It Takes a Real Value Proposition to Build Brand Loyalty

It is paramount that pharmaceutical companies discover ways to build consumer loyalty for their brands, but creative marketing alone may not be enough in today’s market. Loyalty from both the physician and patient customer must be earned, based on hard evidence and the value proposition the brand provides.
By Bill Ott, MBA, and Rita E. Numerof, PhD

SIGNIFICANT EFFORT AND MONEY GO INTO building a brand identity and establishing sustainable preference for it. When managed successfully, the business rewards are certainly worth it. Increasingly, however, the tried and true approaches to building a brand are falling short. An increasingly complex and challenging healthcare market environment has raised the bar for what it takes to earn brand loyalty.

A GATHERING STORM
Across the world, payers are clamping down on healthcare costs by saying “no” to new products, line extensions, and of course, price increases. Reacting to the prospect of exponentially increasing financial liabilities, payors of all types are demanding hard, comparative clinical and health economic data to justify any change with bottom line impact. Going forward, you should expect that brand introductions and growth will depend on country-by-country, payer-by-payer, and patient-by-patient decisions to pursue a treatment or not, or to choose a newer, more expensive treatment versus an older, less expensive one. Your case for economic and clinical value will be the lynch pin for your brand success.

AN UNRAVELING BRAND MANAGEMENT MODEL
Many successful pharmaceutical and medical device companies have carved out significant market shares and built their reputations on innovation and clinical superiority. Once breakthrough innovation has created new product and market categories, the primary competitive battleground will evolve to sustain relationships with physicians— utilizing marketing practices that have provoked questions about the integrity of both industry and the physicians they are wooing. Commercial models that have been refined to build and keep very tight relationships with key physician “customers” are now rapidly becoming obsolete.

The main reason for this is because even though physician loyalty may still be necessary for success, it is no longer sufficient. Payers have assumed control over access to the playing field. Their decisions are increasingly governed by tangible benefits in superior clinical outcomes and/or lower costs of treatment. As pressure for pricing transparency grows and the patient consumer assumes a greater role in choosing providers and treatments, the benefit/ cost case for brands becomes more salient at the patient level as well. A brand strategy that does not have economic and clinical evidence as its centerpiece is fatally flawed in a world increasingly focused on economic–clinical trade-offs.

REDEFINING YOUR PHYSICIAN CUSTOMER
There is no question that healthcare practitioners are the essential link between patient healthcare needs and the products that meet those needs. In recognition of this critical role, the traditional brand commercial model has been focused on the physician. But calling the physician a “customer” has led to a lot of misdirected (and expensive) effort to market brands. Large sales rep forces have been built to deliver new product information in an attempt to influence physician “purchase” behavior on the assumption that this is what the physician “customer” needs.

In fact, the physician is more of a collaborative partner than a customer. The real needs of healthcare practitioners are to achieve better health outcomes for their patients, and, to do so most efficiently in an economic environment where time is money. Presuming the value proposition of any brand starts with an impact on health outcomes, brand management should be forging partnerships with health practitioners that are defined by achieving measurable health outcome improvements.

While this may seem obvious, it is not apparent in most industry–physician interactions today. These partners are interested in how to better diagnose unique patient conditions, how to determine the course of treatment to achieve an improved health outcome, and how to guide a patient to manage their health. They do not need brand information dumps that lack any broader context to overall success in disease state management.

Most contemporary continuing medical education (CME) isn’t much better than the sales rep–physician interaction. Very little of it is supported by a base of evidence for an improved health outcome. As a result, most physicians are very cautious and guarded in their implementation of purported new science that is supposed to be helping people get better more so than existing products.

This suggests some key differences for many of the commercial models currently being deployed:

• It requires hard clinical evidence of improved health outcomes in comparison to existing products
• It suggests there is a service value beyond the product in helping physicians utilize the brand in the broader context of diagnoses and treatments
• It requires sales reps with the clinical knowledge and sophistication to engage physicians in dialogue and deliver on a broader value proposition that meets the shared objective of improving patient health outcomes

For your collaborative physician partner to see value in your brand, you must provide evidence-based clinical and economic value with your product and service value in how you help your “partner” use your product—all to achieve your shared objective of improving health outcomes for patients.

LOYALTY OF THE PATIENT/PAYER CUSTOMER
Competing on the basis of differentiated clinical and economic value propositions is also the key to building brand loyalty with the patient/payer customer. The value proposition to both patient and payer must be considered because of the unique complexity of the healthcare purchase. Most customers consider product value and price together in making purchasing decisions, but with healthcare products, there is a separation of the two decision variables. The consumer patient is interested in the clinical value in addressing whatever ails them. To the extent that cost is covered by third-party insurance, their payer is the decision maker considering if the healthcare solution is worth the money.

Understanding this separation of buying considerations presents some opportunities to position brands more strongly with each. Consider a truly patient-centered perspective. The reality is that people don’t want to have health problems and would prefer to do anything necessary before going to a hospital or getting an operation. The unmet clinical value in this natural human scenario is in moving earlier into a care continuum and addressing health needs before more drastic interventions are required. While this value proposition probably isn’t possible for most existing brands, it should be foremost in the consideration of creating new healthcare solution brands.

It is also helpful to take a cynical view of payers in conceptualizing a value proposition. In its simplest form, their economic model is to not pay for anything they don’t have to. Evidence of clinical value won’t build loyalty with this important financial customer. There must be a supportable economic argument. The question payers typically pose is “what am I paying for?” However, the real question should be “can I say no?” without incurring greater costs downstream.

ALL-TIME SKEPTICISM IS A CLEAR WARNING SIGN
Pharmaceutical and medical device companies are under siege. Government investigations of business practices are increasing in frequency and broadening their probes. Media are finding a plethora of juicy stories questioning the integrity of industry. Considering that your company is devoted to developing better healthcare solutions for people, this comes as quite a shock.

The purported objective of these critics is public interest in looking out for the best healthcare solutions for people. The real objective is about money. The overall cost of healthcare has become unsupportable and the absence of both clinical and economic value propositions is justifiably attracting increasing criticism and skepticism. In the absence of real data supporting the fact that our increasing expenditure is truly resulting in improved health outcomes, the void can only be filled with negative assumptions by people under economic pressure.

This is the market environment reality within which you are trying to build brand loyalty. Substantive, concrete, evidence-supported clinical and economic value propositions are the only thing that will create positive results.

ARE YOU SERIOUS?
If you’re serious about building brand loyalty in this market environment, it will take far more than simple tweaks to marketing tactics. An emphasis on a differentiated clinical and economic value proposition will need to be embedded into all of the critical business decision-making processes that go into creating and sustaining a competitive brand.

Strategic Portfolio Management. Brand identity starts in the context of the role of products in a care continuum that results in an improved health outcome. Diabetes, obesity, and degenerative arthritis are just some examples of pervasive health conditions that are growing despite current care efforts, which suggests that current healthcare solutions are not providing the outcomes you would expect for the expenditures being made. What physicians, patients, and payers would all value are new products integrated in new care approaches that result in reversing these trends. Decisions about new brands must be based on a clinical and economic value proposition in this context.

Clinical Research. The evidence needed to support a differentiated clinical and economic value proposition goes well beyond the question of “does it work?” Clinical strategy and studies and their associated costs all need to be realistic and aligned with such a value proposition. A real value proposition in a science such as medicine is evidence-based. Anything lacking evidence is just marketing smoke and open to the skepticism of critics of the industry.

Market Research and Segmentation. People are different and so are their health needs. Even in a specific disease state, there will be a range of different clinical and economic value propositions. More sophisticated market segmentation will be required to identify and provide meaningful value propositions to narrower slices of the patient population.

Sales Rep Model. Evidence-based value propositions that achieve improved health outcomes when applied in the context of new care approaches require substantive dialogue with healthcare practitioners. There was a time when sales reps were clinicians themselves, and were thus fully capable of such dialogues with practicing clinicians. This is generally not true today, as companies have loosened clinical knowledge requirements to expand staff and compete based on the volume of physician calls, rather than the quality of those calls.

If you’re serious about value propositions that support brand loyalty you must:

• Ensure that your sales reps have the knowledge base to discuss care approaches with clinicians that are supported by outcomes data
• Develop competencies of your sales reps to engage in more substantive, value-added dialogue with clinicians
• Understand that when your reps provide more value in helping patients, practitioners will spend more time with them to get that help

DTC Advertising. Critics of this marketing practice argue that advertising is creating undue demand for products that won’t result in improved health outcomes. Proponents argue that the advertising better educates patients about health conditions they may have and should address. Considering the lack of evidence behind a differentiated value proposition in most advertising, it’s easy to see where the critics are coming from. If you were genuinely concerned about a health condition you have, what education would you prefer? Today’s standard of advertising content or product information with hard evidence supporting improved health outcomes?

IF YOU’RE NOT SERIOUS, YOU SHOULD BE There is only one way to build brand loyalty. It must be earned, based on the value proposition the brand provides. Consider the market you compete in today:

• Payers are resisting more expensive new products, insisting they provide no value beyond existing, less expensive products
• Senate investigative committees are reviewing an increasingly broad range of business practices between industry and physicians
• Sales practice and CME regulations are becoming increasingly restrictive
• Companies are being fined and agreeing to government monitors
• Politicians and the media are blaming industry for the out-of-control healthcare costs
• American citizens are crossing the borders to buy their drugs

There is an underlying question that weaves across all of these constituents and their actions: Are we getting value for the money we’re paying and can you prove it? The winners in this market—the ones who will enjoy brand loyalty—will improve on how they answer this question.

Bill Ott is a Senior Consultant at Numerof & Associates, Inc. (www.nai-consulting.com). He can be reached at info@nai-consulting.com.

Rita Numerof is President of Numerof & Associates, Inc. She can be reached at info@nai-consulting.com.