Cross channel synergy can lead to a more satisfactory customer experience
Before the multichannel era in Life Sciences, marketing was primarily driven by the sales force. Consequently, channel analysis was tantamount to an analysis of sales force effectiveness. Undeniably, the sales force will continue to be the number one driver of marketing. However, today the explosive growth of emerging channels prompts growth of emerging channels prompts marketers to capitalize on opportunities to deliver unique and data-driven experiences across all channels. With right-time and right-place communications, cross-channel synergy can lead to a more satisfactory customer experience. Further, it follows that when customer expectations are heightened, higher customer satisfaction and loyalty will follow. Delivering on these new-age expectations is not easy, but increasingly it should be viewed as table stakes. To understand the progression of analysis from one channel to multiple channels, here is a simple summary:
- In the old world where the sales force is the only channel, channel analysis is simply a bi-variate analysis correlating Channel and Sales.
- When two channels are available, Sales is a function of the two channels. The contribution of Channel 1 is estimated after the effects of Channel 2 have been controlled for. This is straightforward.
- When more than two channels are leveraged in marketing, multiple regression methods are used to estimate channel contributions simultaneously, similar to the two-channel situation, but with more considerations for multichannel complexity.
Figure 1: Two analysis scenarios
Traditional analysis ignores cross channel synergy
So what are the challenges? Looking closely you will notice two interesting things in the first chart:
- The relationship is only between a channel and sales (scripts, in this case).
- The relationship is unidirectional. This traditional way of analysis ignores cross-channel synergy. Without proper consideration of channel synergy, the channel analysis is no different from one which assumes all channels are acting in isolation, with each accounting for a discrete portion of total sales. In reality, however, this is not the case. Imagine that a sales representative drops a sample in a doctor's office and leaves without saying anything. Will the sample by itself make a physician write the drug? Probably not.
The co-pay card is another good example. The classic channel analysis often renders a higher-than-expected impact of a co-pay card on sales. Why is this? A patient who receives a diabetes co-pay card will go for redemption only when two conditions are met:
- He is suffering from diabetes.
- He has some level of confidence in the drug. When neither, or only one, of these conditions is met, the face value of the co-pay card has no appeal and, consequently, no impact on sales since it will not be used to purchase the drug. For the patient to purchase the drug, their confidence must rise to a required threshold (and they obviously need to be a diabetic).
The patient can acquire a threshold level of confidence in the drug from, e.g., the following channels:
- Detailing: A physician recommends the drug to his patient after talking with the sales rep.
- TV: A patient views a TV commercial about the drug.
- Internet: A patient either sees an online ad about the drug or researches the drug online themselves.
As you can see, in this instance a traditional regression analysis examining solely relationships between sales and marketing channels (including co-pay card) will be misleading. It will completely miss the impact of detailing, TV, and the internet on the co-pay card. Cross-channel synergy is not accounted for.
After we understand the multichannel reality of our current environment, and the importance of cross-channel synergy, we can accommodate cross-channel synergy in our analysis.
Opportunities that come from an evolving market
The opportunity to meet the advancing expectations of customers comes in an evolving market. Whoever grabs the opportunity will achieve benefits like:
- Enhanced strategic investment
- Improved in-market decision-making
- Improved customer engagement
Channel synergy accommodates interaction and order of impact among marketing drivers by capturing the causal path among the sales drivers and by distinguishing between the direct and indirect effects of the relationship among the sales drivers. Direct effects are estimates of relationships between potential sales drivers and sales. These effects are direct in the sense that estimates are based on the linkage with the ultimate metric of interest — sales. A traditional channel analysis measures only direct effects.
Indirect effects, by contrast, are not directly measurable by drawing paths from predictors to sales. They come from interaction among channels. The interaction is unidirectional in some cases. For example, a productive call with a physician positively affects the impact of subsequent samples. But it is a little counterintuitive to assume that dropping a sample positively impacts the effect of detailing on sales. In other cases, the interaction is bidirectional. Media channels are concurrent almost all of the time so it is hard to say whether watching a TV ad influences Internet search or vice versa. Most media channels interact with each other; their relationships are reciprocal.
Let's go back to the two examples given above. Suppose the Sample has a 10% contribution to sales. It is also found that Detailing has a 50% impact on Sample. It means that half of Sample's impact on sales, or 5%, comes from Detailing. This 5% is the indirect effect from Detailing which further cascades into the total impact of Sample on sales. Taking this out of the original 10% leaves Sample with a 5% adjusted contribution. In the co-pay card example, many marketing tactics have successfully conveyed safety and efficacy messages about the drug to physicians and patients before the co-pay cards are redeemed. These all translate into indirect effects on co-pay card redemption. If the direct effect of a co-pay card on sales is 12%, the adjusted effect may only be 2% after the removal of indirect effects. The 2% represents the net impact of the co-pay card's face value.
Cross-channel synergy calls for the re-attribution of promotion tactics
Traditional channel analysis looks at the direct effects of promotion tactics on sales and is often called "attribution analysis." Cross-channel synergy calls for the re-attribution of these effects. This allows better informed decision-making and budget prioritization, which lead to higher ROI. In addition, knowing how different channels interact with each other enables marketers to plan an optimal channel mix, which heightens customer experiences.
Finally, beware that knowledge of the channel interaction is just the first step of channel synergy. Synergy implies harmony. Delivering right-time and right-place communications to customers with the right mix of channels consummates the journey. Any disconnected efforts along this chain will compromise the otherwise ideal customer experience.