Do Incentive Programs Really Work for Pharma Brands?
By Al Kenney
Partner, M2 Worldwide Global Strategic Marketing
There is this debate going back and forth over the years as to whether delivering incentives to patients such as free trials and co-pay offsets really pay out for the Pharma Marketer? Is the practice of delivering these patient discounts changing behavior by increasing trial, compliance, and/or persistence? This is such a loaded question.
Of course it can pay out… but if you look at the current marketplace, based on what I have seen, only about 20% of all incentive programs currently in market are producing a positive ROI for their brands. The bigger issue… Brands don’t know their offers are not working because so little effort goes into the design of the program/offer and almost no one has a sound process/methodology to evaluate the programs they have in market.
One major reason for this is “learned apathy” on the brand side. Doing the same thing we did last year (IE: same offer, same vehicle, same delivery, same vendor, same everything!). My grandmother used to tell me that the definition of an idiot is doing the same thing over and over and expecting different results. How long have you had the same offer in market and not been happy with the results before you do something? Brand situations change as we need to change with them. This is a major problem in the Pharma industry which can easily be remedied.
And the answer is simple…If you think through your issues, pre-plan & analyze before you throw an offer into market, it will most likely meet your objectives of changing behavior, and increasing compliance and persistence thus driving the incremental business necessary to produce a positive ROI for the brand. Recognize that minor “tweaks” in your any component of your program offer can produce drastically different results. The key is to think it through and do your projections before you put the offer in market. Granted there is less data available to Pharma Marketers but there is still more than enough to do a detailed analysis, understand a programs true impact, and make adjustments.
Another major hurdle…The companies selling these types of programs don’t know about “optimization of an offer” or setting up a measurement plan so there is no help coming from the vendor partner. Incentive vendors don’t know enough about the clients business to ask them for the right information to set up the framework for a successful program in the first place.
The fact is without key background on the brand, the marketplace, and the competition, you can’t put together a well thought through patient incentive plan that will both meet your objectives and produce a positive brand ROI.
Coming from a strong analytics background and spending the first half of my career in consumer package goods industry I have been shocked by the lack of effort many Pharma and BioPharma companies put into market and analyzing the multi-million dollar programs they have in market. Even more shocking is the way many brands include in their ROI calculations only costs that come from their own budgets and all costs many of which are charged to other areas of their company’s budgets.
The most common mistake made is brands excluding monies that don’t come specifically from a budget which they manage. For example they pay the cost of getting a program physically in market (10-30% of total cost) but exclude the “patient incentive” (save $30) because it comes out of a separate corporate budget which they don’t manage.
These excluded dollars often represent 70-90% of the entire cost of putting the program in market. Not accounting for these dollars is doing their company a huge disservice and inflating their ROI numbers by 200-300%. Brand managers need to think strategically and include all related costs in their ROI calculations.
A little analysis, structure, and preparation upfront can make a huge difference in the programs outcome and its effect on your brands bottom line!
Al Kenney is a partner of M2 Worldwide a firm that specializes in Strategic and Customer-Centric Marketing. M2 Worldwide believes everything a company does should be easily measureable. M2’s clients include many leading companies in the CPG, Pharma, and Software industries. Al can be reached at Al@m2ww.com