Medical Device Link.

Originally Published MX January/February 2003

INFORMATION TECHNOLOGIES

Getting the Most out of Customer Data

An enterprisewide analytics software package can bring competitive advantage and enhance customer loyalty.

Amy Valley and Joseph McGee

Thanks to continuing advances in customer relationship management (CRM) and enterprise resource planning (ERP) software systems, medical technology executives can gain access to increasingly enormous amounts of data about their customers and business operations. But therein lies a problem. That abundance of raw business information somehow has to be turned into usable knowledge on which intelligent business decisions can be based. How can medtech company leaders quickly integrate and analyze customer and market data gathered from multiple sources in order to increase sales, enhance targeting efforts, and improve customer service?

Most medtech companies rely on some form of data warehouse whose vast store of information is organized and interpreted through the application of analytical programs. However, these systems typically are not integrated. Retrieving useful data from them is thus difficult and time-consuming. Managers responsible for driving business performance need quick, easy access to real-time sales, marketing, and consumer information to be able to measure the effectiveness of their strategies and make timely changes accordingly.

Table I. Typical sources and data sets that analytics systms draw upon to create a customized executive dashboard that reports on a medtech company's key business measures. (Click to enlarge)

Analytics software, which delivers data from multiple sources and systems in real time, can help executives leverage mass quantities of information in support of rapid and sound business decisions. The software efficiently integrates fragmented data from disparate systems, including front- and back-office, legacy, and Web-based applications (see Table I). Using analytics, medical technology company managers can better target physician customers, optimize monitoring of field sales performance, and gain clearer insight into the volume and nature of complaints received by call centers so as to help keep customers satisfied.

Easy to Use

Analytics software has emerged recently as a special offering within the range of computer-based business intelligence (BI) tools. BI tools have been around for some time. What makes analytics software distinct from older BI software is that it is more user-friendly. It is designed to be used by managers rather than data analysts. BI systems are broad in scope and feature a range of analytical and reporting functionalities. In contrast, analytical tools are easier to use, facilitating quick searches of comprehensive databases for both market- and customer-related data.

What makes analytics software so accommodating is its intuitive design. Using the simple, basic techniques of clicking on an icon or identifying a search parameter, executives can readily obtain the information they need—say, how many field engineers are servicing a particular device. Consequently, analytical tools require no specialized skills. Knowledge of the business is enough. Managers can enjoy a feeling of empowerment when they realize that they can easily access, and even analyze, important data immediately and on their own.

Addresses Key Areas

Analytics software offers a customized screen, or dashboard, to help managers gain access to key performance metrics from a variety of applications, including sales and marketing, field service, customer service, and supply-chain planning. The dashboard, which is usually reached through a browser, presents information in a manner tailored to the particular user's corporate business function or industry sector. Executives can view the information from multiple perspectives—for example, by region, by product, or by division—or can use the system to drill down for more-detailed data in order to gain additional insight into matters of customer behavior, product development, distribution, or trending sales. The software also enhances data sharing among departments, making it easier to coordinate sales and marketing efforts, among other advantages.

Analytics tools are designed to help medical technology managers answer questions that previously could not have been answered quickly, if at all. Those questions can be grouped into several key areas.

Customer Behavior.  Medtech executives want to know how satisfied their customers are with their company's products. They are interested in learning which medical groups purchase the most equipment, as well as whether customers are purchasing more devices on-line, and, if so, at what rate of increase. By providing a comprehensive view of consumer demographics, analytics software enables managers to better understand their customers' shopping patterns, spending behaviors, and product preferences. An enhanced understanding of buying trends and product loyalties can be used to improve the company's customer targeting and the effectiveness of its marketing campaigns.

Marketing Campaigns. Analytics affords a way to assess the overall status of the company's multichannel marketing programs. It can reveal the quality of the leads generated by a particular campaign and tell which physicians are responding most favorably to the current promotion. Using the software to measure marketing success and return on investment can help medical technology companies in analyzing the effectiveness of their promotions. By showing how products are selling across all channels, it allows managers to fine-tune campaigns and focus sales efforts around the most profitable products.

Many organizations use analytical tools to enhance targeting efforts by segmenting their customer base according to product preferences and potential market value. For example, a large pharmaceutical company relied on analytical software to find the best target audience for a pilot campaign before investing a lot of time and money in a full-blown promotion. Using a carefully chosen set of parameters, the marketing manager put together two lists of physicians to approach, additionally identified by their associated sales representatives—all within 30 minutes. The manager might have taken more than a week to generate the same list without the aid of analytical software.

Product Offerings. Which products are generating the most revenue? Which are selling the best in which region? An analytics program supplies the answers. It can parse the data to determine the average order size across all sales, and by account. Its application to several sources of sales data can suggest which products should be cross-sold with each other. Analytics software provides sales managers with thorough and up-to-date information to help them evaluate the performance of sales representatives, quickly identify problem areas, and schedule the appropriate resources to address trouble spots. Companies can also use analytics to modify product lines or strengthen other initiatives, such as on-line self-help.

The Call Center. Analytics software can give executives an in-depth picture of their company's call center, clarifying trends in service activity and problem resolution, the degree of customer satisfaction, and resource allocation. Data can be

 retrieved, organized, and displayed to reveal how long it took a service representative to close a service request, how many calls a representative handles in an average day, and which medical devices are generating the most customer calls. Knowing call center response times and levels of performance over time enables medtech executives to optimize customer service and maximize customer satisfaction.

For example, a company that sells disposable medical products installed analytics software after implementing a large call center operation. The firm used its analytical tools to compare customer complaints coming into the call center against records of products being serviced in the field. Determining, via analytics, whether the same products were generating all the calls, how the complaints were handled, and whether the call center representatives coordinated with field service personnel to make sure issues were resolved, company managers obtained insight into the performance of their service staff that motivated them to make improvements in customer service.

Regulatory Compliance. Analytics can help companies comply with federal regulations by making it easier for management to access the data necessary to compile FDA-mandated equipment-defect tracking reports. Several available Web-based solutions enable medtech firms to track the product-defect resolution process more effectively until the problem is eliminated. These also serve to streamline management of product enhancement requests. Other benefits offered by analytics in this area include the potential to avoid redundant work, increase productivity, shorten the product release cycle, release products on time, and accelerate speed to market.

Table II. Major providers of complete analytics software packages. (Click to enlarge)

A Growing Market

The analytics software market appears poised for growth. Already worth $3.5 billion, this market is expected to experience a 35% compound annual growth rate over the next five years.¹ It consists largely of a handful of major software developers (see Table II). However, several smaller companies also offer some form of analytics software, as well as the data-warehousing tools that support it.

The software is popular in many industries. As presented in the report of a research survey, 14 vertically organized industries (a heavy majority of those investigated) named customer data analytics as the software application area given the highest spending priority.²

The requirements and complexity of instituting an analytical software system vary according to the company's size and needs. However, a few helpful guidelines apply to any medtech company considering implementation of an analytics system.

• Data should be clean (i.e., of high quality) before interfaces are built, in order to ensure that the system functions successfully.
• How many different data sources will make up the system should be clear from the outset (the complexity of the system increases with this number).
• Key information should be mapped to a data model. (Functioning as a blueprint, a data model can show an item of information, the category in which it belongs, and its appropriate relationship with other items of information such as, for example, a specific device and the field engineers who service it.) 

Implementation can take three to four months for midsized medical technology companies and as long as eight months for larger companies. The actual time frame will depend on the nature of the systems and applications already established within the company and on how much cross-industry integration is necessary.

Implementation costs tend to range between $350,000 and $500,000 for midsized companies. The setup for large-scale enterprises can run to $800,000 or more. Companies typically start seeing a return on investment in about three months, via quicker data turnaround and improved market trend analyses.

Small companies that have not yet installed extensive information technology systems are not likely to benefit from implementing analytical tools. The cost of automating their business processes to make them compliant with the operational requirements of an analytics system may be prohibitive when considered from the perspective of the benefits that might reasonably be expected to follow.

Figure 1. Mock-up of an executive analytics dashboard for manufacturing orders and sales, showing typical data breakdowns that might be built into the system. Photo courtesy of Siebel Systems (San Mateo, CA). (Click to enlarge)

However, medtech companies with ERP, CRM, and other enterprise software systems already running can enhance the performance and extend the utility of those systems by installing analytics software. An analytics package does more than simply facilitate business operations and transactions. It offers company executives the opportunity to better comprehend the import of the product development, marketing, distribution, and customer service data being fed into their enterprisewide software systems (see Figure 1).

For example, the operations pertinent to CRM software might include having a customer service representative first collect and update customer information relating to a caller and then route that caller to the appropriate sales agent or information resource. Analytics software goes a step further by allowing the representative to take the same consumer data, cross-reference it with information residing in other systems, and then analyze all the data in order to fully understand the customer's relationship with the company. The software might, for instance, show that the customer spends substantial money on particular types of medical devices. The customer representative can then pass that information to the sales agent, who will be able to knowledgeably recommend new products to a customer targeted as one who is relatively more likely to buy.

Getting Started

Medtech company executives who continually find themselves unable to respond quickly to changes in the marketplace because their data are outdated or not easily interpretable can benefit from analytics software. Those interested in implementing analytical tools ought to consider following a several-step course of preparation before undertaking system deployment.

Developing a Vision. Before any software tools are purchased and implemented, managers from key areas, such as marketing and sales, should get together to discuss their overall business requirements and their vision for the future. The questions they should ask and answer will include what data they can access, what additional information they will need to perform their jobs better, and how enhanced access will improve the company's profitability. They should reach agreement regarding the role analytics software will be expected to play in the company's overall business strategy.

Designing the Process. Once the executives know what information they require and why, they need to figure out how they can attain the desired level of data access. That means understanding where the data currently reside, who is responsible for collecting the information, and how it can be accessed across departments. When, from this, they discover what kind of systems integration is required, they can develop an infrastructure able to be accessed throughout the enterprise, as an improvement over one compartmentalized by department.

Verifying the Data. Confronting data quality issues, in part by implementing a framework to address them regularly, is key to achieving the full benefit of any CRM initiative. Data sources need to be cleaned, standardized, and integrated to ensure that the information will be able to be manipulated as intended by the analytics software. Here, executives should establish who owns the data, whether the data have all been verified, and who will take responsibility for making sure that information is clean.

Selecting, Testing, and Implementing the Software. A key implementation step is working with the analytics software itself to determine how it will interface with other systems, what data will feed into it, and how individual screens will be designed. Companies typically go through several testing cycles to ensure that the software is working as intended.

Preparing to Appraise Results. A vital element in supporting and maintaining the effectiveness of an analytics software implementation is to measure the results. While the choice of appropriate metrics will vary from organization to organization, one principal reason for deploying analytics remains constant: to increase the effectiveness of customer interactions. Toward this end, some companies look to discover a verifiable increase in customer-campaign response rates after implementing an analytics system, while others hope to measure an increase in cross-selling opportunities or a reduction in customer churn rates. Whatever the objective, proof of an enhanced ability to meet clearly defined goals can help to underscore the value of analytics software to the whole organization.

Conclusion

Medical technology executives' ultimate aim in implementing analytics software is to gain quick access to real-time customer and market data in order to make better-informed business decisions more rapidly. Being able to access and analyze pertinent information on demand, they are likely to be more responsive to market trends, to have deeper insight into customer behavior, to reduce marketing costs, and to gain competitive advantage through better customer service and improved market targeting.References1. Adrian Mello, ÒThe Analytics Advantage,Ó [on-line] in ZDNet Tech Update (San Francisco: CNET Networks, February 2002 [cited 2 December 2002]); available from Internet: http://techupdate.zdnet.com/techupdate/stories/main/0,14179,2845861,00.html.2.

Amy Valley is a managing director in the life sciences practice and Joseph McGee is a managing director in the CRM strategy practice of BearingPoint Inc. (McLean, VA) a business consulting integration firm.

Copyright ©2003 MX