For pharmaceutical and medical products

Transcription

1 SALES & MARKETING INSIGHTS Focus Is Fundamental: Using Objective-Based Segmentation to Identify, Target and Influence Your Most Valuable Customers Paul Kraus For pharmaceutical and medical products manufacturers, identifying and targeting the most receptive customers is more critical than ever. While customer segmentation has long been considered an important tool to achieve this, traditional methods have often fallen short in helping companies identify the best targets and take effective action. A more focused and practical approach known as objective-based segmentation can provide healthcare companies with segments that are both highly relevant for product strategy and more readily implemented by the organization as a whole.

2 Introduction For pharmaceutical and medical products manufacturers, identifying and targeting the most receptive customers is more critical than ever. As markets have become increasingly crowded and sales and marketing budgets more limited, there is growing recognition that traditional mass-market promotional strategies have become more costly and less effective. Achieving greater focus, both in terms of the targets identified and the messages and support provided to them, is increasingly fundamental to brand success. While historical prescribing or purchase volumes provide a rough starting point to guide targeting efforts, many other factors now influence which customers are, in fact, the best prospects for a specific product or offering. As health-care decision making has become more complex, differences in customer attitudes toward cost, safety or side effects risk, and specific methods of administration, for example, play an important role in determining opportunity at the individual customer level. The growing influence of payers and the shift toward group practices have introduced new considerations into health-care decisions that can significantly affect the opportunity associated with physicians in these accounts. In this new and dynamic environment, past volume alone can often be an unreliable indicator. Customer segmentation has long been considered an important tool for prioritizing customers and understanding their differential needs. However, traditional segmentation efforts have often fallen short in helping health-care companies effectively identify the best targets and take action. There are several reasons. First, while most approaches are designed to identify homogenous groups of customers, these often do not clearly align with the specific objectives for the brand (for example, predicting the best targets, identifying specific tactics to help drive conversion, etc.). Likewise, the results of these efforts can be difficult to communicate because segments are often defined in very complex ways based on dozens of variables. Lastly, and most important, implementation through the sales force can be a significant challenge. Even in markets with customer-level prescribing or usage data, segments can be difficult to project to 2 ZS Associates

3 the full customer population without substantial rep profiling efforts. Many companies pursuing these efforts have found them difficult to implement in practice. For all of these reasons, a more focused and practical approach is required. In our experience, we have found that an alternative methodology known as objective-based segmentation can often provide companies with an effective way to achieve these benefits that is both highly relevant for product strategy and more readily implemented by the organization as a whole. Objective-Based Segmentation Objective-based segmentation is a powerful but conceptually simple approach that is specifically designed to predict which customers have the highest receptivity and value for a brand. Instead of grouping customers simply on their degree of similarity to one another, as in traditional methods, they are segmented only on those underlying dimensions that best predict their likelihood to use the product. This ensures that the segments identified are truly those most relevant to brand strategy and long-term sales opportunity. The fundamental idea behind this approach is that specific markers can help identify customers who are more likely to be receptive to a given product, because they are reflective of important differences in their attitudes, capabilities or needs. For example, specific types of prior prescribing or purchase behaviors can provide evidence for certain preferences, such as comfort in incurring side effects to achieve higher efficacy, or willingness to overcome managed-care hurdles to use a product of choice. Likewise, differences in practice characteristics or infrastructure such as availability of nursing support can also play a vital role, particularly for products that require significant patient education or practice resources. By taking differences in these factors into account, in addition to market volume, objective-based segments can provide an accurate forward-looking view of which customers are most valuable for the brand. In addition to informing customer value, this approach can also provide specific direction into how marketing tactics can be tailored to address 3 ZS Associates

4 each segment s unique needs. Because the segments are designed to predict customers receptivity to the product, they differ in the specific drivers and barriers they face. This can help provide key insights into their promotional preferences and support needs. For example, if cost sensitivity emerges as an important barrier for a given segment, copay offset programs and formulary status communications can be specifically targeted to this segment. Likewise, for segments in which concern exists around mode of administration, specific patient support programs can be targeted to help offset these challenges. The ability to predict these barriers and tailor programs to address them can make this approach equally relevant in specialty markets such as oncology, in which customer prioritization has traditionally been less of a concern. Perhaps the most important advantage of this approach, however, is that it can be substantially easier to implement in many healthcare markets. As shown in Figure 1, while traditional efforts often define segments based on a long list of differentiating characteristics, objective-based segments are typically identified based on a small number of simple rules. In markets with prescriber-level secondary data, these rules can often be applied using secondary markers, allowing segment identification without the need for substantial rep profiling efforts. In markets without secondary data, segments can often be assigned with a minimum of effort, as the rules require no more than a small number of objective facts about each customer, many of which reps in the field may already know. And lastly, the segments are easy to communicate because they are defined in a way that is simple and intuitive to convey throughout the organization. Figure 1. Summary of Differences: Traditional Clustering versus Objective-Based Approaches Figure ALTERNATIVE 1 SEGMENT DEVELOPMENT APPROACHES ABILITY TO PREDICT BRAND PREFERENCE EASE OF PROJECTION EASE OF COMMUNICATION IMPLEMENTATION / MAINTENANCE Traditional Cluster Approaches Segments reflect customer differences but are not designed to predict preference for a specific product Segments must be projected to the broader market us ing algorithms and rep profiling efforts Segments are defined in complex ways that can be challenging to communicate More difficult as requires significant rep profiling efforts Objective-Based Approaches Segment definitions are specifically designed to predict product preferences When possible, segments are defined based on secondary markers, ensuring maximal projection from the start Segments are defined based on rules that are straightforward to communicate Can often be fed directly into call planning and program targeting efforts 4 ZS Associates

5 CASE STUDY Our client, a midsize pharmaceutical company, faced the challenge of launching a next-generation product in a well-established market for a major chronic, progressive disease state. To maximize the launch, it was critical to identify which physicians the company should target and the amount of promotional resources it should allocate to various groups of customers. The product had efficacy advantages over prior therapies, which the company felt made the product potentially more broadly appealing than the current market leader. But it was unclear which physicians would warrant the most effort and which promotional levers would be required to encourage different types of customers to adopt the product. To identify the most receptive segments, the client engaged us to conduct a survey of its potential targets and measure reactions to a detailed (but blinded) profile for the product. We also captured physician perceptions on a host of other factors that were hypothesized as potential drivers and barriers to usage. These primary data were then linked to secondary data sources at the physician level to connect their stated attitudes to their historical prescribing behaviors and other known characteristics of the practice. Using objective-based techniques, we found that a small number of key drivers proved most predictive of customers intentions to adopt the product, and that these could be captured in a limited set of markers already included in the customer database. Based on these drivers, a segmentation tree was developed that clearly defined the segments using simple, well-defined rules. As shown in Figure 2, several factors predicted receptivity to the product, including their rate of adoption of a previously launched product, their comfort with the mode of administration, their sensitivity to cost and their loyalty to the company for other products in the category. Each of these could be measured directly from the database, based on previously identified markers. 5 ZS Associates

6 Figure 2. Segmentation Tree All Physicians Figure 2 Historical Fast Historical Slow Injectable High Users Injectable Low Users Combo Product Users Combo Product Avoiders Low Generic Share High Generic Share High Company Loyalty Low Company Loyalty SEGMENT 1: Fast Adopting Experts SEGMENT 2: Cost-conscious New Product SEGMENT 3: Oral Therapy Preferrers SEGMENT 4: Combination-friendly Slow SEGMENT 5: Company-Leaning Combo Avoiders SEGMENT 6: Low- Receptivity Laggards LEAST RECEPTIVE MOST RECEPTIVE CASE STUDY The resulting segments were easy to define and intuitive to communicate throughout the organization, and also pointed to clear implications for marketing tactics as well as targeting priority. As illustrated in Figure 3, segments differed on the drivers and barriers for the brand, with the most receptive having many drivers and few barriers, and the least receptive segment having many barriers and few drivers. High-potential physicians in the most receptive segments were clearly the top-priority targets for the brand and were identified as potential advocates to drive broader adoption. At the same time, the least receptive segments were deprioritized since the number of barriers they faced would be very challenging to overcome. For each segment, the specific drivers and barriers provided direct insights to help tailor the right mix of messages and programs. For example, physicians for whom the method of administration was a barrier were targeted for specific patient education and support programs, while those perceiving cost barriers had additional emphasis placed on copay offsets. In this way, the segmentation provided clear action steps that tied to the underlying needs of each group. 6 ZS Associates

7 Figure 3. Drivers and Barriers by Segment Figure 3 SEGMENT 1: Fast Adopting Experts DRIVERS Fast Experience With Class Favor Combos Fewer Safety Concerns With Injectables Lower Cost SEGMENT 2: Cost-conscious New Product Fast Experience With Class Favor Combos Fewer Safety Concerns With Injectables High Cost SEGMENT 3: Oral Therapy Preferrers Fast Lower Cost Favor Combos Fewer Safety Concerns Less w Injectables Prefer Orals SEGMENT 4: Combination-friendly Slow With Injectables Lower Cost Favor Combos Fewer Safety Concerns Slow Less Loyal to Company Products SEGMENT 5: Company-Leaning Combo Avoiders Favor Company Products With Injectables Slow No Experience With Class Avoid Combo Products High Cost SEGMENT 6: Low- Receptivity Laggards Less w Injectables Higher Safety Concerns Slow No Experience With Class Avoid Combo Products High Cost BARRIERS CASE STUDY Most important, because every customer was assigned to a segment, results of the effort could be fed directly into physician targeting and call planning efforts to ensure that resources were prioritized toward those segments that were more likely to be receptive. Segment receptivity was combined with market script volume at the physician level to provide a significantly more accurate valuation than would have been possible using volume alone. As shown in Figure 4, six months after launch, differences in product uptake closely mirrored the predicted pattern across segments. Likewise, subsequent market research validated the key drivers and barriers faced by each segment. Call effort was progressively focused toward the more receptive segments to maximize the return on promotional investment, while less costly channels were pursued with less valuable or receptive customers. In other cases, more significant investments in specific support programs were targeted at highpotential targets with specific attitudinal barriers since their high value warranted focused efforts to overcome these barriers. 7 ZS Associates

8 Figure 4. Customer Penetration by Segment (% Trial After Six Months) 100 Figure % 40 44% 20 0 SEGMENT 1: Fast Adopting Experts SEGMENT 2: Cost-Conscious New Product 19% SEGMENT 3: Oral Therapy Preferrers 11% SEGMENT 4: Combination- Friendly Slow 4% 3% SEGMENT 5: Company- Leaning Combo Avoiders SEGMENT 6: Low-Receptivity Laggards CASE STUDY One final benefit of the approach was that it created a common platform for developing and implementing launch strategy across the organization as a whole. Marketing was able to leverage the segments to understand its customers and develop promotional strategies, while the sales force received clear direction on how to prioritize call efforts and selling tactics. Moreover, the organization adopted a common language for discussing, targeting and tracking its customers over time, which facilitated better alignment and coordination in what might otherwise have been a very complex and disconnected launch process. The result was a highly successful launch, with rapid initial uptake as well as sustained market performance over time. Conclusion As illustrated above, objective-based segmentation can provide companies with a practical and effective tool to help target and influence their most valuable customers. While the case study focused on a new product launch, we have also seen similar benefits for companies looking to maximize their inline brands, particularly in dynamic markets in which customers future potential is uncertain. These situations are increasingly common, particularly in markets that have seen changes in the treatment environment or competitive landscape (for example, new entrants, new indications, increased generic competition or evolving treatment guidelines). 8 ZS Associates

9 As health-care markets continue to become more challenging and promotional resources more scarce, maximizing the impact of every dollar of investment will become essential across all stages of the product life cycle. To achieve this, it will be important to go beyond coarse measures of historical potential to identify the specific markers of product receptivity. At the same time, as health-care customers grow more diverse, promotional efforts will need to be tailored to address their unique drivers, barriers and needs. Tools such as objective-based segmentation provide a timely way for companies to rise to meet this challenge. About the Author Paul Kraus is a Principal with ZS Associates in Princeton, N.J. He has developed strategic insights for major pharmaceutical clients across a wide range of therapy areas, including diabetes, cardiovascular, psychiatric, pain management, virology and women s health care. His experience also spans a broad set of methodologies, including integrated segmentation, brand positioning, demand estimation, performance tracking, treatment process analysis and qualitative research. Paul holds a B.A. in economics from Yale University, and a master s and Ph.D. in marketing from the Kellogg School of Management at Northwestern University. About ZS Associates ZS Associates is a global leader in sales and marketing consulting, outsourcing, technology and software. For almost 30 years, ZS has helped companies across a range of industries get the most out of their sales and marketing organizations. From 20 offices around the world, ZS experts use analytics and deep expertise to help companies make smart decisions quickly and cost-effectively. ZS comprises multiple affiliated legal entities. Learn more at 9 ZS Associates

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