Don’t you know there’s a squeeze on?!
Over the last couple of months, two themes have emerged in my conversations with people in the medical education enterprise. Firstly, the apparently increasing difficulty of medical education companies to recruit experienced editorial and programme management staff. And, secondly, the challenge on most companies in the industry to maintain their prices and defend their profit margins.
These two issues seem intuitively to be in conflict. Medical education companies need more staff, so surely business is good. However, they are feeling a significant squeeze on their profits. On deeper investigation the two issues come together in a simple and illuminating way. Let’s explore further.
Can’t buy me people
A quick review through Google of the number of medical communications vacancies in Europe throws up an amazing number – 500. No doubt some of these will be duplicates. Nevertheless, it points to a real problem in finding the people to do the work. The economics of this situation is simple, you have to pay more for the right people, it’s a seller’s market. So, the price of good people inevitably goes up.
Is this an explanation for the challenge to the profit margin? Perhaps, and it is certainly an explanation used by some managers to explain the situation. However, it doesn’t provide a full explanation, actually it doesn’t come close to a full explanation. For example, if people cost more why don’t the medical education companies simply pass on the extra expense to their clients? They don’t and we need to look deeper, and before we do so let’s spend a little longer on the lack of experienced talent.
“…if people cost more why don’t the medical education companies simply pass on the extra expense to their clients?”
The ocean is full of fishing boats
Students of management theory will know about the “Blue Ocean” approach. Don’t swim with everyone else and where the sharks are, find yourself a section of blue ocean and you’ll swim and fare better. Surely the EU medical communications recruitment field is a crowded ocean, full of recruitment agencies claiming they can do better than the last one and then going to fish in the same part of the ocean as everyone else. Those medical communications organisations that think the answer is to employ more recruitment agencies and to have rolling recruitment miss the point. If there aren’t enough people it doesn’t matter how hard you try, unless you pay the highest salaries and offer the greatest benefits, and not surprisingly companies seem reluctant to publicly make this claim.
Grow your own
An obvious alternative is to build your own market, find people that haven’t been in medical communications before and train them. When I worked for a medical communications company some years ago we were faced with this same issue, a growing business and a difficulty in finding good editorial people. We decided to “Grow our own”. There were some significant challenges to the programme, namely that it took time, so it wasn’t an immediate solution and it cost money, obviously both true. However, the argument for the training programme won because there were no alternatives. I now know of a couple of companies that take this approach, though I hear that their enthusiasm for the expense is not great. Nevertheless, I am yet to see another alternative that works. And, by the way, the cost is less than might be expected as you save on agency fees, you start people on trainee salaries, and you generate some loyalty, a rather scarce commodity when it’s a seller’s market.
One of the most regular comments I hear from medical communications companies, large and small, is that their clients are “Squeezing” them. Procurement, transparency, competitive RFPs and online auctions are all conspiring to push prices down. One hears a tone of “It’s not fair”. Well, it is fair, and it is right. Simply, the client knows very clearly that they are dealing with a commodity and they have the confidence to push on prices and the commodity suppliers have no response other than to comply. How do they know? Try this simple test. Write down what is special about your medical communications agency or the agency you employ. I am sure you will write down the key words of scientific knowledge, programme management (ability to get things done), creativity, full service, whatever that is, and great people. The great people comment is very nice. It is reassuring to know that managers like their staff. However, everyone says this, so it’s hardly a selling point. I know specific therapy area experience counts, though it’s hardly unique and skills in areas such as e-learning are mentioned, and they are equally common. So, all the “Special” things about your agency are actually remarkably common.
“So, all the “Special” things about your agency are actually remarkably common.”
The clients see and hear this type of “Differentiation” every day and realised a long time ago that most medical communication agencies swim in the same ocean and their services are commoditised. As a brief aside, I am fascinated by the attempts by some medical communication agencies to “Brand” their commodity services. Some wonderfully creative ideas have been used. However, unless, as you will see below, you can actually make a serious claim with serious evidence that differentiates your service such as ‘it is more effective than comparative services’ you are merely spending time putting a name on a commodity, and that doesn’t work.
Milk the system
We all see commodities every day and we see branded commodities. Ask the managers at Hovis (I know some of them), or Shell, or any of the many companies that sell branded commodities and ask how much of a price differential they can charge over their competitors. The answer is usually very little or zero. Why, because there is no fundamental difference in the product. It shouldn’t be any different with medical communications, and it isn’t.
There is a good example of a branded commodity that charges more than the non-branded commodities and we can use this example to illuminate a little of what needs to be done by agencies. In the UK there is a brand of milk called Cravendale. Clearly, milk is milk, and this is a branded commodity. How can they charge more for their brand of a commodity? The answer is simple, there is a difference, Cravendale is filtered and lasts longer, a few days longer, than “Ordinary” milk. Yes, I am a Cravendale user!
It has taken the company that owns Cravendale around 5 years to establish the brand and create the price differential. No doubt they will tell you it wasn’t easy. Take a look at their web site and you will see an interview with the head of marketing. This lady is smart, she talks about the need to educate the customer, explain the differences between products and to do this over a long and sustained campaign. This is a great example of a multi-year plan to invest in the creation of a “Blue ocean” position. Is there a senior manager in medical communications doing this, presenting this type of plan to their bosses? I sincerely hope so.
It’s never easy
I don’t claim it is easy to find the differentiation, the something that can help you create your own Cravendale, your own “Blue ocean” position. Then again, the rewards are great, and the effort needed to reap those rewards is great too. The alternatives are not attractive so it is certainly worth the effort.
“More branded commodities are not the answer, real differences are the answer.”
Some theoretically simple, though sometimes painful, actions are being seen, for example, consolidation to reduce costs, redundancies, outsourcing of certain non-core services. I certainly understand the value of taking these actions, they can address the expense / margin issue for a while. They are not a long-term solution.
The customer and market focused leaders and senior managers will be challenging their organisations to find the differentiation. Is it in a new type of service, is it in new markets, is it in providing services differently, in a more attractive way, is it in a consolidation of services? It may be some or all of the above, the main point being that it has to have a real and valued benefit to the customer, and it may take some time to get the message home. More branded commodities are not the answer, real differences are the answer.
Power to the people
In this author’s opinion, there is a truth about the marketing services business that is brought into sharp relief by the discussion above. It is a people and relationship business. Simply, it is people that win and keep business. This makes the discussion about the lack of talented people and the need for differentiation come together with a focus on the people. It strengthens the argument that one way forward is to brand your people as different, not your commodity services. Remembering that the difference has to have real value to the client, how can you brand your people with a meaningful differentiator?
Perhaps you can train them better than any other agency, sponsor managers MBA’s, ensure editorial people are the best trained, send them on courses regularly to grow their skills in areas such as market access and health economics, be leaders of societies, make your day to day contacts with clients with your senior experienced people, offer meaningful sabbaticals, organise internships at client companies, and train staff on customer interaction and gain certification in Investors in People, and then market this to your customers and convince them that it means they get better service, more effective service that impacts their market, better strategic interventions and an edge over their competitors. How much would they pay for this? If they knew it to be true, a great deal.
The tyranny of “Or”
This isn’t an either / or option. Don’t look for the new product or service and forget the people. Invest in the most precious thing you have in the business, the people, make them definably better, and more valuable to your customers, and let your customers know. The people will help you find the “Blue ocean” and to establish the differentiation you need. At a time when you are feeling the “Squeeze” it takes a brave person to argue for investment in the medium term. The people that do will be seen as the visionaries and strategic leaders, not merely as the temporary administrators of the industry.
About the author:
Chris Stevenson is a managing partner at CSC Solutions, a strategic consultancy offering insight in marketing and communications to the pharmaceutical and medical communications industries. CSC Solutions specialises in the design, moderation and execution of communication plans, strategic marketing advisory boards, and CME strategic consulting.
+44 (0) 1625 826906.
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