In the 1990’s pharmaceuticals were launching blockbuster after blockbuster. Drug companies hired droves of sales reps to march into physician offices to promote their latest new life saving compound. Sales rep numbers in North America alone ballooned from three hundred thousand to over one million. Each rep was instructed to deliver the same message in their territory regardless if that territory was populated with Asians, Caucasians or Blacks, young or old, rich or poor, obese or skinny, active or sedentary. The model was simple – one size fits all! It didn’t matter which territory you had the same message was delivered on every call.
Virtually all pharmaceutical companies employed the same model until the wheels started to fall off in mid 2000. Here’s one story about how a company took on this challenge and turned it into an opportunity. It’s called differential resourcing.
Solvey pharmaceutical had a big problem. They had eight different drugs they were selling through four independent sales teams. Like most pharmaceutical companies Solvey had neatly divided their market into physician territories using zip or postal code data to ensure each territory had almost exactly the same population and number of physicians. Reps marched lock step to their assigned doctors and delivered the required message. Life was good for the reps – march and deliver; that is until 2007 when Solvey hit a “situation”.
Over the next three years several of Solvey’s competitors’ products would be going off patent meaning Solvey would now be facing low cost generic competition in its key markets. At the same time Solvey would be launching three new products and re-negotiating several co-promotion programs. Any one of the above events would normally trigger a redistricting of the sales force. In short, Solvey was facing a logistical Armageddon!
That there were three competitors going generic, three new products to launch and three co-promotion contracts to re-negotiate meant there were twenty seven potential permutations and combinations of sales force altering events. Solvey executives knew each of these events would happen but compounding the problem was they just didn’t know when. The disorder caused by a myriad of resizing and redistricting of sales teams would be catastrophic and the disruption in physician relationships as reps shifted responsibilities would be devastating.
To solve this problem Solvey developed a differential resourcing model called Customer Centric Alignment or CCA. Simply stated they developed three hundred territorial footprints across America and then modeled how each event would affect each territory. In each footprint they gave reps a basket of products that they could promote. The break with the former “one size fits all model” was that reps would no longer be required to carry the same basket of products but rather could choose to promote the products that made most sense for their territorial footprint. For example a rep in a University Town might choose to focus on birth control products while a rep in a retirement community might focus on a heart medication.
Solvey tested the model to see how it would handle the various “events” that might potentially take place. As the company launched a new product or a competitor went generic reps could simply move their focus to another product without having to relinquish the highly coveted relationships that the rep had established with the local physicians.
In the end events didn’t roll anything like Solvey had predicted but the CCA model allowed reps the flexibility to adjust their product mix without disrupting much else. As well, many of the market events described earlier didn’t happen uniformly yet each territorial footprint adjusted sale strategy accordingly to both the event and the timing. The sales force flexibility was hardly the only benefit that Solvey realized. At the end of the year, with the same number of representatives, sales rose a jaw dropping 5%.
What can we learn from Solvey’s experience:
- A rigid, uniform approach to market strategy is very inefficient
- Strategy is flexible and adjusts to new information
- A good strategy ensures resources are allocated to the best opportunities
- Product knowledge is important but relationships in business are paramount
It sounds so simple – you’ll hope your company is doing this yet our data shows most likely it’s not. This story is about a pharmaceutical company but equally applies to any company with a sales force – any company with a marketing team – any company that needs to allocate resources. With markets evolving at ever increasing speeds the need for differential resourcing increases radically. Preserve relationships and allow your strategy to flex and adjust to market conditions – start differential resourcing!
1. For more info see Chris Wright ZS Associates, Matching Resources to Opportunities