Thought Leaders
 Linking Marketing to Bottom-Line Results

How do you know if your marketing dollars are having an effect? This is a question that tended to be answered with a leap of faith in the past. But today, marketers have the information to begin to link some of their advertising spending more directly with short-term and long-term results.

The pharmaceuticals industry, with vast databases on prescriptions (such as location of the pharmacy and patient and the price charged and how many refills), has been able to close the loop on some of its marketing and sales activities. This is becoming increasingly important as marketing budgets have risen and there has been a rapid growth of direct-to-consumer advertising.

Assessing Competitive Interactions

But an important part of the equation, which is often overlooked, is the impact of competitive interactions, said Wharton Marketing Professor David Reibstein, academic director of a new Wharton executive program, Marketing Metrics. Once early direct-to-consumer campaigns such as the one for Rogaine were successful, the airwaves and magazines were quickly crowded with ads from rivals. How does this erode their effectiveness?

"It's likely that if a pharmaceutical company starts direct-to-consumer advertising and sees its prescription rates rise as a result, that its competitors might start DTC as well. Then you have to start factoring in this impact into your marketing estimates," Reibstein said.

Even with strong measures of marketing effectiveness, companies have to look beyond the immediate short-term gain of any marketing effort — such as a spike in prescription rates — and to envision the longer-term consequences of any marketing initiative. Reibstein is currently working with a number of large pharmaceutical companies in this area.

"You need to consider, at every step of the planning process, which actions you can take that will yield sustainable gains," he said. "You don't want your marketing to just initiate battles that end up only increasing everyone's costs and returning to a steady state again."

Another key challenge is to go the last mile to link marketing metrics to financial returns. "Often what marketers have done is see that their campaigns have increased customer awareness or loyalty levels and stop there," Reibstein said. "I'm working on ways to quantify the financial value of one more point of customer loyalty. You need to connect to the financials."

Other Marketing Lessons

In addition to the use of marketing metrics, Reibstein identified several other useful marketing approaches that have been used effectively by pharmaceuticals firms:

  • Adopting a "customer relationship" attitude. Pharmaceuticals companies are now treating the patient more holistically, rather than just treating each symptom. "For instance, if someone has diabetes, chances are they are probably suffering (or will suffer) from several other symptoms besides blood sugar irregularities," Reibstein said. Some companies also offer a medication reminder service. Families with elderly or ill relatives can request this service for their loved ones, or themselves.

  • Linking prescriptions and technology. One company Reibstein has been talking to has experimented with giving patients Palm Pilots not only to remind them when to have prescriptions filled, but to transmit the refill request to the pharmacy. This helps patients learn to take these more complicated drugs that need a strict regimen to be effective.

  • Using coupons. Besides offering a discount to the patient, companies can better track compliance by asking the patient to fill out a questionnaire as part of the coupon. This has been a "tremendous help" with the problem of compliance — whether or not the drug was taken as directed and for the entire course of treatment. Current estimates place noncompliance at over 50 percent, Reibstein said.

This is based on an upcoming marketing measurement program. The dates and locations for the program are being determined. Please send us an e-mail if you would like to receive future updates and information on this program. Please indicate "Marketing Metrics" in the subject line.

    

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