Omnichannel or Multi-Channel? How your Customers’ Value defines the best Strategy for 2023

Over the last decade or more the healthcare industry has undergone what appears to be a very fundamental shift in promotional approach. Moving from a “Traditional” approach through “Multi-Channel” and now on to an “Omnichannel” approach.

We in the healthcare industry use these terms all the time, but do we have a common understanding of what we mean? I am going to offer a personal view on what these terms mean. And set out what I think we need to do be doing if we really want to attain an Omnichannel approach in our Pharma Marketing.

The “Traditional” Approach:

I think when we use the “Traditional” term we are remembering a time when most of our promotional effort to customers was delivered through our sales reps. We had our brand sales Forecasts, and we understood the cost of our sales reps. A little bit of math then told us how much we could afford to spend on sales force detailing. So, our next task was to decide how to allocate this spend. How many of our customer audience should we see, and at what frequency? In other words, we decided who we would see and who we did not. The industry was very firmly in control of both the promotional brand message and who heard it.

Now I have deliberately kept this a bit simplistic. This “traditional” approach had some variations within it:

• We had the “Workload build-up” approach. We simply decided the call reach and frequency for our customers first and then, with some rep productivity data, calculated how many reps we would need to deliver it. A simple approach. But one which took no account of the impact on sales or on profit.

• We had a “Segmentation and Targeting” approach. This is really a variation on the above “Workload build-up”. Here we segmented our customers. Usually on their perceived or potential value, into segments and then set our reach and frequency targets on these segments. The goal here was to become more efficient in our call allocation. This was a start in recognizing that our customers were not all the same. It made us think about becoming less brand focused and instead more customer focused. It was a start in understanding the impact on profit of our call plans.

• We also had the “Sales Response” approach. A more sophisticated method which builds upon both methods above. Sales Response brings in the concept of maximizing Long-Term Profit. It relies on an understanding of creating sales and profit response curves and introduced the concept of “Carryover” sales – the percentage of last year's sales which would occur with no active selling activity. It allowed us to understand the relationship between promotional effort, the sales return it drives, and therefore the profit and ROI. It gave us a method to link our reach and frequency call targets specifically to the value of our customer segments. Even when those customer segments had value across more than one of the promoted brands in our portfolio. It gave us a way of measuring customer value.

So, if that is the Traditional approach what is a Multi-Channel? I am sure there will be many views on how to define it, but this is my suggestion.

The “Multi-Channel” Approach

When we talk of moving towards a Multi-Channel Marketing approach (MCM) it gives the impression perhaps that this is/was a new concept. I am not sure that it is/was. We have always promoted across multiple channels. Of course, back in the “Traditional” way the sales force was key. For most pharma companies it represented the second largest area of spending after research. For some organizations it was the largest single expense. So, it’s natural that we would spend most of our time on it. But we used many other channels:

• Inter-National conventions / Trade Shows
• National conventions / Trade Shows
• Event Sponsorship
• Print advertising in specific medical journals
• TV/Radio & other broadcast media channels (in markets where this is permitted)
• Free Samples (again in markets where this is permitted)
• Trials
• Co-ordinated advertising campaigns that brought together multiple channels
• To combat the impact of brand substitution in retail pharmacies in those markets where it is allowed, we set up Pharmacy sales forces with a more business approach to promotion.

We have always used multiple channels. However, a new channel was becoming available. The Internet. Pharma is often described as being late to wake up to the opportunities that the Internet provides for promotion. But we should not be so hard on ourselves. We should remember that we operate in a highly regulated industry. It was always going to be difficult to agree to a set of industry standards for using this medium. These standards are still evolving, and I assume always will. So, it may be the case that pharma will always be a little behind the use of the Internet in marketing when compared to non or lesser regulated industries.

We seem to have adopted the term “Digital” to describe all the new promotional channels that the internet has made possible. There are several:

• Brand Websites
• Customer Portals
• E-mails
• Conference calling – making e-details possible

I am sure there are others. But perhaps we are missing something here. I don’t think that it is the number of digital channels that is an issue here. I think it is more the direction of communication that matters. Before Digital, most promotional channels offered one way communication. From the seller to the customer – “outbound” if you like. There was very little communication in the opposite direction. Digital has changed that. Now there are several opportunities for two-way communication and our customers are expecting to be able to make use of them. Promotional campaigns using outbound promotional channels can be started and stopped – inbound promotional channels don’t expire.

Inbound channels have opened the importance of the patient too. Patients can bypass physicians and go directly to pharma companies for information. So digital inbound promotional channels have required us to be patient-centric as well as customer-focused.

This brings us to Omnichannel approaches.

The “Omnichannel” Approach

Why Omni? The dictionary definition tells us it means “a combination of all things” or “in all ways and places”. So, in my view Omnichannel doesn’t mean that we have a completely new approach to learn and implement. It doesn’t mean all previous approaches are obsolete. Instead, it means that we need to learn to co-ordinate all the channels we use – both Traditional and Digital. Different customers will want to interact with us in different ways, and we must be mindful of this. Being “in all ways and places” makes us able to take advantage of Inbound Digital communications from our customers. But it also requires us to maintain a presence in our traditional promotional channels too.

Traditionally our sales reps would deliver a pre-prepared speech to our customers with visual aids, leave-behinds, and perhaps samples. Some of our customers will continue to want this. But increasingly much of this information will be available online. The sales rep won’t earn the right to the next visit if he/she only brings information which can be obtained online. So, the principal role of the rep must change if they will continue to exist.

Is this the demise of the sales rep? Not yet I think. In surveys, around a third of prescribers still cite sales reps as their preferred source from which they want to receive their information. This will only be for as long as reps bring value. What constitutes value? This is different for different customers. For some it will be access to services that allow physicians to keep on-track with their treatment protocols. For others it will be services that offer access to samples, vouchers, or co-pay assistance. I am sure there are many other expectations too. Sales reps are now being thought more as “Orchestrators”, directing customers to all the information and services that are available to them across many channels. Some customers will want to use just one channel, but increasingly it is expected that they will want to use a combination of several. Reps are expected to know which channels are preferred by which customer.

We as pharma are no longer in control of who hears our message. We are expected to respond to any customer or potential customer that approaches us. Our role is to deliver our message accurately and consistently to these customers. No matter how many, or few, channels they choose to use when interacting with us.

There are some very significant advantages to an Omnichannel approach.

Fishing with nets

In the past we fished with nets. We used to cast our sales force over practically all our customer audience. We caught some “big fish” who were very valuable to us. Some small fish that were not so valuable. And others with no value at all. The problem was, catching little fish was as expensive as catching big fish. The more experience/data we gathered on our customers, the better we were able to segment them. By value in the first place. And then adjust the number of calls each segment received. Clearly this helped significantly with profits.

Fishing with spears

Through our digital channels, our customers can now contact us at will. We don’t need to cast our nets. Instead, we can wait until they contact us. At this point we know we have a potential customer. We don’t know yet if they will be a big or small customer, but at least we know they have an interest. Now we are fishing with spears.

When is it appropriate to fish with nets or spears? Both are valid approaches. In a situation where we are new to a therapy area. Perhaps with a newly launched product. Where we are not fully aware of the key players in a market. There we might need to cast our nets. But it will be important to collect the data on these customers as we haul the net in. This information will drive our future promotional planning and help to improve financial efficiency. Although we can only cast nets if our combined customer value will pay for the salesforce to do it.

In markets where the customer value is relatively low, we may not be able to afford to cast nets. Instead, we rely on interactions that have a low cost per customer contact. Increasingly, these are digital channels.

So, what does all this mean to us who have a role in Commercial Excellence (CE) or Sales Force Effectiveness (SFE) teams today?

Impact on Commercial Effectiveness Teams

Today, Commercial Effectiveness Teams have a complex role to perform. Senior managers and their finance teams will always have a need to understand their business through the lens of brand performance. After all, brands are the main pharma company asset (after its’ workforce of course). Research will, hopefully, continue to bring us new discoveries and treatments creating new brands. These brands will be bought and sold, co-developed, and perhaps co-promoted. Shareholders in healthcare companies will always want to know about the financial performance of the brand assets they own. There will always be roles within a company where being brand-focused is important. Let us remember that sales forecasts are set by brand.

Our customers are not looking for brands, however, they want solutions. They are solution focused. How many Health Care Professionals (HCPs) are agnostic as to which company owns or sells specific brands? They simply want to improve patient outcomes. Whether that is for individual patients or for a whole population. Our HCP customers will usually have an interest across several brands in their areas of expertise. Regardless of which company makes them. They are increasingly reaching out to us – using their preferred channels – to get the information they need to deliver solutions.

This requires our sales and marketing departments to be customer and patient focused. To be very aware of the real-world goals of our HCP customers. But these same departments also need to deliver against sales targets. And do it within budget constraints set by finance.

There is a risk we can become too customer focused. Imagine a situation where all our least valuable customers were demanding to be seen in their clinics face-to-face by sales reps – one of our most expensive channels. If we take the customer focused approach, we will of course give them the customer experience they are seeking. But we are likely to be losing money most of the times. Can we afford to deliver to all our customers using their preferred channel? Maybe not. There must be trade-offs between Customer Experience and company financial targets.

For Pharma companies that are focusing on innovative patent-protected brands, it may be possible to give customers the experiences they want. However, for companies that focus on generic brands with smaller margins, it may not be possible to be so accommodating.

I mentioned earlier that around a third of physicians still declare sales reps as their preferred source for receiving information. The other two thirds are increasingly preferring digital channels. This is true for markets like the US, and for much of Europe and the Western world. But it is not true for many other geographies where reps remain by far the most recognized and valued method for prescribers to get their information. For global healthcare companies there will likely continue to be a need for their promotional planning to align along “Traditional”, “Multi-Channel” and “Omnichannel” approaches simultaneously.

This is a challenge. Commercial Excellence teams need to create a “go-to-market” approach that allows all customers to have individual tailored customer experiences whilst hitting company financial expectations.

In a variety of local cultures and habits. No easy task! Where do you start?

The key is understanding Customer Value. Our real-life expectation is that the promotional channel spend is aligned with customer value. Obviously, this must be true – how else could you get the most return from your promotional investment? But how do we achieve this alignment if we don’t know our customer value?

Right back at the start of this article I mentioned “Sales Response”. This remains the best way of deriving a customer value. With this, we can start to build a go-to-market approach that is relevant to any specific market. Understanding the customer value will help us understand when we can afford to cast nets and when to fish with spears. It can help us understand which promotional channels are appropriate for which customer audiences and brands. It can help us avoid using too high cost a promotional channel on our lower value customers. Equally, it will help us to avoid under promoting to our most valuable customers.

To achieve this, you need to have a solid solution to three fundamental challenges:

1. Put a Dollar value on your customers (Analysis)
2. Get intelligent investment recommendations (preliminary Optimization)
3. and coordinate your promotional channels (Plan)

You may have multiple promoted brands, many customer specialties, segments, sales teams, and marketing channels. And a set of sales targets and budget constraints to work with. All needing to be coordinated and optimized to achieve Omnichannel success.

I hope this is helpful for you get a better grip on Omnichannel planning and clarify a few key terminologies.

If you need a practical approach to address any or all three fundamental challenges above, please contact us now!