Marginalized APC Inc.

Meeting Transcript
Date:

30th Jan 2006

Start Time:

Purpose:

To understand the reason why sales expenses are high such that it is adversely impacting APCs
profitability

Venue:

APCs head quarters

Participants:

Bill Beaver, Chief Sales & Marketing Officer

2:00 PM

End Time:

2:45 PM

You, Functional Business Analyst, Corporate Strategy Group

Initially, the meeting begins with only the Analyst team and Bill Beaver. After the initial exchange of greetings and
pleasantries, the conversation ensues. The following is the verbatim transcript produced from the voice recording of the
meeting.
Bill: Hey, thanks for coming. I need you to analyze the sales expenses and figure out if this is truly why our
overall margins are down. There is such a perception and I need to be sure. Get started right away and I
need your report in three weeks.
You: Sure. But quickly, it sounds from the tone of what you said that you dont believe that the sales function
is the primary cause for low margins.
Bill: No, not that I dont believe it. Just that I havent seen any solid data to back me up. In my mind, we
have optimized sales & marketing expenses quite well. Unless you bring me evidence of inefficiency, I am
reluctant to make any major investment in improving this function.
You: Ok. Sounds good. So, I think, to dig deeper into this, I need to be talking to couple of Regional Sales
Managers, a few key Sales Reps, and few folks from Marketing, right? Do you have any specific names for
me? Can you suggest any other roles?
Bill: Yeah, talk to Regina. She is in the head quarters this week. She is busy, so be judicious with her time.
You can talk to Joe Phillips, he is our star sales rep. Roger from internal marketing. Additionally, you might
want to talk to someone from finance and accounting for the hard numbers.
You: Alright, this is a good list. I might add more people as I progress through my investigation. OK.
Now, I know you said you dont believe that sales & marketing can do anything more. Suppose you were to,
for a second, act that you have a reasonable doubt, that, lets say marketing expenses are high and that you
have to reduce it. What would be your thoughts?
Bill: Ok. Lets see. Pharma marketing is already very restrictive. My main expenditure is advertising. Every
TV ad must run for at least 70 to 90 secs because of all the disclaimers and risk factors one must include in
the ad, with all the strict regulations in this regard.
To optimize that, we already have a team that performs very thorough research on the most effective slots to
place ads. If you must, we can do some more optimization, not sure though. I dont want to be sounding like
unnecessarily cutting costs.

Business Analysis Level 1

Page 1
COPYRIGHT 2011 by BA ValueBASE LLP

Marginalized APC Inc.

And then, talking about optimization, we use our sales channel to the maximum to advertise. The sales
literature that they carry with them on sales calls are not only targeted at the healthcare providers, but also at
the consumers.
Sales folk also carry with them the mandatory samples of drugs that they leave back with the doctor. We
need a lot of samples to distribute.
And, coming to promotional items - we have a lot of innovation in this area. The kind of promotional items
that we develop to attract attention are unbelievable.
You: Innovation in promotional items? Interesting
Bill: Yes, we create promotional items that are not only useful but also of high quality that people would not
mind using, despite our companys logo and a brand of drug printed on them.
Plus, we take a lot of care in defining which promotional item is suitable for which therapeutic area.
Additionally, we define which item is for which region and what type of providers. For diabetes, for high
profile health care providers, we have say, a blood sugar reader.
For normal clinics, we might have a large poster that the doctor can display in their waiting area. The poster
provides some very useful information on say, what kind of food one should consume to avoid diabetes. We
define a diet for diabetic patients. Something like that. Do you get the drift?
You: Yes. Very much.
Bill: So I have an amazing creative team that works on nothing but creating these promotional items relevant
to a given slice of market from many perspectives therapeutic area, region, demographic of patients
visiting the healthcare facility, the scale of operations of the facility, etc. We have over a thousand
promotional items overall, but only about 350-400 of them are active. We retire the old items.
You: Thats really impressive! This must all be costing significant dollars, right?
Bill: Yes, of course. Creative folks dont come cheap. Plus the cost of the promo items. We outsource this too,
as in, we prepare a design. China manufactures them and ships them directly to all our distributors.
You: Ha, ships them to distributors, why?
Bill: So that when sales people need them, the closest distributor can ship the order directly to the sales reps.
You: So, I should be talking to a couple of distributors, right?
Bill: You do? Ok. Talk to Regina; she will organize a visit.
You: OkI will ask Regina. Going back to one point you made earlier. These drug samples are
manufactured and operations department is responsible for this, right?
Bill: Of course
You: So who pays for thatthe drug samples? Is that your cost? It should be, logically, right?

Business Analysis Level 1

Page 2
COPYRIGHT 2011 by BA ValueBASE LLP

Marginalized APC Inc.

Bill: Yes, I foot the bill for the drug samples also.
You: Cooland Im guessing that you should be charged at cost price, correct? Never mind, Ill check that
with accounting.
The next question that I have is about some sort of a metric to measure if all these promos are being effective
in generating revenue. Do you know if there is any correlation between sales rep visits, the promotional item
presented and prescriptions the doctor provides?
Bill: No straight way of measuring. It is very difficult to measure effectiveness at an individual sales rep
level.
See the way it works, at a high level, is as follows: A sales rep should see a given physician twice every
month, you know, to maintain top of the mind recall for APCs drugs.
The number and persistence of sales reps, across all companies like APC, are increasing over the years. As
the number of reps goes up, the amount of time an average sales rep spends with doctors goes down. So I
cant just increase the sales rep numbers to achieve scale. It is a zero sum game because, today, not only do
physicians not spend adequate time with sales reps, worse still, they do not see this as a serious problem.
So, to counter this, we also train our sales reps on relationship selling techniques in addition to medical
science and product knowledge. This can make a difference in sales force effectiveness. Current trend is that
specialist physicians are relying more and more on specialty sales reps for product information, because they
are more knowledgeable than primary care reps.
From the corporate, we do provide sales force a lot of assistance in terms of physician targeting, call
planning, and sales force effectiveness programs. We are slowly trying to move the sales reps to the specialty
grade. We have processes and systems for all of these activities.
Anyway, because of the size of the sales force, measurement of effectiveness of the sales force is a significant
business challenge. We have processes to categorize the physicians into different classes according to their
prescription behavior, patient population, and of course, their business potential. To quote numbers, in the
US alone, we have about million physicians. Based on the above parameters, we target only about 400,000 of
them. We have a sales force of about 4200 and they have to cover as many physicians as possible. We
provide the sales reps with a call list of about 120 to 150 physicians that should be visited in a 3 week cycle.
You: Ummokthis is great information. Do the sales reps actually reach this daily target?
Bill: I believe so. This is a question for the sales managers. But I do keep hearing complaints about
inadequate supply of sales supplies, i.e. drug samples, promo items, sales literature. They cancel
appointments if they do not have these supplies or, obviously, even if they do make these calls, they are not
effective. We do have an ordering system in place for these sales reps. They are free to place orders
whenever they want supplies and we make sure the distributors supply them to their door step. But still
there are glitches.
So listen, some of these more detailed questions, Regina, the distributor, or even Joe will be able to answer
better. So I suggest you get some time from them. I got to run now. I am already late for my next
appointment.

Business Analysis Level 1

Page 3
COPYRIGHT 2011 by BA ValueBASE LLP

Marginalized APC Inc.

You: Sure. Thank you so much. This has been great. I will keep you posted with the progress. You will have
my report in three weeks.
Date:

2nd Feb 2006

Start Time:

4:00 PM

Purpose:

To understand the sales process and the expenses

Venue:

APCs head quarters

Participants:

Regina Buffay, Regional Sales Manager, Midwest

End Time:

5:30 PM

Joseph Phillips, Sales Representative

Roger Geller, Internal Marketing
Mathew Greene, Premier Distributors
Debra Ray, Head of Order Administration
You, Functional Business Analyst, Corporate Strategy Group
After the initial exchange of greetings and pleasantries, the conversation ensues. The following is the verbatim
transcript produced from the voice recording of the meeting.
You: Thank you all for accepting my invite. As I had stated in my invite, the objective of this meeting is to
understand why expenses related to sales are high. Let me start with Regina.
So Regina, what are your thoughts? Do you first agree that the sales expenses are high? If yes, what are the
reasons according to you?
Regina Buffay (Reg): Well yes, the sales expenses can be contained a lot more. See, the first reason, in my
mind, for the expenses to be high are the cost of sales supplies. Well, let me take that backnot actually the
cost of sales supplies, but the piling up of costs because sales reps order lot more than they need.
You: How do you mean? Why would they order more than they need?
Joseph Phillips (Joe): Yeah, what do you mean Reg?
Reg: Im sorry Joe, but isnt that what the situation is? Why do you need so many boxes of the drug samples?
I wonder where all the drugs go. I hope they are not expiring and landing in the trash.
Joe: Reg, youve been a sales rep yourself. You know how it works. Besides, I have to get all the way from
the field to our local office just to place order in that stupid system.
You: Yeah, Ive heard this beforeyou guys have no easy access to the order processing system.
Joe: Yes, thank you! And do you know how much time it takes for the order to land at our place. It is
unbelievable. I dont even know why the admin team needs so much time.
Debra Ray (Deb): Because Joe, all the orders that you guys place in the system, my team has to regularly
collect, sort and fedex to the closest distributors. This takes time.
You: Why do you have to do all this manual stuff Deb? The data is in the system. Why cant the system do
everything but ship the order to the distributor.
Deb: The system does all that. But my team double checks it before shipping the order to the distributor

Business Analysis Level 1

Page 4
COPYRIGHT 2011 by BA ValueBASE LLP

Marginalized APC Inc.

Matthew Greene (Matt): Ohyou guys do double check? But why do I receive so many orders asking for
Items that weve withdrawn. This happens a lot with the promotional items.
Joe: This happens because when we place the order, wed find so many Items with the same name. We just
select the first one. There is no easy way, believe me, there is just no way for us to determine whether an item
has been discontinued or withdrawn. While we are on this topic, I think wed be better off if there were some
sort of an image if the item that we could see before we ordered.
Matt: I have also seen, quite regularly actually, that there are multiple orders, exactly the same, well almost
the same. I look at the sales rep information and the same sales rep has placed both the orders.
You: I am guessing you will ignore one of the order, right?
Matt: No, I honor both orders. Who am I to decide which sales rep receives what? None of my business.
You: Got it. Joe, any idea why there are multiple orders from the same sales rep?
Joe: Not reallywell, hang on a secondOhnow I get itsometimes I wonder why I receive an order
today and receive another batch of the same order the next day too! Oh this is why!! Ok let me explain.
See, I wait for some time to receive the order after I have placed it. As I said earlier, it takes a lot of time for
me to receive my orders. I either go back to the office to resubmit the same order or, if someone else is going
to the office, I ask them to help me out by placing the order for me.
It sounds like the order admin has sent my first order already and they send the second one also.
Ive been recommending that we be allowed to cancel orders. Somehow, I dont know why, we dont have
an option to cancel an order or track an order.
You: You cant cancel or track an order?
Joe: No I cant. Wellthat is not truewe can cancel and orderbut only up until the time my order is not
sent to the distributor by the order admin team. Once it is out of the gate, I cant cancel. Normally, order
admin gets the order out of the gate by the next day. But, my issue is, it takes so many days for the order to
be processed by the distributor. If we are able to send them a cancel notification before they have shipped the
order out, then they can cancel the shipment and we can save a lot of trouble for everyone.
About tracking, no, there is no way to track an order. Just have to wait for the order to show up. I cant even
call Order Admin team because they too dont have a clue once they send that order slip to the distributors.
You: UmmDont you return the excess order?
Reg: No they dont. Why will they? They can use the excess. I wonder what they do with all that excess. I
dont see in peoples sales call report to have done any more sales vists than they are expected to. So where is
all that excess going?
Deb: That is why, Reg, I keep saying that there has to be some kind of tracking and monitoring for who is
ordering what and how much. Im not insinuating anything, but I do notice cases like the other day, I clearly
know that the sales rep belongs to the Cancer area. But his orders, not small, mind you, are for diabetes and

Business Analysis Level 1

Page 5
COPYRIGHT 2011 by BA ValueBASE LLP

Marginalized APC Inc.

HIV area. I wonder what business does a Cancer rep has ordering non-Cancer drugs. May be, they do have
some business!
Joe: Deb, I know it can look bad. There is no need for any tracking and monitoring. I did tell you that we
help each other out by placing orders for each other. This must be a mistake. Besides, if you cannot even
send out a cancellation request to the distributor, you can imagine why we cannot send the shipment back. It
only adds to the cost. Wont it?
You: Deb, does this happen quite often?
Deb: Well, I dont know often or not. I have seen a few cases recently. I have heard similar stories from a few
people in my team.
You: Deb, does you team provide some backoffice support at all? As in, can the sales reps call in an order
and you place them in the system on their behalf?
Deb: Yes, it is not official though. I do offer that service as a gesture of good will.
Joe: Yes, I have used this once. But I had to spend a lot of time on the call explaining exactly what items I
needed. Im not complaining. It sure is mighty nice of Debs team to help us out. But, they dont know these
items as well as we do. So they make errors while placing orders. Besides, several times, I have reached a
sorry-I-am-busy person. This is reasonable since this is not an official service that Debs team is expected to
do.
You: Joe, what do you do in cases where your order has not arrived and you are scheduled to meet a
physician? I guess what I am asking is what do you do in cases where you have exhausted all your stock?
Joe: I try to keep the appointment. But I wont be effective. There are cases where I have cancelled my
appointment. Not a good thing to dobut what do you do when you are so short changed with no stock.
You: Roger, now coming to you. Do you have any thoughts?
Roger: Yes, just one. I think internal marketing also contributes to sales expensesnot too much, but
significant, I think.
When our research indicates we have to push a specific drug or when we introduce a new drug to the
market or we want to replace our sales literature or we want to communicate some hot news with our reps,
we are left with only two options. One, we wait until a sales conference is organized, like the one scheduled
in Miami for later this year. Two, we send a separate shipment to our sales reps. Both costs money!

Business Analysis Level 1

Page 6
COPYRIGHT 2011 by BA ValueBASE LLP