Salesforce Business Planning in the year 2000 and beyond

"Failure to plan is a plan to fail". Today, this maxim is more apposite than ever.

When in 1983 I started my career as a Medical Representative with a large American pharmaceutical company, resources were plentiful. Apparently, large share of voice automatically implied success which was ostensibly measured in sales and volume turnover. Profit and Return on Investment were almost incidental, left to the accountants who it seemed to me presented such 'secrets' to board members in a large, darkened room on the top floor of a tall building.

Then, as now, it was universally recognised that, in order to maximise sales, it was necessary to formulate a business plan.
Initially, this manifested itself in simple call rate objectives and sales targets being set by sales managers. As the industry became more sophisticated, doctor coverage and call frequency targets were added to the mix.

Representatives were expected to plan ahead and demonstrate how they intended to achieve these activity and sales targets. Salesforce planning further evolved to encompass what is often called P.E.R. (Potential/Effort/Results) analysis (a system I refer to as S.A.P. - Sales/Activity/Potential - where the aim is to concentrate activity in areas of high potential to help maximise sales opportunities), and SWOT analysis.

However, practically none of these business planning processes (and I use the word "process" with caution) include return on investment calculations or "What-if" scenarios.

Furthermore, all of these business planning processes were implemented at a time of relative stability in the NHS. We are all well-informed about the major changes which have been effecting the NHS over the last two to three years, and which will continue to do so for the foreseeable future:

• Generic prescribing
• Need for Pharmacoeconomic support
• Collective buying (GPs and Hospitals)
• PCGs / PCTs

• treatment protocols

• specialised sales teams
• focused marketing activity
• added-value services

6. Improvements in Information technology

The process of using the past to forecast the future is no longer valid. The market is evolving more rapidly than ever, with a constantly increasing customer and influencer base. Because of the number and complexity of these changes, different parts of the country will be affected at different rates, at different times, and to different extents. Regional differences will become increasingly significant, and companies that can identify and capitalise on these differences will succeed. The nationally constructed plan, with national objectives imposed on the regions, is no longer appropriate.

It is important to recognise that there are two apparently opposite forces at work. There is the strategic global view which sees the international market in terms of the U.S.A., Japan, Europe, and the rest of the world. As companies merge and become more global, this view is strengthening.

However, there is also the growing realisation that, within these markets, there are local differences. For example, Europe may be thought of as a single market, but the differences in prescribing behaviour between countries are marked. This diversity is growing within countries as governments introduce market forces to increase the rate of change in indigenous health services. Customers are beginning to use their new-found autonomy in significantly different ways.

Regional tactical planning is becoming a vital tool in maximising salesforce efficiency and hence returns on one of the company's largest investments, the salesforce. Regional tactical planning can exploit the different opportunities, and minimise the different threats, which exist across the country. It does this by taking into account the differences in the local operating environments.

For example, a protocol for the treatment of asthma in Devon will have substantially more commercial implications for the business in the South Western region, than it will in the Northern region. Therefore, the contents of any business plans for these two regions should, by necessity, be different.

The problem is finding an appropriate Regional Business Planning process which combines the global strategic objectives with the tactical micro-marketing detail. To my knowledge, there are only a handful of processes which successfully reconcile these strategic and tactical objectives.

It must be recognised that there must be sufficient flexibility within the strategy to allow operating units to identify and deploy tactics. If not, the planning process will become a paper exercise.

Simply replicating old, national planning processes at a regional level, e.g. traditional SWOT analyses, is not particularly helpful. They do not allow sufficient scope for regional variation in the operating environment and resource deployment. Furthermore, in the case of SWOT analysis, people nearly always treat the four boxes - Strengths, Weaknesses, Opportunities, and Threats, in isolation. Consequently, there is little relationship between Opportunities and Threats, which should be of an environmental nature, and company Strengths and Weaknesses.

The resulting plan, therefore, risks being far less rational, logical and consistent than it should be.

There are other, generalised, theoretical tools which Consultants often promote including Porter's Industry and Value Chain analyses, and McKinsey's directional policy matrix and 7-S analysis models. However, the difficulty is often applying the theory to practice in a co-ordinated and logical way. To state the obvious, the key is to arrive at an integrated salesforce business planning process, which includes some of the new models and ways of thinking, but which is capable of producing a practical and usable output. Sadly all too often this is not the case.

However, there exist business planning processes which can be adapted for the pharmaceutical industry, and which are capable of producing practical, regional return on investment scenarios.

In general, processes should start with a situational analysis to build a picture of the current regional operating environment.

Expectations about the future are then overlaid on this picture in order to develop a view of any forthcoming market opportunities and risks in the region. Using this analysis, a list of tasks which need to be done in order to take advantage of the available opportunities, or minimise the likely risks, can be constructed, (often referred to as Sources of Competitive Advantage).

Comparison with the competition reveals company advantages and disadvantages, and hence a series of regional objectives and action plans which need to be achieved in order to maximise commercial return on investment. We refer to the central tool of the process as MORCAD Analysis, (Market Opportunities / Risks, Company Advantages / Disadvantages).

In order to also show regional profitability and to test "What-if" scenarios, the business planning process must explicitly allow rational sales forecasting based on the future, local market expectations, and implicitly link these forecasts with action plans and resource requirements or expenditure. Most business planning processes do not adequately integrate sales forecasting with the other sections of this process.

Although initially seeming complex, this process is in fact straightforward. It simply requires practice and a change in mind-set.

Successful implementation of such devolved, regional business planning processes will, in general, depend upon:

• The level of "Empowerment" - the organisation's desire to devolve accountability downwards
  Don't bother with devolved planning if managers do not have the flexibility to manage and change resource allocation !
• The level of integration with corporate planning processes and objectives
  Good integration will ensure that regional plans, when amalgamated, will achieve national requirements.
• Allowing "TIME"
  Managing the pace of transition from the traditional Area Manager, who is good at training and motivating, to the Regional Business Manager, who is a stronger analyst and more commercially aware, will take time.
• Being practical
  The use of experienced, practical (rather than theoretical) consultants/trainers to produce "live", realistic outputs from workshops is important to cement the processes in place.
• Encouraging over-achievement of contribution/profit through incentive schemes
  On the basis that "what gets measured, gets done", if maximising return on investment is of primary importance then this should be explicitly monitored, and over-achievement rewarded.

I believe that this is the way forward for successful salesforce business planning.

In an article which I wrote and was published in the Pharmaceutical Times in 1996 I forecast that by the year 2000 in the UK, regions will have started to become profit or contribution centres, responsible for constructing and implementing a regional business plan which will differ significantly, maybe strategically and certainly tactically, from other regions. In reality this meant different regions promoting different products in different ways and with different priorities assigned to them, depending upon the local market place's opportunities and threats.

In several proactive organisations this has now become a reality and we are beginning to witness the birth of true regional marketing.

This is already quite advanced in the USA, although critics would argue that the UK is too small to profitably undergo similar changes. In order to increase efficiency, the UK needs to continue to go through this transition. However, the reality is that UK regional business units may still continue to require a central Marketing team to produce top-line, promotional materials and give strategic direction, rather than having regional product managers performing these tasks as they do in the USA. The difference will be that promotional materials will be flexible enough to be adapted for regional variations and will have been designed with significantly more salesforce input, whilst production economies of scale will be maintained.

The implications of all of these changes for good team-working, the industry's traditional marketing and sales powerbases, and hence career progression, are considerable, but therein lies another story...

Author: Julian Ashley

About the author: Having worked in pharmaceutical sales and marketing management for 14 years, Julian Ashley is now managing partner of Jenzyme Consulting Associates, a management consultancy specialising in salesforce business planning processes, supporting software analysis tools, and sales management training.