Introducing Customer Weighted Portfolio Value (CWPV) and how it can help you better define your Target Customers

Does your company take a ‘Lead Brand’ approach to selling? That is, does a specific brand preferentially occupy detail position 1 for a period of time with a particular sales team?

If the answer is yes, you are probably wasting 50% of your promotional effort…….Let me explain.

A Sales team will typically have responsibility for promoting a number of Brands —often in multiple therapeutic areas. Customers are often defined as “Targets” based on a ‘Lead Brand’, so individuals who are strongly relevant for the other Brands but not the Lead Brand fall out of the Target Audience. Additionally, while the Lead Brand dictates the Target audience, the sales team are asked to promote a second (and often third) Brand to this “Target” audience on all sales calls.

From our analysis of this common practice the company is often surprised to find that while they are achieving 2+ brand details per call, only ~50% of the total details are actually ‘relevant’ to the customer – i.e. ½ of all brand details were to non-targets for the brand detailed.

The triple whammy of this approach is;

• Up to 50% of brand promotional effort is irrelevant to customers – even when the effort is focused to ‘target’ customers
  
• Customers may be turned off the brand message of the relevant product due to the irrelevance second & third brand messages
  
• Some customer with a high overall value to the company (across a range of brands) are excluded from the target audience due to the ‘lead brand’ approach to targeting and are not adequately promoted to for any brands (lost revenue opportunity)
  

Lead Brands may also change from Cycle to Cycle, meaning Targets customers would change as well (driven by the lead brand target mentality), so consistency of promotional activity with key customers can be easily lost following the approach described above.

As previously discussed in our article about profiling & segmentation, it makes sense to profile and segment customers at the brand level rather than generalizing about a customer’s value across a range of products and therapy areas. In this way, you can tailor messages and promotional activity specifically for each relevant brand (refer to our article about differentiated brand strategies per customer segment).

But how can you best determine which Targets the sales force (and other channels) should focus promotional attention towards that will optimize the revenue opportunity for your company and ensure the highest degree of promotional relevance to your customers?

We advocate a Customer Centric approach which effectively dollarizes Customer value based on the aggregation of a Customer’s value for each of your Brands as follows;

• Determine a process that allocates a “points value” for each customer for each of your major Brands – based on their segment for that Brand
  
• Factor the points value to allow for each Brand’s strategic importance, product life cycle, customer segment responsiveness and return on promotional investment (ROI)
  
• Aggregate the individual points values for each Brand (weighted or factored) to determine a Customer Weighted Portfolio Value (CWPV) for each Customer (their overall value to your company)
• Use this methodology to drive sales force and marketing activity towards the “Most Valuable” Customers for the Team/ Company, while being able to define what constitutes each customer’s value at the Brand level and drive brand strategies accordingly

The benefits of this approach are as follows;

• Consistency in Target audience over time
• Ability to reweight brand importance or introduce new brands into the mix while still maintaining a standard process of defining Target audience
• Understanding of customers value to the company and the brand(s)
• Ability to drive a customer centric selling approach which improves the relevance of brands promoted to each individual customer (versus brand centric selling)

A Customer Weighted Portfolio Value approach to valuing customers has other downstream benefits as well, which include the ability to more easily balance territory resourcing requirements across a portfolio and restructure territories if required.