How life science companies can realize the value of omnichannel investments
How to realize omnichannel value?
Despite large investments in omnichannel capabilities, many life science companies have yet to see the results predicted in business cases. In this perspective, we describe how an integrated bundle of technological, commercial, and transformational capabilities combined with deliberate strategic choices will increase the odds of a successful and sustainable transformation and enable full omnichannel value realization.
Omnichannel is the new standard
Accelerated by the COVID-19 pandemic, it has been necessary for life science companies to interact with HCPs in new ways. Unlike the traditional approach where customer interactions were mainly face-to-face and product-centric, more and more HCPs are expecting engagement through digital channels, with personalized "on demand" content. Now, even as COVID-19 loosens its grip on most societies, virtual interactions, or a blend of virtual and in-person interactions remain a preference for HCPs. Studies show that HCPs value and expect content tailored to their needs and accessible where and when they prefer.
Asa result, omnichannel customer engagement (see Figure 1) has become the expectation of HCPs and represents a must-win battle for life science companies. Recognizing this shift of HCP preferences, many life science companies have invested significantly in technology.
However,despite large investments, many life science companies are struggling to driveany meaningful change in their engagement with customers. More than 70% of life science companies expressed that they have encountered challengesconcerning channel conflicts, and around 65% of HCPs feel that they havebeen “spammed” with digital content. Without a coordinated effort acrosschannels, HCPsare impacted by an overwhelming amount of non-personalized messages whichlikely causes unintended results.
In addition, it is our experience that life science companies are not realizing their expectations and business cases for their technology investments, because the organization has not adopted the technology. This is not just a change management issue, but also a matter of not having configured the commercial organization to leverage the technological capabilities.
Figure 1: Multichannel vs Omnichannel overview
Customer engagement in a multichannel setup is the traditional engagement where doctors, pharmacists, nurses, and others are impacted with non-personalized messages across a range of (uncoordinated) channels. Omnichannel customer engagement allows coordination across channels in coherent customer journeys where individual touchpoints depend on previous interactions to create personalized experiences.
Technology is not enough
Many life science companies have had their focus on developing technology-focused capabilities, such as marketing automation platforms and CRM applications, and much less on building a suitable operating model with supporting commercial capabilities and processes to leverage the technology.
However, technology alone is not enough. Technology should be accompanied by an integrated bundle of capabilities to realize its full value. Specifically, we believe that building an omnichannel customer engagement model requires three equally important layers of capabilities: Technological, commercial, and transformational capabilities (Figure 2).
Technological capabilities
At its core, omnichannel customer engagement requires a robust technology infrastructure that supports the integration and coordination of multiple channels, and enables the delivery of personalized, seamless customer experiences. While marketing automation platforms and CRM applications are essential, required technological capabilities go further and include data management, consent management, and data analytics. Overall, the omnichannel setup must be aligned with the organization’s other enterprise architecture and requires seamless integration into existing IT infrastructure.
Commercial capabilities
To put the technical infrastructure into effective use, commercial functions must develop capabilities to create and execute end-to-end omnichannel customer experiences. This starts with data-driven understanding of customer segments and microsegments, building on sound data collection and analytics. Moreover, cohesive brand and campaign strategies are a prerequisite for creating concrete, integrated customer journeys across channels.
Again, commercial capabilities and technological capabilities go hand in hand when programming campaign journeys in marketing automation platforms, supporting campaign execution, and continuously refining customer understanding as well as brand strategies through post-campaign analytics.
Transformational capabilities
Pursuing omnichannel capabilities entails fundamental adjustments to an organization’s ways of working that cannot be implemented overnight and, therefore, require well-planned and coordinated efforts. Transformation management, training, and support, as well as a comprehensive communication strategy to demonstrate value across the organization are essential for a successful and sustainable transition to the new omnichannel setup. Facilitating this change and moving the entire commercial organization in one direction is only possible with astute leadership.
In summary, rather than focusing in technological capabilities alone, life science companies must be prepared to build an integrated bundle of capabilities across three layers to reap the full value of their investments in omnichannel capabilities.
Omnichannel value realization requires tight integration of strategy, operating model, and leadership.
To realize the value of omnichannel investments, there is no one-size-fits-all solution. Instead, a multitude of factors such as organizational size and complexity, existing investments and platforms, and digital maturity must be taken into consideration, making each organization’s optimal setup unique. To solve this puzzle and layout a transformation roadmap for value realization, we recommend taking a step back and integrating choices across three dimensions: Strategy, operating model, and leadership.
All three dimensions are equally important to omnichannel value realization, and the value delivery chain is only as strong as its weakest link.
Figure 2: Omnichannel Capability Framework
Technological capabilities only constitute a subset of the capabilities required to transform the customer engagement model in life science companies, and with technological capabilities alone, companies will not experience the benefits. In addition, life science companies must also build commercial and transformational capabilities across the commercial organization.
Omnichannel strategy is about prioritizing which sources of value to focus on
The potential value of an omnichannel engagement model is a function of value drivers across three categories: Revenue uplift, reduced cost of sales, and reduced risk. In Figure 3, we have outlined twelve typical omnichannel value drivers which create value by impacting the frequency and nature of customer interactions, the processes for preparing and executing campaigns, and risk management practices. These value drivers can be further amplified through three categories of multipliers, defining the overall scope of the omnichannel engagement transformation. Here, the mechanics are intuitive: The larger the number of markets, customer types, and brands that are incorporated into an organization’s omnichannel engagement model, the greater its potential value.
Designing an effective omnichannel strategy starts with establishing a clear view on which value drivers and value multipliers an organization should pursue. Life science companies have different motivations for engaging with omnichannel, and hence, there is no one-size-fits-all.
While some are mainly focused on uplifting revenue, others may want to save costs. For some organizations, omnichannel represents an opportunity to establish a fully digital sales model, whereas others want to augment the existing sales force. Likewise, some brands might be at a lifecycle stage where pure digital communication is more suitable to cut costs, while others still demand mainly field force attention. As such, omnichannel engagement capabilities enable new ways to manage brand lifecycles effectively.
This means that there are no right or wrong omnichannel strategies per se, but transformation leaders must make strategic choices in a coherent and integrated manner.
By establishing a clear view of the overarching objectives and the value drivers required to achieve these, life science companies can identify the most impactful focus areas and make coherent strategic choices.
This enables the organization to test and learn as the transformation is rolled out, allocate resources more efficiently, and ultimately increase the odds of a successful omnichannel transformation that will realize value for the organization.
Figure 3: Omnichannel Value Realization Framework
Life science companies create value with omnichannel through a combination of uplifting revenue, reducing cost of sales, and reducing risks. The ultimate value it derives depends on the value multipliers, such as how many markets the engagement model is rolled out to, how many brands have adopted it, and how many customer types are impacted.
Cross-functional operating model aligned with strategy
To deliver on the strategy and the choice of value drivers and multipliers, life science companies must design and implement a suitable, supporting operating model. Importantly, the operating model must be cross-functional, spanning functions such as marketing, sales, medical, digital enablement, IT – potentially market access and patient engagement, and must be an integrated part of the company’s overall operating model
Hence, there is no such thing as a separate omnichannel operating model.
In our view, a sound operating model spans choices and decisions across several dimensions, including organization, people, technology, data, processes, and funding. For each of these dimensions, interdependencies exist, governance should be defined, and trade-off decisions must be made. In below example, we have outlined three typical operating model trade-offs.
Localization
Standardization
Global life science companies must navigate significant complexity. Local regulatory requirements as well as market-specific preferences often demand operating model localization. To meet local demands, organizations may choose to provide their affiliates with more autonomy. However, this may also result in the costly duplication of capabilities across affiliates and decreased ability to apply standardized solutions locally and collect homogenous customer data for analytics. Instead, centers of excellence could be an option to achieve greater depth of expertise.
High speed
Sustainability
Omnichannel customer engagement can be a strong competitive advantage in heavily contested markets. To get omnichannel capabilities up and running more quickly, partnering with external agencies might be a viable choice for some life science companies. However, this also results in significant costs and negligence of building internal capabilities.
Strict governance
Case-by-case decision-making
Once operating model choices have been made, a final question demands consideration: Will we allow exceptions? If so, under what circumstances? Communicating the answers to these questions upfront helps set expectations and demonstrate that there are unwavering answers to the requests that will without a doubt be raised.
Affiliate archetypes used to manage global complexity
Complexity increases as the specific answers to the trade-offs will likely differ across the organization, in particular across affiliates. For instance, large markets might be allowed more flexibility which comes with increased costs, whereas small markets should prioritize scalability to lower cost. This complexity can be managed by dividing affiliates into archetypical groups, and designing variations of the operating model for each archetype.
The choices for affiliate assignment to the archetypes have concrete implications for the transformation roadmap.
With increasing degree of customization, life science companies should expect higher investment needs and longer, more complex implementation timelines. An operating model design risk is that stakeholder management gets replaced by stakeholder accommodation, and that operating model choices get replaced by complex one-by-one solutions, diluting the entire business case for the transformation. Making operating model choices, therefore, should ideally happen with a focus on how each decision impacts the business case.
Figure 4: Operating Model Archetypes
The global operating model complexity that arises from local needs and compliance requirements is best managed by dividing affiliates into archetypes, which can then have different versions of the same operating model rolled out, each with a varying degree of local autonomy and influence. Strong top-down governance is required for the roll-out not to drown in political negotiations and business case-destroying local modifications.
Leadership as key enabler for omnichannel value realization
In addition to sound strategic choices and effective operating model design, the success of an omnichannel transformation crucially hinges on visionary leadership. We distinguish between two different, but equally important types of leadership: Executive leadership and transformation leadership.
Executive leadership enables transformation through allocation of resources and guidance and is responsible for establishing the foundation for a successful omnichannel transformation. Executives must equip the program leadership with a sufficiently strong mandate and governance framework to empower effective and agile decision-making. While more attention from senior leadership is required at the beginning when making strategic choices and developing the roadmap, regular check-ins along the way ensure that the transformation remains on track.
Transformation leadership, in contrast, is the driving force moving the organization from point A to point B. With increased focus on day-to-day progress, mid-level management is responsible for coordinating activities across workstreams, as well as change management and communication to the wider organization. Sharing success stories and making everyone understand the magnitude of the transformation is critical. While senior management is ultimately accountable for delivering the anticipated return on investment, program leaders are responsible for value realization and performance tracking throughout the transformation.
For an omnichannel transformation to be successful, it is essential that both executive leadership and transformational leadership are in place. Executive leaders provide the vision and strategic direction, while transformational leaders oversee the implementation.
Sequencing the transformation to increase the odds of success
Successful omnichannel transformations require careful planning, informed strategic choices, and strong leadership. It further requires navigating between moving too fast with too many things at once versus doing too little too late.
Although it is tempting to pursue a rapid transition to target state to try to maximize value in the short term, it is crucial to recognize that this also compounds the risk of a failed transformation. Pursuing too many drivers at once dilutes focus and resources, leading to a scattered approach that is unlikely to effectively release value to the organization. Ultimately, companies may struggle to deliver on their strategic goals. Our recommendation is to sequence the transformation into adoption waves, as shown in Figure 5. In this way, the end-state is gradually adopted across strategy, operating model, and leadership in a coordinated manner. This could mean a gradual expansion of value drivers in focus (strategy), gradual roll-out of matching capabilities (operating model), and gradually larger mandate and stronger governance (leadership). Value realization then follows investment scope, hence ensuring continuous return on investment.
Sequencing the transformation enables steady and orderly progress, allows for incorporating learnings along the way, and ultimately, increases the odds of a successful and sustainable transformation.
Figure 5: Operating Model Archetypes
The global operating model complexity that arises from local needs and compliance requirements is best managed by dividing affiliates into archetypes, which can then have different versions of the same operating model rolled out, each with a varying degree of local autonomy and influence. Strong top-down governance is required for the roll-out not to drown in political negotiations and business case-destroying local modifications.
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