, Closed Loop Marketing strategies and the like. Amongst all this noise, shrewd pharma companies are recognising that SFE is far from dead. They understand that SFE is not about the quick-fix solution to the current pressures of the day. It involves viewing your sales engine holistically - as an ecosystem of component parts, that work interdependently to impact sales results. They perceive industry shifts as the opportune moment to return to basics and make sure the house is in order by simply doing the right things (sales leadership) as well as doing things right (sales management). They recognise that core SFE capabilities represent a necessary precondition across all economic and product lifecycles. Whilst there are fundamental and universal principles that hold true across all industries, the five opportunities outlined here represent quick-win, high-impact and immediately-actionable SFE priorities that have proven timely and relevant for benchmarked pharma companies. High performing pharma companies know that returning to core SFE priorities like these is what’s actually required to move the needle. In times of uncertainty, it is those that return to these universal, enduring and proven basics that will not only survive the tides of uncertainty, but prosper amidst the headwinds of unprecedented industry challenges. 17
  • About Blackdot Blackdot exists to assist our clients to achieve more predictable, repeatable, and sustainable sales performance. What makes us unique is our total fixation on the use of data-driven, evidence-based techniques to understand what does (and does not) drive sales performance. By viewing the ‘sales engine’ holistically, as an ecosystem of component parts that work interdependently to impact sales results, we’re able to identify the root cause of what’s inhibiting and enabling your current performance, including quantifying the payoff in actually getting it right. Armed with this knowledge, we stand alongside our clients who engage us to define, implement and embed change programs that bridge the gap between ‘hoping’ and ‘knowing’ you’ll deliver top and bottom line performance improvement. North America 347 5th Ave New York, NY 10016 United States Europe / Africa 33 Throgmorton St London, EC2N 2BR United Kingdom Asia Pacific Suite 1, 185 Gloucester St Sydney, NSW 2000 Australia +1 646 205 8059 +44 (0) 20 3551 6894 +61 2 8246 7300 enquiries@theblackdot.com.au www.theblackdot.com.au