February 1, 2016 PAP-Q1-16-IC-001
By Guy Tiene and Robert Leeuwendal, Nice Consulting
This article reviews alternative approaches to improve the customer experience that can be taken by both growing and established contract manufacturing organizations (CMOs), and contract development and manufacturing organizations (CDMOs).Building a client relationship that results in repeat orders and leads to a long-term partnership between the CMO and Sponsor requires the “customer experience” to meet or exceed client expectations. Customer experience is not the same as customer satisfaction, which is often measured. A CMO’s ability to respond effectively to a client’s needs and demands shapes the customer experience. This article looks at the impact of communications, adaptability, and ways to improve the customer experience.
Customer experience is the product of an interaction between an organization and a customer over the duration of their relationship. This interaction includes a customer’s attraction, awareness, discovery, cultivation, advocacy, purchase, and use of a service. It has become evident that, despite the habit in many consumer retail industries to routinely measure customer satisfaction, high customer satisfaction metrics do not correlate with increased customer retention or increased customer referral patterns.1 In contrast, companies that have been able to successfully implement the customer experience approach have been found to be 4%-8% more profitable than their peers. In these companies, a customer experience metric known as the Net Promoter Score® (NPS®) (e.g., How likely is it that you would recommend our company/product/service to a friend or colleague?) has been implemented successfully, not as a one-off metric, but as a process and system for building a greater customer experience. Research has shown that an NPS acts as a leading indicator of growth (www.netpromoter.com).
So, are the customer experience results from these consumer markets and other B2B industries relevant to the contract manufacturing segment? The answer is a resounding yes. In both our professional/ business and private consumer lives, we are continuously exposed to, and demanding for ourselves, increasingly positive customer experiences in buying cycles.2
Experience in the CMO/CDMO Market Which of the new insights in customer experience are relevant to the CMO industry, and what are some options to improve the customer experience? There are critical differences between large consumer market segments and the customers for CMO services.
Important dimensions that have shaped the customer experience for decades are cost (obviously), delivery date/supply reliability, and product specifications.
Nice Insight has developed the Customer Awareness (CA) and Customer Perception (CP) scores to further detail what constitutes customer experience dimensions in the CMO market. For purposes of the Nice Insight survey, Customer Awareness describes a potential or current buyer’s knowledge of a particular company, product, or service offering. Customer Perception reflects how a current buyer or prospect rates a company based on information he/she has been exposed to, such as marketing materials and word-of-mouth influence, as well as personal experience.
The CP score is based on six drivers in outsourcing: Reliability, Quality, Innovation, Affordability, Productivity, and Regulatory Track Record. In addition to measuring customer awareness and perception information on specific companies, the survey collects data on general outsourcing practices and preferences, as well as barriers to strategic partnerships among buyers of outsourced services.
Other dimensions may include intellectual property, process compliance, and traceability, depending on the complexity of the customer’s request.
The Nice Insight Pharmaceutical and Biotechnology Survey is deployed to pharmaceutical and biotechnology executives seeking outsourcing on an annual basis. Since 2010, Nice Insight has randomly selected respondents from a group of over 40,000 qualified individuals who are key industry influencers and decision makers to complete its Nice Insight Pharmaceutical and Biotechnology Survey (CRO/CMO/CDMO). Survey respondents answer a range of questions based on their outsourcing needs and behaviors. The data provides ratings of company strengths for providers offering similar services based on various criteria, such as buyer group or service type.
The 2016 CDMO report includes responses from 587 participants representing Big Pharma and Biotech (36%), Midsize Pharma and Biotech (43%), Small and Emerging Pharma and Biotech (21%), and having positions in C-Suite (39%), Operations, Purchasing, and Drug Development (29%), Quality Assurance/Regulatory (11%), and R&D/Formulation (18%).4
The 2016 CDMO Nice Insight report found that 87% of CDMO customers across all customer segments (Big Pharma/Biotech, Midsize Pharma/Biotech, Small and Emerging Pharma/Biotech) look for strategic partnerships, while CDMO selection criteria include hard business requirements for understanding customer requirements, contractual approach, regulatory compliance, and cost (See Figure 1). Post-CDMO engagement satisfaction relies on the “soft” attributes that are related to good communication, being flexible, and the ability to adapt to customer protocols. It is clear that, apart from the great performance in business and manufacturing, a CDMO must also excel in service performance in order to retain strategic partnerships.
Analysis of successful businesses in improving customer experience across many different industries tends to point out three critical factors.
Guy Tiene, Strategic Content Director, Partner, Nice Insight
Heading up our Thought Leadership, Research and Nice Insight (market research and business intelligence) programs, Guy brings over 30 years of education and marketing experience to his role, drawing from 16 years in the life sciences alone. Leading our editorial standards for client content and Nice Insight research-based industry articles, Guy works with clients and the agency to produce hundreds of pages of data, trend and commentary each year. Having served as head of global marketing and communications for a CMO, he also brings critical insight and guidance to all communications. Guy holds a Masters degree from Columbia University.
LinkedIn: www.linkedin.com/in/guytiene
Email: guy@thatsnice.com
Robert Leeuwendal, MSc Senior Consultant, Specialty Chemical and Biotech Industries, Nice Consulting
Robert has been partnering with clients to co-create and implement solutions that boost client’s growth and innovation capabilities in areas such as strategy formulation, new product development, and market expansion and customer experience. Robert holds a B.Sc. in Biochemistry and M.Sc. in Physical/Polymer Chemistry from Leiden University, The Netherlands.
LinkedIn: uk.linkedin.com/in/rleeuwenda
Email: Robert.Leeuwendal@haigbarrett.com
Guy supports the success of life science organizations by identifying synergies across research, content, marketing and communications resources to drive value for clients. With over 30 years of education and marketing experience and 18 years in the life sciences alone, Guy leads our editorial standards for client content, Pharma’s Almanac and Nice Insight research-based industry content as well as external communications for clients. Having served as head of global marketing and communications for a CMO, he also brings critical insight and guidance to all communications. Guy holds a Masters degree from Columbia University.