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Chart a course for sustainable growth

As life sciences and pharma services companies forge ahead in 2024, they find themselves at a critical juncture―realizing unparalleled opportunities while managing market challenges. Many leaders have or are asking themselves, “Should we cut costs in our commercial teams? Will we cut too deep and miss the next wave of profitable growth?” The challenge is daunting. And for those who can adapt to shifting market conditions and evolving customer expectations, they will chart a course for sustainable growth in 2024 and beyond.

As an extension to our recent article, Profitable Growth is on the Horizon, we will dive deeper into commercial changes across the following key trends:

  • Continued Emphasis on Efficiency
  • Investment in Post-sales Customer Experience
  • Significant Plans to Deploy AI

1. Continued Emphasis on Efficiency

Efficiency remains a linchpin for success in 2024. The volatile nature of post-pandemic demand requires companies to meticulously look across the organization, rationalizing investments in Sales, Marketing and Services functions. In some drastic scenarios, organizations are abandoning specific geographies or end-markets to maximize ROI in particular markets. If your organization is contemplating efficiency plays, here are a few considerations:

  • Assess overall marketing performance and channel mix (e.g., SEM, SEO, paid social media, events, etc.) to inform investment levels. Insight: Average marketing ROI is 1.6x. (Source: Alexander Group Life Sciences 2023 Demand Generation Performance & Investments Study)
  • Investigate sales team time allocations to provide more engaged selling time (EST) to sellers and reduce non-sales activities. Insight: Best-in-class EST is 35% for field sellers. (Source: Alexander Group Sales Time Benchmarking Sales Force Survey)
  • Reimagine account prioritization to push low spend accounts to e-commerce and customer service coverage, focusing field and inside sales teams on higher opportunity accounts. Insight: To start, target less than 5% of revenue to a no-touch model. More advanced models can target over 25%. (Source: Alexander Group Life Sciences Customer Segmentation Survey?)

TIP: If your organization is considering reducing headcount across cross-functional teams, try to limit the cost savings from commercial and focus on keeping to talent (e.g., high performers, product specialists, application scientists, etc.)

2. Investment in Post-sales Customer Experience

While operational efficiency is crucial, so is preserving customer relationships. The post-sales customer experience emerges as a pivotal battleground. Whether through reimagined vendor interactions or automating customer service activities, companies are urged to invest in immediate efficiencies. Automation and digital roadmaps become key components in sustaining and enhancing customer satisfaction. If your organization wants to improve customer lifetime value, here are a few considerations:

  • Investigate the biggest time-consuming and manual back-office activities to identify key improvement areas for back-office automation and digital capabilities. Insight: Average total customer service expense to total revenue is 1.27% for North America to 2.1% for Europe. (Source: Alexander Group Life Sciences 2023 Customer Service Study)
  • Build omnichannel and self-service capabilities (e.g., centralized knowledge centers, AI-enabled chat functions, online order management and scheduling functions, etc.). Insight: 96% of life sciences companies are developing digital self-service capabilities. (Source: Alexander Group Life Sciences 2023 Customer Service Study)
  • Integrate order management, sourcing and supply chain systems to provide customer real-time data synchronization and remove redundant requests. Insight: Approximately half of customer service tickets are “where’s my order?” (Source: Alexander Group Life Sciences 2023 Customer Service Study)

TIP: Most organizations are reviewing their commercial digital technology stack and ensuring they get the most out of what they have versus buying net new technology. Integration and customization are key to improving automation yield and efficiency.

3. Significant Plans to Deploy AI

Listen to quarterly presentations, read the transcripts and check the news. One of the widespread topics on everyone’s mind going into 2024 is artificial intelligence (AI). For the most part, AI is being incorporated into companies through product and research and development (R&D). The most common forms of AI include chatbots, virtual assistants, image recognition, natural language processing tools, speech recognition and recommendation engines.

In 2024, there is an expectation that AI will begin helping companies accelerate commercial innovation, enhance their productivity, and improve their customer experience. As you are determining how to incorporate AI into your commercial teams, here are a few considerations:

  • Widen the top of the funnel while maintaining lead quality by investing in an AI-enabled demand generation engine. Insight: Examples include automated content based on targeted personas, flexible and accurate attribution scoring, intent signal gathering and competitive web-scraping to identify differentiation.
  • Incorporate a 24/7 self-service availability AI chatbot function to provide a consistent experience and scale large contact volumes. Insight: Organizations that have a conversational AI-enabled chat see a payback period within six months and 300% ROI over three years. (Source: IBM Watson; Salesforce; Fastly; average payback period)
  • Increase seller productivity and reduce onboarding ramp time by introducing AI coaching and intelligence. Insight: Examples include improving sales productivity through reactive talk track optimization, follow-up task recommendations and sales management time allocation insights.
  • Incorporate AI-enabled tools into your commercial talent management system, reducing time to find and slot the right talent. Insight: Average time to fill a sales role is three weeks; best-in-class is two weeks. (Source: Alexander Group Life Sciences 2023 Commercial Talent Study)

TIP: There are a significant amount of deep learning AI tools coming to market. Make sure you review all the use cases, potential ROI, system integration and other customizable options versus buying something out of the box. And avoid Open AI Chat-GPT wrappers.

Life sciences and pharma services companies in 2024 face a critical juncture, navigating unprecedented opportunities amidst market challenges. The dilemma of cutting costs looms large, requiring commercial leaders to strike a delicate balance between cost reduction and seizing potential growth opportunities. Adaptability to shifting market conditions and evolving customer expectations emerges as the linchpin for sustainable growth.

For more information on Alexander Group, please visit www.alexandergroup.com.