Rushing to sales: kiss of death or golden jackpot?
Jean?Louis Roux Dit Buisson
Jean-Louis Roux Dit Buisson discusses the six most common mistakes pharma makes when it comes to creating and implementing a sales strategy.
“Plans are unimportant. Planning is essential.”
It is early June and the CEO calls me in as she wants help in developing sales for her newly produced “0 series” medical device prototype. She counts on the properties of the widget to break even in six months and prepares to hire an international sales force from grass-roots, which will start promoting the product on a large scale to a population of surgeons by early September, the high season for the indication.
It is Mid March, and a young entrepreneur wishes to discuss his commercial plans. He and his team have developed some IT maverick application and they want to rush samples of the programs to most of the smaller companies in the sector, especially the ones which they diagnosed as being in difficult competitive situations.
This tendency to rush to the market spells for “caution: danger”. Boards are ill advised in our judgment when they incite entrepreneurs to rush to markets with half thought-out strategies.
In the above examples, by following the traditional going-to-market strategy that the leaders in the sector have imposed over the years, the CEO plays by rules that she does not master, and for which she is ill-equipped.
By being altruistic, the young entrepreneur forgets that there are some good reasons why companies fail, and that his attempt to rescue ailing ventures without diagnosing the reasons that lead them to their current situation might very well attract his reputation, his resources, staff and morale into the dark-hole created by others.
“…a successful sales penetration strategy ought to be carefully planned…”
These two examples highlight the fact that a successful sales penetration strategy ought to be carefully planned, taking into account the strengths and weaknesses of the new comer vis-a-vis the existing competition, and more importantly, allocating the required amount of resources to guarantee thorough execution.
Most executives, be it in smaller or larger organizations, fail to properly prepare their top-line growth decision making process. The common mistakes that we see over and over again are as following:
1. Disregard for planning
Planning is a highly dynamic exercise and, when executed in the proper mind frame, leads to astonishing outcomes. Yet in many companies, planning is confused with budgeting, which in our eyes is a consequence of upstream decision-making.
2. Corporate habits
Not every competitive situation falls in the market mould and not every company is in the situation where it could play according to the market rules. Yet how many time have you heard “paralysis by analysis” or “that’s the way we’ve always done it here”?
3. Failing to understand the dynamics of stakeholders
By rushing to the market without performing a 360 on stakeholders you implicitly admit that there is no other way to fulfil the needs of the various stakeholders than by mimicking what the leaders are doing.
That wisdom forgets that you are smaller, less funded, with no support from the establishment that your proposition could endanger. There is some arrogance in this attitude from a newcomer.
Once you enter a segment, you shake the habits of the current players. You might especially shake the way they generate their income, or their profit. This might be better, and you should make sure that it shall not be for the worse.
“People buy from leaders, and thus newcomers have to define the pond in which they will be the big fish…”
We once had an application that was outperforming the existing ones in terms of performance, time and overall costs. However, it never went online at some clients’ facilities, because by being faster and better, it meant that the customer would have had to change the way shifts were organized, which was out of the question. We did not lose the market as we outsourced for them the work to be done, which provided them with additional potential for savings.
People buy from leaders, and thus newcomers have to define the pond in which they will be the big fish, because being the small fish in the large pond usually ends-up being the fodder for the predator.
The blockbuster mantra is starting to erode under the repeated ponds of “personalized medicine”. In fact, personalized medicine is not much more than defining the population which is most likely to respond to your treatment more positively than to any other. If you are in this situation, then you own that population and you are the leader on that segment of the market. Though you might only make 5% market share of the say oncology market, these 5% cost you much less to maintain than would an outright positioning in the global market without focus.
4. Confusing speed and hastiness
Being first to market, with a really new solution and the money to promote it, usually ends up in owning a comfortable market share. However, who remembers Tagamet? Tagamet was first on the market of the peptic ulcer, until three years later Glaxo’s Azantac took over the leadership position and finally absorbed SmithKline Beecham.
Careful planning ought to provide you with insights on defining the pond where you will be the big fish (leader) e.g. where the customer benefits that you propose will address the population most likely to respond positively, and where, with your limited means, you will be able to build trust and confidence over time and repeated satisfactory buying experience from your customers.
“The newcomer is always at a disadvantage when it does not recognize the power of the existing players…”
5. Not understanding what you – really should – sell
Inventors tend to think that their widget is so great that demand for it should magically grow and sustain itself. Unfortunately, the odds are that targeted segments are more sophisticated than foreseen and that what will really sell is a “total product” which will encompass your invention, plus additional products / services / options that you have to package around it so that the experience with the solution you propose is most gratifying.
“If you don’t know what the customer benefit is, the whole thing is a waste of time.”
B. Weiss, Entrepreneur.
Otherwise, the competing existing offers are fairly good, the reps are nice and know good restaurants around the place, and most importantly your “prospects” don’t have to face switching costs and risks.
6. Not budgeting time and effort
Few new products enter markets where there is no substitution, be it direct or indirect. Competition has been here for long, is entrenched, seen as leader and unless there is a huge lack of empathy from the leader to its customers, the barriers to change will be high to overcome for the clients as habits tend to rule operations.
The newcomer is always at a disadvantage when it does not recognize the power of the existing players, and wants to capture market share rapidly based on its start-up communication budget and using the same promotional tools as the leaders. They will run out of breath before they have reached the first hurdle. Investors must make sure that sufficient funds are available, and more.
Even when your pond has been carefully defined and selected, your customers need time to understand your proposition, test it, and accept it. Most corporate decisions nowadays involve a number of decision makers and numerous levels of hierarchy before your offer is approved. Your conversion rate from prospect to customer will most certainly be a portion of what you hope for, and this even if you have properly planned and executed.
Not budgeting the time, effort, resources in money and staff hours to get to the signature is a common and dangerous habit of enthusiastic entrepreneurs.
Failing to plan is planning to fail, and as J. Watson the former IBM CEO used to say “Think”.
About the author:
Jean-Louis Roux Dit Buisson is a Professor of Entrepreneurship at the Grenoble Management School in France. He is founder of Foro Ventures, a company dedicated to provide assistance and interim management for top-line growth projects and turn-arounds.
Jean-Louis is specialized in high technology sectors (such as Bio Pharma, Medtech). He has an MSc from MIT and an MBA from INSEAD and can be reached at firstname.lastname@example.org.
How can pharma plan a successful sales strategy?