The Power of Understanding Attainable Growth Opportunity
Pharmaceutical organizations have endured substantial change over the past decade. Large sales forces rationalized by outdated promotional response models have become less influential as their physician targets lose autonomy to payers, who exert more control to reduce drug costs. Growing provider networks are increasing their demand for proof of clinical and economic benefits. Combined payer/provider roles will become more common.
Given the new market environment, most medical sales forces face a “burning platform” for change in the way they size, deploy and compensate their salespeople. However, we find that the changes made can be incomplete and inconsistently implemented. Salespeople may pursue the wrong physicians, territories are misaligned, KAM and fields sales forces are out of synch, and compensation plans do not motivate. As a result, many commercial organizations experience rampant inefficiency at precisely the time when they are being held accountable to deliver a stronger ROI.
Solution: Use of Payer/Provider Position to Define Attainable Potential
Almost all pharma and biotech companies purchase Payer/provider Rx data. Statistically valid “Attainable Potential” models can be developed using this data to transform raw opportunity into practically achievable growth at the physician, account and territory levels.
The results can be used to improve:
Sales Force Sizing. Workload-based sizing may not be economically justified. Sales coverage must be established to maximize the total value of coverage over and above costs of coverage. This requires consideration of the attainability of volume growth opportunity to ensure that the marginal value provided by the last tier of accounts covered exceeds the cost of covering them. It avoids “leaving money on the table” due to under-sized sales forces, and also eliminates over-sized sales forces that make it impossible for some salespeople to cover the cost.
Targeting. Physicians and accounts with large raw volume potential but low likelihood of capture (in light of poor payer mix and formulary positions) are moved “down the list” resulting in less wasted sales effort. On the flip side, those with truly attainable volume opportunity are moved up the list. Promotional response increases.
Territory Alignment and Resource Allocation. Most alignments are designed to balance opportunity with existing business. Yet, in many areas of the country, the opportunity is unattainable, since physicians have much less power than payers. Alignments must change to incorporate attainability factors such as Managed Care, so that sales coverage is increased where it matters more, and decreased where it matters less. The same re-allocation would be likely to impact samples and other physician-directed programs.
Incentive Compensation. Goaling is the foundation for most incentive plans, yet goals are inequitable if attainability of growth is not considered when setting individual quotas. The graph below left conveys the impact Managed Care can have on true territory “Attainable Potential” and related goals, while the graph on the right conveys the impact of inequitable goaling on actual incentive compensation payout. In this case study, we found that over 60% of sales reps were being substantially over- or under-compensated.
Costly over-payment to some occurs at the same time others are demotivated, which can lead to unwanted turnover. The combination is disruptive and impairs productivity dramatically.
Pharmaceutical sales organizations must become more effective. Incorporating Attainable Potential into basic sales analytics, most often without the need for costly added data acquisition, is a great way to start.
To learn more about how to assess true, attainable sales potential and apply potential to sizing, deployment and compensation practices, we invite you to contact us.