Marketing in the Life Sciences Industry
Sean Higgins and Kevan Savage of Alexander Group share new and contemporary ways organizations are modernizing their marketing teams, including segmentation and targeting metrics, KPIs and investments in channels. This topic is top of mind for many companies who are battling for market share.
Sean Higgins: And one recent observation from our study suggested many marketing organizations are failing to track their ROI of their spending campaigns. Why is this, and what metrics and KPIs should companies be tracking?
Announcer: It’s time for another episode of the Alexander Group Revenue Growth Model podcast. Welcome, and enjoy.
Sean Higgins: Hi, everyone. Sean Higgins here from the Alexander Group, along with my colleague Kevan Savage. Kevan is our marketing practice leader, and we’re both leaders in our life sciences and analytical instruments practice. Alexander Group is a revenue growth consulting firm. We help companies figure out their most vexing commercial issues and problems and how to optimize their commercial models. And we’re here today to talk about new and contemporary ways organizations are modernizing their marketing teams, including segmentation and targeting, metrics and KPIs and investments and channels. This topic is top of mind for many companies who are battling for market share. Certainly in a quarter where most vendors are seeing softness in customer spend. To kick us off here, I’m going to ask Kevan to talk a little bit about how organizations are focusing on marketing from our most recent research. So Kevan, how are organizations evolving their customer segmentation and account targeting efforts?
Kevan Savage: Yeah. Sean it’s a very interesting and timely question you pose here. You know, a couple of observations that we’ve had working with a number of different organizations, both current and prospective, you know, one is this trend around what I would call life cycle management and matriculation. And in the life science space, you know, an example of that would be tracking the life cycle of university students and how they matriculate in an academic setting or research setting into post-op and then post-op to bench and to their first publication. We see many organizations struggle in that area. And we also see from a demographic standpoint, beginnings of aging populations and certain life science roles and really understanding how to approach your life cycle management of who your prospective customer might be today, who they are tomorrow and what type of role they may have in the future is super critical for many organizations today. And in a B2B environment, you know, there’s only so many scientists within particular roles. So it’s a great opportunity for organizations to think about what is their approach to life cycle management and the matriculation of those roles.
Another trend to call out is around market research. We know that most organizations go out and they conduct market research either annually, quarterly, monthly, at different levels and different cadences. Now, what we’ve observed as a trend is that very few are using that to really guide the operationalization of their segment potential. And what that means is a lot of the market research still stands as a static exercise where the work is commissioned, the data comes back, it gets saved off in a file somewhere and teams go about their day-to-day activity. What more progressive organizations are doing is operationalizing that in the sense where they understand where the potential is, and they are orienting their teams around how to execute against that and measuring their pace and progress around that execution. First and third-party data. In the scientific community, there’s a lot of focus, of course, around applications and workflows and research methods and things like that. Thinking through how you harness your first-party data, and an example of that is, you know, your customer and your product data, and you complement that with third-party data to identify new opportunities and follow the flow of money is becoming even more critical, especially in areas where we’re seeing industry consolidation. We’re seeing funding flows radically change with macroeconomic factors at play. And so thinking through how you do that at scale is becoming quite paramount for some organizations. The last trend I’ll leave you with in response to your question is around our friend AI, all over the news, and we won’t talk more specifically about ChatGPT4 or anything in particular. But if you think broadly speaking about segmentation and account targeting, where AI can play is think about the citations out there in the marketplace, the protocols, the publications, the vast scientific content that exists that is ripe for AI to understand, interpret and translate for organizations to guide them on where they have opportunities to accelerate their targeting efforts across their organization. So I’ll leave it there for the moment. A lot more to come on the AI front, but that’s one area that we see as a potential game changer for life science companies.
Sean Higgins: Quite a few things for organizations to think about. It reminds me when we work with clients, there is a clear difference for folks who collect information, as you mentioned, whether it’s third-party data or life cycles of students to post-op to bench directors, but others who can actually make that tangible for their marketing and sales organizations and execute against some of those data points. Definitely see a difference there. And one recent observation from our study suggested many marketing organizations are failing to track their ROI of their spending campaigns. Why is this and what metrics and KPIs should companies be tracking?
Kevan Savage: Oh, Sean, this is one of my favorite topics. It’s also one of the most difficult ones to respond to. But I will share some recommendations along with some observations that we’re seeing across the life science industry. So KPIs, metrics we have internally what we call a model around what we call the RRRs, which is all about reach, response results and returns. And what we’re seeing broadly speaking, across the life science industry is that we’re seeing much more progression in terms of organizations migrating from, you know, the reach metrics. An example there would be impressions or how many eyeballs are seeing my message in the market. They’re progressing more to response metrics which are more oriented towards how many click-throughs, how many view-throughs. And then even further, they’re starting to see better what we would call results metrics. And those are, you know, things along the lines of how many leads am I generating, how many of those leads are qualified, how many closed, how much, you know, closed-won revenue can I associate with my marketing activity? The fourth area around returns is where we’re not seeing the progression that we would like to see, and that is looking at larger return on marketing investment. The incrementality of for every dollar that I spend in marketing, whether it’s resources or programmatic spend or discretionary spend, what do I get in return and how is that driving the overall improvement of the organization, both profitability-wise and growth-wise?
So a couple of things that we’re observing. One is in direct and indirect environments, we see varying degrees in disparity in tracking. And so in life sciences organizations that tend to have a heavier direct go-to-market model, we’re seeing a much stronger improvement in correlation to the results metrics. So closed won revenue, e-commerce revenue, return on ad spend, things along those lines. What we still haven’t seen, though, on the direct side, is the velocity that marketing can contribute to drive further growth for that organization. On the indirect side, we’re seeing a disconnect between marketing team’s ability to connect campaigns to distributor dealer transactions. And so inherently what that means is that marketing doesn’t get the transparency or the post back to actually say this activity translated in these results and these returns that came from distributors and dealers. And so those are some of the areas that that we’re seeing some of the challenges around.
The other area that we have as a recommendation to many marketing organizations is that marketing teams are still tracking the effectiveness of marketing at a channel level, yet sales tends to refer to them in terms of their success at an account or a segment or a market segment level. And so one recommendation we put in place is to find that common denominator to where your metrics should show incrementality and velocity. And usually we refer to that at the account level. And so the more and more that organizations can align their KPIs and metrics to their target accounts, how they’re penetrating those accounts with certain activities, and then look at the mix of those activities to justify the returns, the better off they’ll be.
Sean Higgins: And I’m glad you brought up that last point. It’s hard to shift some of the legacy thinking, moving from a marketing organization that has positioned itself around maybe a product or the market in the past to connecting with the sales team to think about their segments. Specifically, whether that’s strategic accounts or down market, where you kind of have transactional accounts that ideally go in through indirect or digital. So good points there. So we’ve chatted a little bit around opportunity metrics. One of the big topics that we wanted to make sure we covered today was investments around channels and roles, and what are leading organizations doing there.
Kevan Savage: Two-part response here. One is the investments in roles and discretionary funds for marketing teams is very much oscillating at the moment. We see obviously budgets, you know, contracting with consolidation in the industry. We see them expanding in terms of, you know, acquisition efforts and things along those lines. But one of the stats that came from our recent marketing study is that over half of our marketing respondents had increased budgets. And in terms of where they’re putting some of those investments, we see from a role perspective, we see, you know, additional resources being planned to be staffed up or currently being staffed up in product marketing, e-commerce-related roles, digital marketing roles. And that’s probably not too surprising. Those roles tend to be very focused on translating the customer product need into go-to-market strategies across channels. So we continue to see progression and increased investment in those types of roles.
One area that was surprising from some of our recent research is around indirect marketing. Historically, you know, in many life science organizations, most of them have some type of indirect relationship with a channel or a distributor or dealer. And those have been historically underserved in terms of, from a marketing standpoint, the types of programs that can be fully leveraged within those indirect relationships or channels. So we are seeing more indirect marketing roles being invested in, whether they’re standalone roles or they are competencies that are being put in current roles or expanded responsibility sets. So indirect marketing is something that is emerging quite quickly. And then as you look further ahead in terms of the more advanced roles in more mature marketing organizations, we’re seeing much more focus around omnichannel marketing roles and audience management roles. And those roles are looking across products, they’re looking across portfolios of products or in markets, and they’re creating brand narratives from a strategy standpoint that can get executed across applications and workflows. And not every organization is ready for those roles quite yet. But for those that are really progressive and they’ve built the foundation where they know that they need to kind of bring that cross-portfolio narrative to market. They’re making investments in those areas.
Sean Higgins: No, that’s great. Kevin, Thank you for the in-depth detail on some of the roles that are certainly needed across the marketing function at a foundational level, but also what some of the progressive companies are doing when you mentioned that omnichannel role specifically thinking across products. Thank you for the time, Kevin. It’s been wonderful chatting with you and hearing the latest on marketing. And thank you to the audience for listening to us chat about what’s going on in marketing organizations today. To learn more, please visit our website at www.alexandergroup.com. We look forward to sharing more.
Visit the Life Sciences and Analytical Instruments practice
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