Dimensionamento e specializzazione della FV: tecniche di progettazione

Luca Minotti – Fondatore e socio Keras Strategy

Altavilla Vicentina – 29 gennaio 2015

Luca Minotti

FOUNDER OFKERAS STRATEGY

Phone: +39 335 78 36 296

Luca's experience has included work in productivity,

territory alignment, roll-out of business intelligence

systems and project management for post-merger

integration activities. He works primarily with clients in the

pharmaceutical industry in Mediterranean countries.

His experience includes consulting for strategic consulting

firms in health care, lifescience, consumer goods, retail,

and financial services practices.

Luca holds a degree in Electronic Engineering from the

Engineering School of the Politecnico di Milano, with a

concentration in Software Engineering

About myself

Italian

ArmyOfficer

La rete commerciale Pfizer Italia 10 anni or sono 2.400 persone !

3

NSD

(1)

BAD

(9)

HBM

(23)

RPM

(9)

Sales Intelligence &

Effectiveness

(30+1)

GAM

(23)

Sales Training

(40)

Administration &

Management Support

(4)

Sales Operations & Services

(41)

PRATT

CV

(23)

Pratt

(180)

CV

(60)

POWERS

UD

(23)

Powers

(180)

UD

(60)

ROERIG

I&P

(23)

Roerig

(180)

I&P

(60)

LABS

CNS

(23)

Labs

(180)

CNS

(60)

DAVIS

P&I

(23)

Davis

(180)

P&I

(60)

SEARLE

NEPSY

(23)

Searle

(180)

NePsy

(60)

SSD

(1)

HAM

(9)

HOSP

(76)

SM

(1)

AM

(4)

Ophtha

(40)

SM

(1)

AM

(3)

Onco

(30)

SM

(1)

Endo

(10)

Assistant

(1)

Le sfide del pharma nell’ottimizzazione della leva Sales Force

• Audience 350.000 medici in Italia, 50.000 Medici di base

• Investimento decine (se non centinaia) di M€ ogni anno

• Differenziazione comunicazione e servizi, per andare oltre il prodotto

• Compliance stretta aderenza alla comunicazione in scheda tecnica

• Complessità selling process variegati, e fortemente multidisciplinari

• Salute centralità del paziente

• Competitor grande aggressività nell’arena competitiva

• Innovazione per ottimizzare le risorse e come vantaggio competitivo…

4

Industry d’elezione per sperimentazione e ottimizzazione

SALES FORCE DESIGN

Effective & efficient coverage of the full target

account universe with a structure & deployment that best fit the value

proposition & sales process strategies

SALES STRATEGY

Customer-focused strategy targeting the best growth

opportunities with differentiated &

mutually valuable offerings

CUSTOMER ENGAGEMENT

PROCESS

Customer-focused & expertly

executed sales processes &

planning that maximize mutual value &

trust

PEOPLE & SKILLS

Sales managers & salespeople with the knowledge,

skills & attributes required to excel at their respective

roles & responsibilities

MOTIVATION

Highly motivated, performance-

focused & accountable sales force committed to “getting it done” &

“doing it right”

SALES OPERATIONS

Highly efficient support capability that provides the sales force with the information, expertise, speed-to-market & efficiency needed to achieve superior performance

= COMMERCIAL EXCELLENCE

Gli ingredienti della Commercial Excellence

Note: SFE Navigator TM is a ZS Associates trade mark

Commercial Excellence approach

SALES OPERATIONS

SALES FORCE DESIGN

STRUCTURE

ACCOUNT ASSIGNMENTS TO TEAMS

SIZING AND ALLOCATION

TERRITORY DESIGN

SALES STRATEGY

MARKET INSIGHT

SEGMENTATION

GROWTH PRIORITIES

VALUE PROPOSITION

PRICING STRATEGY

SALES AND MARKETING COLLABORATION

LEADERSHIP ALIGNMENT

CUSTOMER ENGAGEMENT

PROCESS

SALES PROCESS

TARGETING, TERRITORY AND PIPELINE MANAGEMENT

ACCOUNT PLANNING

SALES TOOLS AND ENABLERS

PEOPLE AND SKILLS

COMPETENCY MODEL

SELECTION AND HIRING

TRAINING

COACHING

PERFORMANCE REVIEWS AND ACTIONS

MOTIVATION

CULTURE

METRICS AND DASHBOARDS

GOALS

INCENTIVES AND REWARDS

DATA MANAGEMENT LEAD GENERATION AND

MANAGEMENT

REPORTING AND

ADMINISTRATION

ANALYTICS PRICING AND

CONTRACTING SUPPORT

PLATFORMS AND

SYSTEMS

Effective & efficient coverage of the full target account universe with a structure

and deployment that best fit the value proposition and sales process strategies

Customer-focused strategy targeting the

best growth opportunities with differentiated

and mutually valuable offerings

Customer-focused and expertly executed sales processes and planning that maximize mutual

value and trust

Sales managers and salespeople with the knowledge, skills and attributes required to

excel at their respective roles and responsibilities

Highly motivated, performance-focused and accountable sales force committed to “getting it

done” and “doing it right”

Highly efficient support capabilities that provide the sales force with the information, expertise, speed-to-market and efficiency needed to

achieve superior performance

Note: SFE Navigator TM is a ZS Associates trade mark

ROI

macro

models

ROI

macro

models

La madre di tutti i maliUn approccio non rigoroso alla resource allocation

7

Tipici (ed errati) approcci all’allocazione delle risorse

Assumes the competition is right and the right benchmark

Profitability not considered

Assumes last year’s allocation was correct

Does not consider evolutions in the market place

Does not consider profitability

Does not help to prioritize tactics

Not enough analytical rigor involved

Too general, not customized for each brand

Too few data points to enable robust analysis

Often highest ROI is tied to lowest spend

Results often not used during the planning process

Not scalable and doesn’t instill learning

Ad HocTemplate

Approach

Last Year

+ X%

Share of

Voice

Y% of

SalesAd Hoc

Template

Approach

Last Year

+ X%

Share of

Voice

Percent

of Sales

Results often

not used during

the planning

process

Not scalable

and doesn’t

instill learning

Too few data

points to enable

robust analysis

Highest ROI is

often tied to

lowest spend

Not enough

analytical rigor

involved

Too general, not

customized for

each brand

Does not

consider

profitability

Does not help to

prioritize tactics

Assumes last

year’s allocation

was correct

Does not

consider

evolutions in the

market place

Assumes the

competition is

both right and

comparable

Profitability not

considered

Approccio parziale risultati sub-ottimali

La madre di tutti i maliUn approccio non rigoroso alla resource allocation

Strategy Analysis Execution

Translate portfolio and brand

objectives into promotional

objectives

Understand market dynamics based on deep industry knowledge to focus promotion on the levers that have thehighest impact

Identify customers with similar behavior to tailor promotional effort

Measure the impact of promotional tactics using advanced modeling approaches

Identify the drivers of success of promotional tactics based on rigorous analysis

Establish and allocate the optimal levels of investment via a transparent decision making process

Practical advice to design tactics that can be implemented by taking into account real world constraints

Evaluate historical effectiveness of tactics to identify insights for improving them

Build plans from the bottom up to maximize the impact at the local level

Flexible tools to enable optimization and ongoing review

What’s the game? Where to play? How to win?

Decidere l’allocazione delle risorse è un esercizio multidimensionale

9

MODELING CRITERIA

Model Fit:

• Historical Fit

• Predictability

Model Validity:

• Error Trends

• Effect of Individual

Drivers

• Outliers

BUSINESS CRITERIA

Final

Resource

Allocation

Decision-Making:

• Informative

• Practical

Business Rationale

• Product Situation

• Consistency vs. History

• Industry Benchmarks

Il criterio principale – l’ottimizzazione del ritorno marginale

10

Gross Sales $$ =

Sales impact of activity with or without

additional years of carryover credit

Profit= 2 - 3

Promotion Activity

Promotion Activity Costs

Profitability of Promotion Effort

Net Sales $$ =

Gross sales multiplied by the gross to

net margin

$ M

M

1

2

3

4

Activity Level

$ 100

$ 50

Unit activity cost

Profit

mROI =

50/100 = 50%

mROI (Incremental

return at a given

activity level)

5

Illustration

For Customer Effort Optimization, different methods can be used, depending on available data, analytical capabilities and time constraints

Workload build-up

Are resource levels in line

with income

expectations?

Which segments and

products justify coverage

financially?

Where to invest or divest?

What is the relation between effort and sales?

Which products or customer segments need a different effort level? What is optimal?

What will be the sales impact of effort re-allocation or the overall change of the effort level?

How big are different

customer groups?

What is a reasonable

degree of coverage?

How much time is needed

to have an impact?

Contribution

FTEs

Value

Segment

What resources are required by geographic area?

Which accounts / bricks are most profitable to cover?

Hint: considerations on geography should be made in all approaches

Reps’

number

Customers’

number

Affordable coverageDifferential resourcing/

Geographic modelSales response

Resource estimation

2 41 3

Approcci all’ottimizzazione del Customer EffortWorkload build-up

The workload build-up method is used to size sales forces for markets with undifferentiated customers or where little data is available. The method requires 4 steps (starting from the bottom):

Workload build-up method

Segment C

(1000 targets)

Segment A

(200 targets)

Segment B

(500 targets)

Key Segments

Total effort

Size in FTEs

Effort required for

each target in each segment

Maintain and grow key customers with 3

calls a month

Prospect MDs with 1 call a

month

• Assess effort (in number of calls/year) needed per each target in the different segments

• Identify key activities for each segment

• Discuss with brand directors / sales leadership

Maintain effort to mid value segments

with 2 calls a month

Calculate the total effort needed:– Number of targets per segment × effort

required per target

Calculate implied sales force size:– Total effort needed (in number of

calls/year) / annual call capacity per rep

~31.2k calls(200 x 36 + 500 x 24 + 1000 x 12 = 31,200 calls/year)

~20 RepsAnnual call capacity per rep:

8 calls/day × 200 working days/year = 1,600 calls/rep/year

Find the universe of the different customer segments for a product/product group

(36 calls/year) (24 calls/year) (12 calls/year)

Steps to follow Sample results

1

2

3

4

1

Approcci all’ottimizzazione del Customer EffortAffordable coverage

The affordable coverage method establishes the segment coverage strategy by determining the account call frequency that achieves a company’s target rate of return per call.

Affordable coverage method

• Calculate revenues per customer

• For each product, estimate total sales driven by the sales force (impactablesales = sales netted of the carry over)

• Allocate the impactable sales to customer segments, then to targets

Total Sales

Impactable sales

Target 1 Target 2 Target 3 Target 4 Target 5

Customer Segment A

Value per targetCost to Cover

Break even

Steps to follow

1 Calculate costs per customer (derived from workload build-up)

– Calculate cost per call (fully loaded rep cost/annual call capacity per rep)

– Multiply effort per target (calculated as in the workload build-up method) to the cost per call

2 Calculate implied sales force size– Cover all accounts above the

company’s target iROI

– Sum up the effort needed for all accounts covered

– Divide the total effort needed by the annual call capacity per rep

3

E.g. with a target iROI of 0% (break even), customers Q1 and Q2 will not be covered because they fall

below the target rate of return

Don’t CoverCover

Value per targetSegment A

50 52 53 53

2317

811 12 12

6

5

29

48 3424 21

18

15

9

7

44

3

3

3

2005A 2006B 2007F 2008F 2009F 2010F

Launch

Prod 2

LOE

Prod 1

Cost per call

Target

2

Approcci all’ottimizzazione del Customer EffortDifferential resourcing

The differential resourcing method, unlike the other methods, consists in a bottom-up approach where sales force deployment is decided before assessing the optimal size.

Differential resourcing method

Steps to follow

1 Choose the best footprint suitable

Assess accessibility and footprint feasibility of the bricks to cover

Remark: This step will be easily done with a map representation of covered/non covered bricks to better take into consideration geographical constraints

2 3• Assess which bricks should be covered

• Carry out a brick level analysis to determine the profitability of each brick

• Based on the bricks’ profitability, decide which ones should be covered

Remark: this analysis is similar to the affordable coverage, at the brick level

Calculate implied sales force size

Sum up resourcing levels (number of implied FTEs per brick) necessary to achieve the footprint in terms of:

– Number of reps needed

– Product emphasis for each rep

Brick ID Revenue (€)

Calls required

Total cost Estimatedprofitability (€)

Cover? FTEs

40549 23.5 60 12.0 11.5 Yes 0.060

40667 22.5 73 14.6 7.9 Yes 0.073

40668 39.4 226 45.2 -5.8 No 0

……

Illustration

Determined from market sales by brick and share assumptions calculated from the validated product forecast

Determined from the rep call capacity and fully-loaded cost

Based on pre-determined business rules based on ROI

Determined from the rep call capacity

1 23

Cover

Do not cover

3

Approcci all’ottimizzazione del Customer EffortSales response

The sales response method is used when the relationship between sales force investment and company sales can be estimated.

Sales Response method

Steps to follow

• Assess impact of sales force effort on revenues

• Build a statistical model using historical data to calculate the impact of promotional effort on sales

• Without historical data, the response curve can be obtained with benchmarks on another product, proxy data, team knowledge

1 Assess impact of sales force effort on costs

– Calculate the impact of each level of effort (FTE1) on costs, including fully loaded rep costs and marketing costs

2 Calculate implied sales force size

– Calculate the profit response to effort (sales – costs for the different effort levels)

– Identify the optimal size considering the effort level that maximizes profit (at the top of the curve)

3

Effort (FTEs)

Co

sts

Effort (FTEs)

Pro

fit Profit maximizing

area

Effort (FTEs1)

His

tori

cal S

ales

Sales response to effort Effort costs Profit response to effort

4

Il bilanciamento dell’indice di allineamento (NON del carico di lavoro) è una tecnica cruciale per l’ottimizzazione del ritorno

Territories should be designed to be well balanced according to 3 main dimensions:

Workload: visits to be delivered on the physicians in the territory

Sales potential: market potential

Travel efficiency: geographical dimension of the territory

Illustration

Workload > 50%

Means we want to focus more on the # physicians seen by each rep / visit

frequency

Potential >50%

Means we want to focus more on the market and/or the sales generated in each

territory

Alignment Index

Potential Index Workload Index

1-x%x%

Territories will be balanced and compared using an alignment index: optimal territories have an index value around 1 000, equal to 1 FTE

Sales effectiveness can be enhanced on the organizational & individual level - talent management is the critical link

17

Organizational

Excellence

Individual

Excellence

Strategy

Structure & resources

Processes

Support infrastructure

Talent & values

Knowledge

Role fit

Behaviors & critical moves

Explicit growth strategy

Redundancy/ role overlap

Cross-functional alignment &

collaboration

Faster & deeper analytic

decision support

Identify & disseminate top-

performer best practices

Identify & remove low-value

approaches

Individual development &

coaching plans

Typical areas for improvement Typical areas for improvement

Competency models

Recruiting

Performance management

Training & development

Talent

Management

Specific competency model,

well aligned with selling

process

Consistent links between

competency model, recruiting

& performance management

Typical areas for improvement

Il Playbook: uno strumento fondamentale per l’efficacia commercialeEsempio Selling Process

Analyze area: Develop customer

opportunity lists; gather information on

competitor/industry; maintain

[Company] product knowledge & sales

priorities

III. Customer Development

IV. Opportunity Development

I. Area Management

II. Customer Targeting

Identify decision makers

Identify stakeholders &

influencers

Identify customer needs

Review fit of [Company] offer

Negotiate & close agreement

Synchronize activities with Comm.

Force colleagues

Develop customer plan &

synchronize w. colleagues

Shape offer and value story

Follow-up on order and any customer

service issues

Coordinate with supply chain

Confirm product/solution availability

Maintain/update customer

information in CRM system

Track account performance

Assess competitor position

Understand attitudes vs.

[Company] and competitors

Research customer’s business &

success factors

Conduct post-call review

Adapt/configure sales collateral

Conduct customer feedback

discussion

Network and build relationships

Plan how to develop the opportunity

Reinforce overarching value and

benefit

Plan call/interaction

Execute call/interaction

Manage the seasonal calendar

Qualify Customers

(initial contact)

Consolidate & analyze customer

opportunity lists

Assess customer fit (validate

segmentation membership)

Rank order potential customers

(shortlist potential targets)

Select and prioritize customers

(target list)

Provide feedback to marketing

(campaigns etc.)

Host/participate in customer &

influencer events

Provide additional technical &

non-technical information

Confirm pricing and terms & conditions

Review and reconcile distributor stock

Provide general customer support

(product performance etc.)

KAM Base Training Modules

Il Playbook: uno strumento fondamentale per l’efficacia commercialeEsempio per Key Account Manager

Il Playbook: uno strumento fondamentale per l’efficacia commercialeEsempio Area Manager / Supervisor

20

Selecting

Coaching

Developing

Leading

Key relationshipsand networks

Opportunity maximization

Account planning discipline

Sales process facilitation

Localization

Cross-functional engagement

Resource allocation

Performance hunt

Motivating

Evaluating

Transformation

People

Manager

Build,

nurture

and

guide the

team

Customer

Manager

Strategize

and foster

customer

engagement

Business

Manager

Align and

steer

the

business

• Spend 50% of the week on in-field coaching (1 day per rep per month)

• Allocate the bulk of your coaching time to average performers (vs. top & bottom)

• Aside from in-field coaching, ensure that some time is allocated towards coaching on account planning and strategy

• For each rep maintain a “cheat sheet” with the key rep critical moves that you want to emphasize over the year – consistent with the objectives agreed during performance review

• Articulate your incremental coaching strategy to achieve this; recap before each field visit; update after each coaching session with a goal for the next

• Plan a specific goal for each coaching visit (e.g. rep masters “killer” closing questions, becomes more aware of body language, uses specific techniques to identify unexpressed client needs, etc.)

• Script the coaching discussion (opening, message(s), examples, exercises, closing/next steps); reflect on potential objections or concerns and plan how you will respond

• Ask reps to analyze their own performance before giving feedback

• When making critical observations, frame them in an emphatic way, using sentences like "when I was a rep, I also used to…until I found out..."

• Check rep's body language for signs of objection or disengagement and do something different to re-engage them

• Check that you are not taking up all the "air time"; use pauses and probing questions to allow a two-way dialog

Selecting

Coaching

Developing

Leading

Evaluating

Motivating

Il Playbook: uno strumento fondamentale per l’efficacia commercialeEsempio Area Manager / Supervisor

“We have run out of money, now we have to think”

W. Churchill