Speaking the Same Language – The Gap Between the Sales Pitch and Supplier Selection Criteria – And How It Applies in the Excipients Market

American Pharmaceutical Review, February 2015

One of the key tenets of behavioral research in the consumer environment is that it is easier to adapt to your customers’ behavior than to change their actions to accommodate your sales approach (eg, store layout, intended product usage, etc). There are few exceptions to this rule; a key example is the refrigerated section of the supermarket being located at the back of the store. This forces a customer who needs only a gallon of milk to walk past the temptations that fill the center of the grocery store.

This works because the customer's need heavily outweighs the seller’s trap. And, we tend to fancy ourselves capable of escaping the trap and leaving the store without a bag of cookies to go with the milk. The other element working against this trap is the introduction of the convenience store, where the milk is close to the door, but a premium price is commanded. Because convenience stores play into the customer need so well, they are able to sell the same products at a higher price point than the supermarket. You almost never hear someone exiting with a gallon of milk complaining it was 25% more than he or she would have paid at the grocery store. This is because of the time-savings associated with the convenience. After all, time is money and saving time is a way of saving money—to a degree.

In the past 10 years, some of the differences that once separated B2C purchase behaviors from B2B purchase behaviors have converged. This change has taken place for a variety of reasons—from the introduction of the internet facilitating side-by-side price comparisons in a matter of minutes, to the economic downturn and overarching change in how businesses keep expenses under control—but the outcome is the same regardless of why or how this convergence occurred. As such, sellers need to differentiate their product from the competition in order to attract buyers. In doing so, sellers need to create a compelling case as to why their product is a better fit for the customers’ needs than the competition. Further, to get more return on marketing materials and business development teams, sellers need to adjust their sales approach to match what buyers seek.

From the information hierarchy on a product’s package to the packaging itself, in a retail environment there are a variety of ways a manufacturer can influence shopping behavior to improve purchase likelihood. The choice of the product’s location within the store, the product’s placement on a shelf, and any associated signage or discounts are ways that a retailer can influence shopper behavior to increase the likelihood of purchase. When it comes to B2B sales, sellers must rely on a different set of tools to influence their customers’ purchase decision. The important thing is that sellers understand the purchase criteria of their customers and tune into those elements during the selling process.

Survey Methodology

The Nice Insight Excipient Survey was deployed to R&D and Formulation personnel and excipient buyers in the purchasing function. The 2015 report includes responses from 412 participants. The survey is comprised of 60+ questions and randomly presents ~25 questions to each respondent in order to collect baseline information with respect to customer awareness and customer perceptions of the top ~45 excipient manufacturers and distributors serving the pharmaceutical industry. Five levels of awareness, from “I’ve never heard of them” to “I’ve worked with them,” factor into the overall customer awareness score. The customer perception score is based on 6 key influencers to purchase: Quality Assurance, Financial Stability, Regulatory Track Record, Affordability, Product Specifications, and Reliability of Supply. In addition to measuring customer awareness and perception information on specific companies, the survey collects data on supplier selection criteria and formulation requirements as they relate to excipients.

And in Excipients

The results from Nice Insight’s first industry-wide study of pharmaceutical excipients include insights into both sides of the transaction. The study focused on buyers of excipients (n = 412), investigating the key purchase criteria expected from a supplier as well as the types of excipients required for their pharmaceutical product portfolio. Excipient manufacturers (n = 189) were asked a complementary set of questions to gain an understanding of how these businesses acquire new customers and retain existing customers. The resulting data revealed a gap in the traits buyers focus on when making a purchase decision versus the traits sellers promote in their marketing communications and sales calls. This gap translates to opportunities lost or dollars left on the virtual sales floor.

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Among excipient buyers looking to qualify new suppliers, the manufacturer’s regulatory track record and the excipient product specifications are top of mind for 31% of respondents. These qualities are followed closely by the excipient manufacturer’s brand credibility and the price of the excipient (inclusive of the product, its transportation and storage), with 30% of respondents indicating these criteria are top of mind in selecting a new excipient supplier. When it comes to engaging new customers, excipient manufacturers stated that they tend to focus on brand credibility (51%), price (48%), and providing product samples or discussing the product specifications (40% each). The number one criterion for buyers—Regulatory/ Legal—lands in sixth place in terms of popularity among excipient sellers, with only 37% including information on the company’s quality systems, certifications or on-site supplier inspections in the dialogue.

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What happens when the seller does not address a buyer’s top priority? Naturally, the buyer leaves the conversation with questions and perhaps speculation as to why this important element was not included in the discussion. The best way to leave off a sales conversation is with the buyer confident that your product will meet their needs and expectations, and the best way to do this is to know what their needs and expectations are before the conversation begins. Fortunately, sellers are more in tune with relaying product specifications—an equally important factor among buyers as the company’s regulatory history. The tendency for manufacturers to promote their brand credibility overlaps with their buying audience’s top selection criteria; however, too much concentration on this broader, more ambiguous element may inadvertently suggest to the buyer that the seller doesn’t meet the buyer’s higher priorities and is instead trying to win on reputation instead of product specifications.

Courting new clients is tricky, and speaking to the points prospective clients want to hear will help immensely in converting prospects to clients. Of course, just like any other relationship, it’s important to stay in touch to understand how a client’s needs change as your relationship evolves—from new to existing to longstanding. Retaining existing clients isn’t easy; thus the same advice applies to these relationships: it is essential to know what matters most to the customer when it comes to pitching a new business or renewing an existing business. It is also important to take note that excipient buyers value a slightly different set of attributes when it comes to renewing a supply contract versus establishing a new relationship.

In the same way that a store needs to adapt to the shoppers’ behaviors to maximize sales, an excipient manufacturer needs to adapt to its buyers’ behaviors to maximize the efficacy of both marketing materials and sales discussions. The starting point is in understanding the purchase criteria among your buyers and crafting marketing materials and sales dialogues that compellingly convey your company’s strengths among these criteria. Keep in mind that new prospects and existing clients evaluate their suppliers on different selection criteria and deserve to have uniquely tailored pitches to renew their contracts.

 

Nice Insight

Nice Insight, established in 2010, is the research division of That’s Nice, A Science Agency, providing data and analysis from proprietary annual surveys, custom primary qualitative and quantitative research as well as extensive secondary research. Current annual surveys include The Nice Insight Contract Development & Manufacturing (CDMO/CMO), Survey The Nice Insight Contract Research - Preclinical and Clinical (CRO) Survey, The Nice Insight Pharmaceutical Equipment Survey, and The Nice Insight Pharmaceutical Excipients Survey.