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Paper ConvaTec CRM

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Paper ConvaTec CRM

    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    The transformation of ConvaTec, a Bristol-Myers

    Squibb Division into a real customer-oriented

    company: considering CRM as an organizational

    strategy

    Ferruccio Fiordispini

    SIAF - International School of Advanced Education in Management and Technology, 56048 Volterra (PI) Italy

    E-mail: f.fiordispini@siafvolterra.eu

    Abstract: The Italian affiliate of ConvaTec, a Bristol-Myers Squibb Division, engaged in a transformation process from product focused commodity provider to patient and customer oriented healthcare player. Actually, the great opportunity for ConvaTec in Italy was to become a true Customer Relationship Management Company in the ostomy business. Reacting on the needs of in-calling patients, the organization set up a service center and different information services for patients in parallel to their conventional sales force structure. The call center started with out-bound calls to reach more patients. Finally the different customer channels (call center counselors and sales representatives) were integrated, the sales approach transformed into a consultative approach targeting the main customers, mainly nurses, as well as individual patients. The customer and patient centric approach had direct positive effects on ConvaTec’s market position in Italy.

    Keywords: customer relationship management; CRM; customer centric; customer oriented; customization; service; ostomy; medical devices

    Biographical notes: Ferruccio Fiordispini is Managing Director at SIAF, International School of Advanced Education in Management and Technology, located in Volterra, Tuscany. After his university degree in economics he served as an officer (lieutenant) of Guardia di Finanza, Italian national police corps. After receiving his master’s degree in marketing and communication, he started his business career in Nestlé, the world leading food manufacturer, where he developed as a marketer, working in Italy and Germany and managing several strategic brands (Nescafé, Kit Kat, Smarties, Baci Perugina). Then he was in Coors, a major US brewer, as a Country Manager for Italy. Later he has been working for Bristol-Myers Squibb, a major pharmaceutical multinational corporation, where he has held several positions in Italy, Germany and the UK. His last responsibility was Marketing Director for Europe. He is a member of Italian Society of Marketing and has served as lecturer and teacher of marketing at several universities and training centers, including the Scuola Superiore Sant’Anna of Pisa.

    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

1 Introduction

    According to Rigby, Reichheld and Schefter (2002) there are 4 perils to absolutely avoid in a Customer Relationship Management Strategy (CRM):

    - Implementing CRM before creating a customer strategy

    - Rolling out CRM before changing your organization to match

    - Assuming that more CRM technology is better

    - Stalking, not wooing, customers.

    This case is based on a concrete experience made in the medical device setting within ConvaTec, a Bristol-Myers Squibb Division. It wants to prove the validity of the warning mentioned above and to focus on the impact of CRM on the organization of a company.

    Often CRM is considered a technological issue, and IT managers are the drivers of the development and the implementation of strategies based on this technology. Actually, a successful CRM approach requires, first of all, a truly customer orientation. This orientation is often included in vision or mission sentences, but only a firm and determined leadership can make it happen. Therefore, CRM is a matter of top management, it is not just a functional responsibility. It has to be the basic strategy of a company, in order to produce real returns on investment.

    In fact, the Italian affiliate of ConvaTec engaged in a transformation process from product focused commodity provider to patient and customer oriented healthcare player. Reacting on the needs of in-calling patients, the organization set up a service center and different information services for patients in parallel to their conventional sales force structure. The call center started with out-bound calls to reach more patients.

    Finally the different customer channels (call center counselors and sales representatives) were integrated, the sales approach transformed into a consultative approach targeting the main customers, mainly nurses, as well as individual patients.

    The customer and patient centric approach had direct positive effects on ConvaTec’s

    market position in Italy.

    2 Some information about ConvaTec, a Bristol-Myers Squibb Division Bristol - Myers Squibb, one of the most important pharmaceutical groups in the world, is located in 130 countries, with 44.000 employees worldwide and 2.000 in Italy. ConvaTec, a Bristol-Myers Squibb division, is a leading company in the ostomy and in the wound care.

    ConvaTec was born with two major innovations:

    1978: Stomahesive

    1982: DuoDerm

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    The ConvaTec revolution consisted of the invention of the hydrocolloid, the first skin protector for a better quality of life of ostomy patients. This was introduced in 1978 with the brand Stomahesive, which is still widely used by patients and stoma-therapists. 3 Some information about the ostomy patients

    An ostomy patient is an “invalid” person, who needs assistance, as well as good medical devices. He/she is a person who, because of a pathology, get a surgical operation, which modifies his body scheme, ending with an incontinence. This person has got therefore a new organ, the stoma, and he/she must learn to live with it and to autonomously manage it.

    The ostomate is a chronic patient, whose quality of life depends mostly by the quality of the assistance received during the rehabilitation. The needs of an ostomy patient are physical, but also psychological.

Table 1 Physical and psychological needs of ostomy patients

    Physical Needs Psychological Needs

    New body scheme: new life customs Understanding

    Incontinence: use of pouches Information

     Assistance

     Discretion

     Competence

     Safety

    Not all the patients are properly and completely assisted by home care and/or specialized rehabilitation centers.

    In Italy there are about 50,000 persons with an ostomy, and only one third of them are assisted by a specialized rehabilitation center. The information at the moment of discharging from the hospital after the surgery is often insufficient and the ostomy patients are dispersed on the territory and need assistance.

    A relevant role in this is important assistance process is therefore played by the same manufacturing industry.

    4 The CRM case in Italy

    4.1 The great opportunity for ConvaTec in Italy was to become a true Customer Relationship Management Company in the ostomy business. There were several reasons for that.

    First of all CRM is very important to win the trust and the loyalty of patients. CRM is also necessary to “reinforce” the trust and the loyalty of clinicians (ET’s: ostomy specialized clinicians), because these customers are actually receiving equivalent offers

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    from the major competitors. Furthermore, it has to be considered that CRM could be very effective also to create trust and loyalty among distributors and payers. 4.2 The management in ConvaTec set a definition of Customer Relationship Management as a customer centric philosophy that aligns company activities around customer needs. “CRM is a business strategy that creates and sustains profitable and long term customer relationship”. There was a clear understanding that CRM requires

    redesigning roles and responsibilities and it requires to reengineer work processes. 4.3 There was also the strong feeling that the business environment was changing, thanks to the evolution of technologies, the change in the regulatory system and the growing attitude of patients to get information and being active towards the health issues. Actually, according to a study made by PricewaterhouseCoopers and called “Pharma

    2005 Marketing to the Individual”, the future of the health care industry is in the so-

    called individualized health management.

    TMFigure 1 PharmaFramework by PiceWaterhouseCoopers

    ConvaTec was already moving from the traditional model towards individualized health management. The patient flow of an ostomate could be divided in specific steps, where a strong relationship could be created in order to accompany the entire life experience.

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    TMFigure 2 PharmaFramework by PiceWaterhouseCoopers Adapted for Ostomy

    Patients

    4.4 However, there was an evolution in the original relationship between ConvaTec and its customer.

    Up to 1997 there was no proactive, structured relationship with the patient, the whole effort was for “professionals”:

    Figure 3 ConvaTec commercial model up to 1997

    In 1998 the “Patient relationship era” started: proactive, structured service to the patients, consultancy and new patients acquisition.

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

Figure 4 ConvaTec commercial model in 1998 started a proactive approach towards

    patients

    In 2000 ConvaTel was launched: a branded, proactive, structured assistance telephone service offered to all the customers on the market.

Figure 5 Introduction of ConvaTel as a branded and comprehensive service

    4.5 The effects of the introduction of the branded service ConvaTel on the organization have been controversial, initially.

    On one hand, thanks to ConvaTel, the company has been able to:

    - offer new and attractive services to the patients (and stoma therapists, i.e. ET’s)

    - create a relationship with a great deal of patients

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    - guarantee loyalty from many of these patients

    - develop a commercial attitude in the call center activity (patients acquisitions

    and conversions)

    But at the same time they have had some limitations:

    - the “traditional” business model has been totally copied by competitors

    - there were actually 2 different operating “sales forces ”, which had different

    mentalities, approaches, languages and objectives

    - the “traditional” field sales force used to keep the relationship with ET’s to itself

    and didn’t support enough the work of the call center in developing the

    relationship with patients

    The management finally realized the need of a new business model and organizational structure, where the CRM strategy could be fully implemented and exploited. This required a full integration in terms of:

    - Strategies (a new global service named Gold Card Service)

    - Organization (a single team)

    - People (same competence profile in the team)

    - Technology (a single data base)

    4.6 According to Don Peppers (1999), one of the major expert of CRM in the world, Customer Relationship Management is based on the simple idea of treating different customers differently to gain their loyalty.

    There are 4 steps - only roughly sequential - which represent progressive stages in the CRM implementation. Any company wishing to implement a CRM program must be able to:

    - Identify its customers

    - Differentiate them one from another

    - Interact with them

    - Customize some aspects of its product or service to meet their individual needs In ConvaTec the clientele of the ostomy business was “mapped” according to the level of

    differentiation of customers, both concerning their value for us and their needs. Figure 6 Customer Differentiation Matrix (by Peppers and Rogers Group)

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    In theory, marketing strategies to be adopted should be in line with the level of differentiation of customers.

    Figure 7 Customer Differentiation Matrix (by Peppers and Rogers Group) and the suggested marketing strategies

    Improving the communication (interactive and one-to-one) and the production/logistic flexibility ConvaTec could have been developing a strategy to “migrate” towards a

    Customer Relationship Management.

    Figure 8 Customer Differentiation Matrix (by Peppers and Rogers Group) and the migration towards a Customer Relationship Management approach

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    4.7 Finally, based on these concepts and on the experience done with the branded service ConvaTel, the management in ConvaTec developed and implemented a new strategy in 2002.

    First of all, it was created a single dedicated team of “ostomy consultants based on

    the ConvaTel successful approach: top clients had to be followed also by field consultants, small ones had to be served directly in-house. A single data base was made accessible in input and output by all the ostomy consultants, for managing the relationship with ET’s.

    The Gold Card service became the key tool with ETs, patients and other partners, sort of umbrella brand to cover all the marketing initiatives.

    Based on experiences done by the US affiliate, it was introduced the Great Comebacks event (sort of contest among patients to find out and disclosure great cases of successful rehabilitation and return to a normal life) as a start-up of a new and long-term relationship.

    A new commercial structure created the conditions for higher focus on the key customers and better exploitation of business opportunities. It was decided for a single leader of the new “Ostomy Team” , in order to align all the members to the same strategy

    and guarantee a full coordination of all the consultants, both in house and on the field. New figures have been created, such as a marketing communication specialist and a data base analyst, in order to exploit the technology and make a profitable use of the data base information.

Figure 9 The new organization in ConvaTec in 2002

    The previous customer relationship manager was appointed to the Ostomy Manager position, although she had virtually no experience in sales management. This choice was made because of her definitively high service orientation and sensitivity for patients needs. This organizational decision was really very important for the success of the entire strategy.

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    IV Convegno annuale della Società Italiana di Marketing

     Roma, 5-6 ottobre 2007

    The profiles of the commercial people were also redesigned according to the strategies and the customer needs:

    Ostomy Consultant

    - Strong Focus on Relationship

    - Customer support

    - Facilitator of relationships between CVT and Customers (ET; Patient)

    - Reference Point for Hospitals

    Key Account Manager

    - Strong Focus on Purchasing Processes in Hospital/Community

    - Larger Scale Negotiations (focus on distributors)

    - Market Intelligence

    Wound Care Specialist

    - Strong Focus on Customers + Products

    - Higher coverage of Community

    - Generate trend on “Modern Wound Care”

    The profile of the ostomy consultants was finally the same for both internal and external people

    - Emotional Intelligence

    - Approachability

    - Compassion

    - Persuasion

    - Patience

    - Initiative

    - Managing Diversity

    - Enthusiasm

    - Result orientation

    4.8 The key competencies of the ostomy consultants have been thoroughly developed and monitored during 2002.

    In the first quarter there was an internal assessment of the 3 key competencies: emotional intelligence, listening, managing diversities. Such competencies, typical of the service industry, are quite different from the classical ones of a sales rep within the medical device industry. Usually they are based on “technical” skills, such as product

    knowledge, medical support, etc.

    This assessment was based on the methodology of behavioral analysis (theory of Lombardo and McClelland), which measures the level of possess of each of those competencies. During the first quarter of 2002 a training program was also implemented to develop those competencies.

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