Analytical Engine

Segmentation initiatives often fail, not because of their design, but because of their execution. In many cases, management is so dazzled by the promise of an elegant design that they neglect to focus on the hard work of actually solving a business problem. Our recent work with a global pharmaceutical shows how to avoid that problem by deploying a simple yet powerful “build/plan/execute/monitor” model. The success of the execution depends upon key metrics around targeting performance (time spent per customer), sales performance (average order size) and resource productivity (effort to conversion).

The global healthcare company relied on a specialized sales force to sell a particular high-end drug directly to consumers. Success depended on the sales force building strong customer relationships and customizing product offerings to each customer’s specific needs.

Step 1: Build a ready-to-use targeting tool
In this case our segmentation approach relied on classifying customers based on two key metrics: by1) customer potential, which reflects a customer’s overall appetite to consume the client’s product, and 2) by customer’s share of potential which indicates percentage of potential captured in terms of revenue dollars.
However, independent of the segmentation approach one follows, the key factor is to translate the approach to a ready-to-use targeting tool which gives sales force reps the flexibility to view the customer classification. (In this case, the customer classification could be viewed on a 2X2 matrix by various filters such as ”geography” and ”last order month.”)

Targeting Tool Overview

Step 2: Plan for the roll out
A solid pre-execution plan can ensure that there are no surprises during the execution phase. We created an exhaustive checklist of key tactical planning steps. Significantly, we also assigned ownership and timelines for each activity. Some of the key areas to focus on as one thinks about a successful execution are:

Step 3: Execute the roll-out
Execution generally tends to be the most arduous phase and requires close tracking and monitoring. In this case, ensuring a means of capturing regular feedback from the sales reps as they got into the targeting and sales process was a critical component of the execution phase. There are two key elements here:

Step 4: Analyze results
A deployment story is half baked if management is not able to assess the performance of the solution over time. Building the right measurement plan is a start, but real value only comes when the data is analyzed in ways that deliver insights that will inform management decisions.
A critical part of the feedback loop, apart from what is discussed in Step 3, also falls in the analysis phase: incorporating the learnings from the metrics into the segmentation algorithm. The metrics and numbers give the real picture of the sales force performance. Beyond that, it also speaks about the efficacy of the target list. Then, the idea is to make refinements to the segmentation algorithm based on the learnings from the pilot process.

Execution Results

In this engagement, our build/plan/execute/monitor approach, along with the buy-in and required compliance from the sponsor of the program,ensured a successful roll out of the solution. Our segmentation solution identified “high maintenance” customers who took approximately two hours of a rep’s time during a particular sales visit, but also generated enough business (up to five products per order) to justify the extra attention . We also helped the sales force reduce the time and effort they spent with some low-potential customers and refocused efforts on the tele-sales channel which cost less and required only about 20 minutes of phone conversation to convert customers. That initiative freed up account managers to focus instead on high potential, low share-of-wallet customers.