To date, technology investments have been focused on ERP software, supply chain improvement, security infrastructure, and CRM platforms. Gartner forecasts that 2015 will be an even better year for IT vendors, with companies spending $3.9 trillion. That will represent a 3.7 percent gain over 2014, if the forecast turns out to be accurate. But where will that increased spending be focused. I’ve read several articles that continue to point to high investment dollars being allocated to CRM projects.
However, when evaluating the pharmaceutical industry I have to wonder if CRM is becoming irrelevant. 
The Changing Sales Model
The state of pharmaceutical sales is influx. The instability in the pharmaceutical space has caused companies to make cuts, and sales reps have been greatly impacted. Reports from SDI Health indicate that the number of sales representatives in the United States has decreased from a high of 101,818 to about 81,780, representing a 20% decline. Equally important is that the cost per engagement for sales calls remains high, ranging from $142 to nearly $600 per call.
Some pharmaceutical companies are moving from a brand-centric to an HPC-centric sales model. Reps are covering more territory and carrying more products. They have to have a tremendous understanding of the service and value of each product.
We’re also seeing the emergence of the hybrid sales model where representatives have defined geographic territories and specific sets of target HCPs, just like typical field representatives. But they reach their physicians through a variety of channels like face-to-face, phone, and video and at times, like work day, after hours, weekends, which are preferred and most convenient for each physician.
But companies have found that expecting sales reps do all things regarding communications is high risk for the business.
The biggest trend appears to be the elimination of the sales representative altogether. Some companies are outsourcing their sales efforts to wholesalers like AmerisourceBergen. This is allowing pharma to focus entirely on R&D and innovation.
Demand for pharmaceutical sales representatives will likely continue to shrink in the near future, driven down by industry mergers; the expiration of blockbuster drug patents; and a shift toward flexible, regional, specialized sales teams, experts say. This trend will only be exacerbated as government payers take more control.
Current Investment vs. Future Investment
Companies invest hundreds of thousands of dollars into CRM systems. CRM can run, on average, $3,000 per seat per year, if not or more. And while a worthy investment, CRM has its share of challenges. The CRM process is driven by human input. CRM is a pull system that requires sales reps to diligently enter information, which is often an interpretation of interaction. CRM is starting to have less tribal knowledge because of the declining sales force. It’s a tool meant for sales to drive the sales process.
But as we all know, the consumer now drives the sales process. This is most evident in the pharmaceutical industry. Pharma reps don’t sell, they influence, and it’s very difficult to measure influence with a tool like CRM. With the emergence of technology like marketing automation, CPQ, MDM, and SRM, the consumer controls the sales process. Unlike the pull process required of CRM, these tools push the behavior, interactions, and interests of the consumer to the sales organization. Sales reps used to be tasked with being the data people; “find out this info about your territory”. These consumer-centric tools now deliver that information. They allow businesses to measure the influence of each individual asset against each individual at different stages of the person’s journey.
While CRM provides insight into the behavior of the sales representative, customer experience technology provides insight into the behavior of the consumer. CRM tools allow sales reps to schedule future calls and details. CX technology allows companies to deliver personalized communications containing information relevant to the consumer based on their behavior and interests. CRM is sales-centric, CX technology is, well, customer-centric.
When evaluating the movement of the industry, and the interests and behaviors of HCPs, patients, and payers, it appears companies are overbuilding their CRM systems. So much attention has been placed on the CRM platform, and not enough has been focused on those efforts meant to improve the customer experience. Perhaps it’s not that CRM is going away altogether, but the investments, both monetary and resource, should be allocated to other customer experience systems that will deliver more of a return to the consumer and the business.
Do you agree or disagree, is CRM becoming a thing of the past?