Repeat Customers: Loyal or Merely Owing to Debt of Gratitude?

Loyalty is the primary aim of any relationship. From the Medieval era of knighthood in Europe to the Bushido code of the samurai, to the legacy found in the hallowed walls of military institutions around the world, loyalty has played an integral role in the shaping of man’s societies.

When there is loyalty, the integrity of an organization, group, team, or system is stable. It is and has been, one of the principal ingredients of tutelage, servitude, charity, and benevolence.

Today, in the world of commerce, Customer Relationship Management suggests: Loyalty is the primary ingredient of better profits.

Getting more sales out of the target market: good. But getting the optimum number of sales from a loyal customer: is better.

To onlookers, the world of Pharmaceutical companies looks like it’s simply about the sale of medicines. But this is far from true.

The real picture is that the pharmaceutical industry IS about keeping its client doctors loyal enough to continually endorse the sale of their medicines.

The keywords here are relationship, individual clients, and loyalty.

As it is, Pharmaceutical companies may be the first entities closest to practicing pure Customer Relationship Management.

BACKGROUND OF THE STUDY

A doctor’s endorsement of a brand of medicine plays a vital role in the profitability of pharmaceutical companies. In this sense, the doctors are the real clients of pharmaceutical companies.

From the onset, pharmaceutical companies claim that to acquire and keep these client doctors, they employ Customer Relationship Management (CRM). They differentiate client doctors based on their individual wants, habits, and preferences. They go to great heights to know the doctor’s wife’s birthday, that secret getaway he’s been dreaming of, that gadget he’s been viewing on Google for weeks. From and based on all this personal info, they will then craft very individual rewards and servicing schemes for every individual doctor. Reps' perception of loyalty depends on the client doctor's support for his product. Reps within this category do admit that it is impossible to have the 100% support of the client doctor.

Their different marketing practices in this category:

Sponsorship:

1. International conventions-US and Europe (6 only per convention)

2. International RTDs (round table discussions) - Asian (14 per RTD)

3. Local conventions (except registration)

4. Booth sponsorships during medicine week

5. Local and regional RTDs with hotel accommodation.

Meals:

1. Dine-outs

2. Servicing

Regular coverage/calls:

1. Detailing

The idea?

Personalized rewards make the receiver feel extra special.

Value is placed on a gift that took special effort. It is hoped that this value received will be reciprocated with loyalty.

Such marketing activities win loyalty thru reciprocity. The obligation to give, to receive, and to repay. Doctors are obliged to prescribe the reps' product but there is no assurance for this. It is all about the debt of gratitude. But the problem is everybody is doing this and the Medical Doctor (MD) can only accommodate a few number invitations of reps. It will all depend on the relationship that the rep and MD will develop thru iterative visits.

The very essence of CRM is the building of a relationship between enterprise and individual clients that results in profitable loyalty for both parties. As THIS loyalty is the grand scheme of all relationships, this research is created to show its building blocks and relevance to pharmaceutical industries.

What makes pharmaceutical industries tick? Do the rewards that are fruits of CRM lessons unlock what necessitates a doctor’s loyalty? Are the general practices of pharmaceutical companies in differentiating clients leading to loyalty?

And if they do, does this loyalty lead to profits?

RATIONALE OF THE STUDY

No matter how connected medicines are, to the alleviation of sickness and suffering, pharmaceutical companies are still businesses with the end goal of earning maximum profit. Laying claim on the vigorous use of CRM practices, these pharmaceutical companies have often been assessed, revisited, and modified their

Marketing practices exist and are carried out not just to reel in more customers but also to retain patrons. The common notion that existing clients-regarded-as-assets is as old as time itself; therefore the business’ plans of nurturing its stable client base have to be continually improved. This led to the shift of focus from luring new customers to retaining old profitable customers. In the case of this paper, the researchers would want to establish proof and truth by answering the following questions below:

1. What are the common marketing practices in pharmaceutical companies to win client doctors’ loyalty?
2. How do pharmaceutical companies build relationships with client doctors?
3. How do pharmaceutical companies differentiate client doctors?
4. How do pharmaceutical companies assess the effectiveness of differentiating clients?
5. How do differentiating clients and building relationships foster client doctors’ loyalty?
6. How do client doctors’ define loyalty?
7. How do pharmaceutical companies define loyalty?
8. Is there a similarity between the definitions between client doctors and pharmaceutical companies? How? Why?

With these questions answered, the researchers are certain that this paper would be most beneficial to anyone who is interested in business, loyalty, and stability. The fruits of this research will be of value to people who would want to know more about CRM in pharma and its relevance, adoption, and applicability to businesses synonymous with pharma.

RESEARCH PROBLEM

This research aims to answer the question:

- What are the current CRM practices of a pharmaceutical company on differentiating client doctors to develop loyalty?

- How do doctors perceive these practices leading to their loyalty?

- What do doctors perceive that pharmaceutical companies should do to capture their loyalty?

RESEARCH OBJECTIVES

This research is conducted with the end view of assessing the effectiveness of the pharmaceutical companies' CRM practices in creating profitable loyalty. Specifically, this research aims to achieve the following objectives:

- To provide a list of current CRM practices.

- To define loyalty from the perspective of reps/pharma and client doctors

- To correlate the two parties’ definitions

- To differentiate longevity and loyalty

- To understand the building of relationships between reps/pharma and client doctors

- To suggest methods and/or practices that will foster loyalty

SIGNIFICANCE OF THE STUDY

The outcome of this research will be most beneficial to the following:

Pharmaceutical and other related businesses can use this study to scrap, enhance, modify, and adopt specific marketing approaches that have been identified by both respondents and subjects. The testimonies and statements of client doctors and preps will provide a wellspring of information as to how and what they perceive as loyalty. Both parties to their individual advantage can use this perception or definition.

Client doctors will see a whole new perspective on pharma loyalty. They will appreciate more the efforts put forth by reps. They will know what are the objectives/goals behind the actions put forth by reps and the pharma.

To general practitioners, this will serve as a window to see what is the true motive behind the actions/efforts put forth by people such as doctors and reps.

To CRM advocates, this paper is an acid test as to which marketing practices would be considered or should evolve into CRM.

REVIEW OF RELATED LITERATURE

While there are few available pieces of research concerning differentiating customers specifically in pharmaceutical industries, the prevailing wind of doctrine in almost all organizations and businesses is geared toward the establishment of a culture leaning towards loyalty. The wealth of information presented to date is mainly centered on CRM practices of industries boasting of their individual doctrines concocted after CRM principles.

One-on-one marketing may have had its roots in the academe thanks to Howard Gardner’s contribution to the true definition of intelligence; however, a large void exists surrounding the realm of specific CRM practices in the pharmaceutical industry. A huge gap is also evident in correlating differentiating clients' and doctors’ loyalty. Like in all great endeavors, the researchers have found it comforting to state that this may be the first of its kind.

The literature available to date concerning the research study can be categorized or divided into the following sub-topics:

1. CRM practices in the Pharmaceutical companies
2. Pharmaceutical representatives’ perception of loyalty
3. Client doctors’ loyalty

Pharmaceutical Marketing Practices

An article written on the Internet titled “Ethical Standards for Pharmaceutical Marketing in the Philippines” states that the local marketing of drugs among client doctors is ridden with much corruption and controversy. It paints a picture of not mere personal favors but even special favors given to doctors so much so that the latter will be enticed, or for the most part, forced to prescribe a specific brand of medicine. This malpractice according to the article, clearly violates the doctor’ sworn oath of giving maximum care to a patient.

It goes on to suggest that strong government intervention and strict implementation of policies to police the marketing habits of pharmaceuticals to safeguard the integrity of patient care are really necessary. It also implies that the marketing malpractices are done to ensure the client doctor’s loyalty to the brand; its primary aim is to impose the need for government intervention and the independence of doctors in prescribing drugs to patients with an end goal of securing optimum patient healthcare.

In a similar US-based article: Pharmaceutical Company Marketing Practices written by Jeffrey B. Miller in 2007, he exposed the problem of manufacturers’ attempt to secure physician loyalty for prescribing drugs to patients. An excerpt is shown below to highlight the essential part of the piece.

In seeking to build these relationships, however, some manufacturers and physicians have gone beyond generally accepted, arms-length business arrangements and niceties. In some instances, these relationships have even been thought to be detrimental to patient care, and to the medical profession in general, particularly where they involve personal financial benefits that do not appear to be directly related to patient care concerns. Frequently cited examples include manufacturers showering physicians with extravagant meals, expensive gifts, tickets to sporting events and theaters, and vacations to exotic locations - and not always just for the physicians, but sometimes for their families, and for their employees. As a result of these inappropriate activities, government regulators and prosecutors, as well as some leading physician and private interest groups, have called for a new prescription for quality patient care: the reform of inappropriate marketing practices.

This segment would want to stress the importance of this paper’s definition of loyalty and not confuse it with other existing definitions written, published, read, and accepted by many. The following is our sincere attempt to itemize, isolate, and define loyalty.

The Various Definitions of Loyalty

1. Fred Reichheld in his book “The Loyalty Effect” defines loyalty as the willingness to make an investment or personal sacrifice to strengthen a relationship.
2. Theodoric, an Ostrogoth monarch: “If this man is not faithful to his God, how can he be faithful to me, a mere man?”
3. Hannah Arendt (1906 - 1975) German-born U.S. philosopher and historian wrote in his book The Origins of Totalitarianism that “total loyalty is possible only when fidelity is emptied of all concrete content, from which changes of mind might naturally arise.”
4. Jean de La Bruyère (1645 - 1696) a French essayist and moralist wrote in Characters, or the Manners of the Age that “party loyalty lowers the greatest of men to the petty level of the masses.”
5. Elbert Hubbard (1856 - 1915) a U.S. writer, printer, and editor wrote in The NoteBook that “an ounce of loyalty is worth a pound of cleverness.”
6. Josiah Royce wrote in “The Philosophy of Loyalty”, the test of loyalty is conducted rather than the intensity of feeling, primarily a certain “stickiness” or perseverance — the loyal person acts for or stays with or remains committed to the object of loyalty even when it is likely to be disadvantageous or costly to the loyal person to do so.
7. West, Ranyard, 1945, Conscience and Society, Some evolutionary biologists/psychologists see loyalty as a genetically transmitted adaptive mechanism, a felt attachment to others that have survival value (Wilson, 23). Given what is often seen as the self-sacrificial character of individual loyalty, such loyalty is taken to be directed primarily to group survival. What “loyalty” may have begun as and what it has come to be for reflective beings need not be the same. Nor would it impugn what loyalty has come to be that it began as a survival mechanism.
8. Michael Walzer and Thomas Nagel, Universalism and Particularism of Loyalty, It may be that particularistic obligations such as those of loyalty have to be considered as sui generis, products not simply of our common humanity but of our sociality, of the self-realizing significance of associational bonds — most particularly friendships, but also various other associational connections that come to be constitutive of our identity and ingredients in our flourishing.
9. Terrance McConnell, 1983, Gratitude loyalty is owed to various associations as a debt of gratitude. Although gratitude as a ground of obligation also stands in need of justification, it tends to be more widely accepted as a justifying reason than loyalty.

Don Peppers and Martha Rogers in their book “Managing Customer Relationships” reads: the attitudinal definition of customer loyalty would mean that someone who is willing to pay a premium for Brand A over Brand B, even when the products they represent are virtually equivalent, is loyal to Brand A. But the emphasis is on WILLINGNESS, rather than on actual behavior, per se. In terms of attitudes, then, increasing a customer’s loyalty is virtually equivalent to increasing the customer’s preference for the brand. It is closely tied to product quality and customer satisfaction.

In the world between med reps and client doctors, the true test of loyalty then, IS, should a rival pharma arrive and give equal or even superior gifts and servicing, would the client doctor maintain the current relationship?

To sum up, clearly, these two points vividly show the need to address the current marketing practices of pharmaceutical industries and the malpractices of doctors to patients. With these as premises, it is vital that we search, prove, and prescribe remedies to the situation.

SYNTHESIS OF LITERATURE

The bottom line of the gathered pieces of literature can be summed up in one word ----- RELATIONSHIP. Defining, establishing, and understanding relationships between the players (reps, pharma, and client doctors) will answer the objectives and aims of this paper.

Rogers and Peppers define a relationship as a mutual, interactive, and repetitive activity, which provides ongoing benefits, that changes the behavior of parties involved thereby becoming uniquely different from other relationships leading to MUTUAL TRUST and LOYALTY. Our goal as researchers is to identify what marketing practices (if there are any) equate to developing and nurturing doctors’ loyalty to brands and pharma. Seen from a top-to-bottom perspective, one will realize that the nature of the relationship between the pharma and the doctor will reveal the type of loyalty and prescription habits of the latter. However, aspects of the nature of relationships have to be scrutinized and dissected in order to know if along the narrow road leading to loyalty marketing malpractices employed. Consequently, do doctors regard the relationship as loyal, or does their act of adhering to and prescribing a specific brand translate to loyalty? When doctors prescribe a particular brand of prescription drugs, does that very act constitute loyalty to the brand? Another pressing concern is whether should the concept of loyalty has to be totally virtuous or not.

There are various pieces of literature to date, which support and refute the claims that prescribing is not loyalty. Gratitude can and maybe a minute part of loyalty but it is not per se. Loyalty can be both virtuous and highly unethical or destructive. That it is relative to one’s self-definition.

THEORETICAL FRAMEWORK

This is the theory: the customized rewards and servicing of pharmacy companies create a perceived special favor to client doctors that are supposed to maintain client doctors' loyalty.

Its roots involve the very basic theories of reinforcement. Reinforcement is a term in behavior analysis for the process of increasing the rate or probability of a behavior (e.g., pulling a lever more frequently) in the form of a "response" by the delivery or emergence of a stimulus (e.g. a candy) immediately or shortly after performing the behavior.

Reinforcement theory is one of the motivation theories; it states that reinforced behavior will be repeated, and behavior that is not reinforced is less likely to be repeated.

A positive reinforcer is a consequence that increases the frequency of a behavior or maintains the frequency.

According to B.F Skinner, primary reinforces include sleep, food, air, water, and sex. But it still boils down to Value. For while these primary reinforcers are fairly stable through life and across individuals, the reinforcing value of different primary reinforcers varies due to multiple factors (e.g., genetics, experience). Thus, one person may prefer one type of food while another abhors it. Or one person may eat lots of food while another eats very little. So even though food is a primary reinforcer for both individuals, the value of food as a reinforcer differs between them.

CONCEPTUAL FRAMEWORK

This is the concept: Using CRM techniques, pharmaceutical companies differentiate doctors based on their individual wants, habits, and preferences. From these data, rewards and servicing are tailored and fitted per client. These include but are not limited to:

Sponsorships:

1. International conventions-US and Europe (6 only per convention)

2. International RTDs (round table discussions) - Asian (14 per RTD)

3. Local conventions (except registration)

4. Booth sponsorships during medicine week

5. Local and regional RTDs with hotel accommodation.

Meals:

1. Dine-outs

Servicing

1. Product Briefing or Detailing
2. Regular coverage/calls
3. Golf, badminton, and other sports activities to win client MDs
   loyalty.
4. R&R activities internationally and locally to MDs. At times, even offer girls to accompany MDs.

The customized rewards and servicing of pharmacy companies create a perceived special favor to client doctors that are supposed to maintain client doctors' loyalty. These loyalties optimize profit. Figure 1 illustrates the entire idea.

METHODS AND PROCEDURES

The wealth of information the researchers can gather will be dependent on the answers of client doctor respondents/interviewees from the following questions below:

INTERVIEW QUESTIONS:

For REPS:

1. What is loyalty for Reps?
2. What marketing practices are employed to win client doctor’s loyalty?
3. How do these practices win client doctors’ loyalty?
4. What are the standards (measurement) for a client doctor to be LOYAL?
5. Do you think that client doctors perceive loyalty as Reps see it? Why or Why not? How?

For CLIENT DOCTORS:

1. What is loyalty for client doctors?
2. How does a client doctor show his/her loyalty to a Rep?
3. What are the standards (measurement) for a Rep to be LOYAL?
4. How do client doctors know that Reps are loyal to them? Specify answers please; give situations.
5. Do you think that Reps perceive loyalty as client doctors see it? Why or why not? How?

The research method involved will be interviews with client doctors and pharmaceutical representatives. The descriptive approach in defining the relationship(s) between variables will also be utilized since the data are leaning more on the qualitative perspective. The answers or statements of client doctors and representatives will be deemed neither mere assumptions nor perspectives but truths and will serve as the basis of research findings.

The interviewed client doctors are categorized as follows:

1. Family member(s)
2. Extended family member(s)
3. Classmates in the UP MA program
4. Clients of researcher/pharmaceutical representative

With the established relationship with respondents/interviewees, the researchers are confident that much, if not all, of the information presented or given, will be factual.

SCOPE AND LIMITATIONS

Only an Ingersoll pharmaceutical company representative was interviewed

Only the four (4) categories of the client doctors were interviewed for easier gathering and confidentiality of information during the interviews

The IDIC model of CRM is also utilized but with an emphasis on differentiating customer methodology

The variables to be correlated are only as follows: client doctors’ definition of loyalty, reps’ definition of loyalty, and marketing practices of the pharmaceutical industry (Ingersoll) in differentiating client doctors.

DEFINITION OF TERMS

1. LOYALTY ---- used and defined in various ways from the perspective of three key subjects of the research:
2. Client Doctor’s LOYALTY - state when a client doctor favors a particular pharmaceutical industry even if another pharma gives better offers.
3. Rep’s LOYALTY - state when a pharmaceutical representative would do anything to win a client doctor’s loyalty.
4. Pharma’s LOYALTY – states when a pharma rewards its reps and/or client doctors with better incentives, bonuses, payment, etc.
5. Conceptual Framework Definition - concerned repurchase activity, regardless of any internally held attitudes or preferences.
6. PHARMA – a pharmaceutical industry
7. The PHARMA – Ingersoll Industry
8. REPS – medical or pharmaceutical representatives who seek out client doctors and establish relationships with them to earn the former’s loyalty.
9. CRM – a relatively new approach in management that focuses on relationship building and aims to make a profit by servicing the wants and needs of customers. Its main thrust is to establish deeper relationships with current and would-be customers thus earning their loyalty. It is the abbreviation of Customer Relationship Management
10. SERVICING – the efforts of reps to service the wants and needs of client doctors in order to win their loyalty.
11. IDIC model – an abbreviated form of CRM’s approach to building customer relationships. It stands for Identifying Differentiating Interacting and Customizing
12. LONGEVITY – refers to the length of time a client doctor has stayed with a particular pharma or has established a relationship with a rep.
13. RELATIONSHIP - a mutual, interactive, and iterative activity, which provides ongoing benefits that change the behavior toward parties involved thereby becoming uniquely different from other relationships leading to MUTUAL TRUST and LOYALTY.
14. OFFER – used to denote anything which pharma or reps may give for a client doctor’s wants and needs may it be ethical or unethical.
15. SPECIAL FAVOR – unethical demands ranging from rendering personal services to providing sexual pleasures.
16. THOUGHT LEADERSHIP – the idea that a senior doctor’s prescription habits will be emulated by young doctors.

ANALYZING THE PHARMA’S MARKETING APPROACH TO CLIENT DOCTORS

Marketing is a broad term that sums up four aspects within its umbrella of activities. A schematic diagram is provided below to show the relationships between the four (4) key aspects.

Encarta Encyclopedia defines Marketing as the process by which a product or service originates and is then priced, promoted, and distributed to consumers. In large corporations, the principal marketing functions precede the manufacture of a product. They involve market research and product development, design, and testing.

From the definition itself, a pressing matter ensues…that marketing is not merely the act of selling products and services but also a detailed activity involving producing, pricing, promoting, and distributing. What makes this definition an eye-opener is that ordinary people often think of marketing as leaning towards that promotion only. If this is the case, then anyone who practices marketing must take into consideration all four aspects of the marketing umbrella.

Marketing concentrates primarily on the buyers or consumers. After determining the customers’ needs and desires, marketers develop strategies that are designed to educate customers about a product’s most important features, persuade them to buy it, and then enhance their satisfaction with the purchase. Where marketing once stopped with the sale, today businesses believe that it is more profitable to sell to existing customers than to new ones. As a result, marketing now also involves finding ways to turn one-time purchasers into lifelong customers. THIS IS

THE ROOT OF C.R.M.

Using the Conceptual Framework of this research and aligning the schematic diagram of the marketing process, it is noteworthy that the task of pharma to lure in more customers (new and repeat ones) using the IDIC model is created to earn loyalty. However, this diagram also shows a possible misconception as to what may be perceived by the reps as CRM may not be so according to the schematics of marketing…

A careful look at the diagram shows that although a rep may be utilizing a one-on-one approach in Direct Marketing, he/she is not into Relationship Building, there is NO C.R.M. This is a realization that all people should know: that even if people do one-on-one, cater to your needs and wants, stay with you for a very long time (LONGEVITY), if there are no mutual, interactive, and iterative activities involved to better the relationship, there will be no LOYALTY.

Marketing includes planning, organizing, directing, and controlling the decision-making regarding product lines, pricing, promotion, and servicing. In most of these areas marketing has overall authority; in others, as in product-line development, its function is primarily advisory. In addition, the marketing department of a business firm is responsible for the physical distribution of the products, determining the channels of distribution that will be used, and supervising the profitable flow of goods from the factory or warehouse.

QUESTIONS about LOYALTY

Does loyalty have to be perfectly VIRTUOUS?

CASE:

This raises the important question of whether judgments about the worth of loyalty are reducible to judgments about the worth of the associations to which loyalty is given or the legitimacy of what is done as a result of them. Does loyalty have any value independent of the particular object associated with which it is connected or is its value bound up exclusively with the object of loyalty? There is disagreement on this (paralleling disagreements about the obligation of promise-keeping). Some would argue that loyalty is virtuous or vicious depending on what is done out of loyalty. Others would argue that loyalty is always virtuous, though overridden when associated with immoral conduct. Consider the complicated case of a loyal Nazi. Ewin would argue that because a Nazi can be loyal, loyalty could not be a virtue, for the virtues are internally linked to the idea of good judgment. But of course, the loyal Nazi might express that loyalty in a number of ways (as a husband and father, as a compassionate co-worker, or as a scourge of Jews), and in at least some of these ways, loyalty would appear to function as a virtue. In the more interesting last case, a loyal Nazi is likely to cause greater harm than one who is not; on the other hand, were such a Nazi to be disloyal by allowing Jews who bribed him to escape, we might see him as deficient in his capacity to form close bonds. A disloyal Nazi seems to be doubly deficient.

ANALYZING the CONCEPTUAL FRAMEWORK

The diagram shows the relationship between the variables. A color code is designated so as to point out what is expected from the two (2) major players in the research. RED represents the effort put forth by the pharma; BLUE represents the actions of client doctors; WHITE is the RESULT or resultant outcome of actions within the process.

To effectively understand the flow of analysis of data and corresponding actions between players, the diagram is subdivided into cluster groups thus segmenting the conceptual framework. This, the researchers believe, is vital to the discussions within the paper.

Rogers and Peppers wrote that the effectiveness of marketing in the IDIC model with the emphasis on DIFFERENTIATING clients revolves around knowing the WANTS and NEEDS of a target customer. The wealth of information on and familiarity with a specific client is tantamount to knowing what is the best possible approach to establishing a working relationship of mutual trust with the target. The keywords are amount of information, familiarity, and relationship.

Another concern in the segment is the perception of the pharma to client doctors. In negotiations, it is necessary to differentiate ASSUMPTIONS, FACTS, and PERCEPTIONS. As stated in the definition of terms, the concept of loyalty (being the end goal of pharma) is self-defined. With this in mind, a pharma must never dwell on the idea that the wants and needs of client doctors are mere assumptions and perceptions but facts. Should a representative know the REAL wants and needs of a client doctor (whether they be ethical or unethical), DIFFERENTIATION would then be easy. Tailor-fitting the most appropriate approach to a target client doctor would be a walk in the park. This setup would increase the chances of securing loyalty or better yet, acquiring complete loyalty of the target.

The client doctor’s definition of loyalty is or may be subject to the marketing approach of the pharma. This is highlighted in the following segment below which clearly illustrates the perception of the target in comparison to the effort put forth by the pharma represented by the actions of reps.

In an interview with client doctors closely related to the researchers, the following information was gathered. While others perceive that actions by pharmaceutical representatives may or may not be unethical, the data below is presented straight from the respondents.

The procedure is a narration by doctors. Starting from the initial point of contact to the possibility of earning loyalty, it illustrates how, why, and what marketing strategies were, are, or have been employed to secure a client doctor. Remember that the end goal of pharma is not just to have a one-time deal or prescription but to elevate the degree of relationship to appoint mutual trust and interactive, iterative, beneficial working activity.

The ideal current setup for winning a client doctor’s loyalty is shown in the following steps below. This may not be the common method between reps and client doctors but it will serve as the basis for how loyalty is perceived and developed ideally in the relationship according to the respondents.

The Ethical Marketing Procedure:

STEP 1: Reps would ask for a schedule with the client's doctor(s)

STEP 2: Reps show research and findings proving that their new drug is better than the prevailing medicine in the market. If the doctor were half-convinced (will try the new drug for no specific length of time and seems to show no interest in a follow-up), reps would ask for another schedule with the client's doctor. In this next schedule, the reps will be bringing the pharma consultant to convince the client(s).

NOTE: If the client's doctor is convinced, he/she will prescribe the new drug to patients for a specified period. The doctor then assesses if the claims are true. Should they be true, the client's doctor begins to ask for more relevant research pertaining to new and better drugs being offered by the reps.

STEP 3: Client doctor agrees to prescribe and assess if the new drug is indeed better than the prevailing medicine. He/She will monitor, interview, and analyze patients’ development following the usage of the new drug.

STEP 4. Client doctor sees better results, and thus asks for more research and findings of other newer drugs offered by the reps.

STEP 5: More and more types and varieties of drugs from the reps’ pharma are now prescribed by the client's doctor.

NOTE: This situation leads to the “THOUGHT LEADERSHIP” concept according to Dr. Gaddi where younger doctors and subordinates begin to follow the prescription habits of older and senior well-experienced doctors.

STEP 6: Client doctor refers the reps to friends (also doctors).

STEP 7: The client doctor’s loyalty is EARNED.

The Unethical Marketing Procedure:

STEP 1: Reps would ask for a schedule with the client's doctor(s)

STEP 2: Reps would entice client doctors with offers and special offers ranging from simple dine-outs to satisfying the personal whims of client doctors.

NOTE: There are reported cases where client doctors either give in to the enticing offers or go to the extent of personally asking for a special favor to secure the signing of reps' documents which will be submitted to the pharma. In rather extreme cases, reps offer the special favor especially if the pharma sets high quotas.

STEP 3: With the favor or special favor as collateral (or owing to a debt of gratitude), client doctors are now expected to prescribe the pharma’s sets of drugs to patients.

NOTE: In this case according to two (2) doctor respondents, the validity and effectiveness of marketed new drugs are often shelved. It is the powerful effect of the favor or special favor which kicks in and allows the doctors to willfully prescribe the set of drugs. In return, however, doctors who engage in such activity will most likely demand more favors thus making the reps act as errand boys and girls.

STEP 4: With the illegally established relationship between reps and client doctors, referrals come in quickly; dine-outs become a normal activity. Usually, the preferred doctors to reps are familiar with/or are currently engaged in the unethical practice.

NOTE: It is but common sense that an ethical doctor will most unlikely refer an unethical doctor to a rep and vice-versa. Using the concept of THOUGHT LEADERSHIP, if a senior client doctor engages in unethical practices, chances are, the younger doctors and subordinates related to the former will adhere to the malpractice(s).

STEP 5: As client doctors continually give referrals and prescribe the brand of the pharma’s sets of drugs, reps perceive that loyalty is earned.

A summary of the two (2) marketing practices of the pharma to secure client doctors is written below.

GENERAL PHARMA PRACTICES believed to nurture Doctor’s LOYALTY

ETHICAL MEANS:

- Reps convince the doctor through explanation, trial, and research that their new drug is better than the prevailing prescribed medicine

- Reps as the pharma’s consultant to convince client doctors through research and findings that their new drug is better than the prevailing prescribed medicine

- Free medicines, snacks, and other medical paraphernalia are given to client doctors during seminars, outreach programs, or civic services.

UNETHICAL MEANS:

- Reps become “errand boys/girls” to client doctors’ whims and wants

1. New car
2. New cellular phone
3. New gadgets (Ipad ETC.)
4. New expensive items (books, equipment, furniture, etc.)

- Reps provide any “service” or special favor client doctors would demand:

1. Call boys/girls for them (doctors)
2. Call boys/girls for their friends
3. Intercourse with reps
4. Dates with reps or others

After establishing contact with client doctors, identifying their specific wants and needs, and customizing the most appropriate approach to earning loyalty, what is the general reaction of the target? Like in all good working systems, Jay Wright Forrester postulated that the sum of the parts is greater than the whole. This being said pertains to the relationship perceived by individual parties or players involved within the grand system.

The stability of the entire system lies in the strength of the relationship between players with each other. Thus, the definition of relationship has to be properly understood from the standpoint of all players and from the eyes of CRM in order to mop out any doubts regarding the veracity of this paper and its findings.

The discussion below is solely for the purpose of illustrating the concept of relationship from the perspective of CRM and should not be confused with other fields.

RELATIONSHIP is a mutual, interactive, and iterative activity that provides ongoing benefits that change the behavior of the parties involved thereby becoming uniquely different from other relationships leading to MUTUAL TRUST and LOYALTY.

Views on relationships and their role in business vary, but all provide a relevant perspective to building a framework for CRM. Jim Barnes says that relationships between enterprises and their customers can exist at four different levels:

1. Intimate relationships are characterized as personal and friendly and generally involve the disclosure of personal information. This relationship may involve physical touching, such as the relationship between a doctor and her patient or a hairstylist and her client.
2. Face-to-face customer relationships may or may not require the customer to reveal personal information. Such relationships occur in a retail store.
3. Distant relationships involve less frequent interactions and might occur over the telephone, online, or through videoconferencing.
4. No-contact relationships rarely or never require a customer to interact with an enterprise directly. Customers typically interact with a distributor or agent, as in the case of buying a favorite brand of soda at a supermarket.

To understand customer relationship management, we must first understand its three components: customer, relationships, and management. I have always believed that a relationship is special. After all, if you were to ask a friend or even a stranger to tell you about her relationships, it is most likely that the conversation would center on relationships with family, friends, neighbors, workmates, and team members. Few, I would suspect, would begin talking about Marriott Hotels, United Airlines, Coke, or Wal-Mart. Relationships are intensely personal concepts. In fact, some people have great difficulty associating the term relationship with the commercial interaction between a company and its customers.

If we insist on using the word relationship in our modern approach to business building, and in the context of long-term customer loyalty, then I suggest it is critical that enterprises understand what relationships are all about. One of the best perspectives I have encountered of what I believe to be the correct view of customer relationships is that John Czepiel wrote that a marketplace-based relationship is “the mutual recognition of some special status between exchange partners.” Such a perspective reflects that a relationship can exist between customers and enterprises, customers and brands and that the customer has to feel the existence of the “special status.”

When it comes to understanding customers, many managers simply do not. They make the mistake of viewing their company’s interaction with its customers through their own eyes rather than the customer’s eyes. They believe that certain things are likely to drive satisfaction among customers, when in fact those customers are interested in quite different things. One of the most important lessons that marketers and other managers can learn is that having a great product at a great price is not nearly enough to guarantee customer satisfaction and repeat buying. In fact, I have come to the conclusion, based on 30 years of research with customers, that a large portion of what contributes to long-term satisfaction and loyalty has absolutely nothing to do with products or prices. It has a great deal more to do with how the customer is treated, what she goes through, and ultimately how she feels about dealing with an enterprise.

A relationship in its simplest form, and as understood by customers, is based on feelings and emotions. It is not behavioral, although there are behavioral effects of customers developing solid relationships with enterprises. Customers go back there again and again, they spend more money there, and they refer their friends and associates. But the behavior is the outcome of the relationship, not the relationship itself. The behavior results from the creation of the relationship.

There is a tendency within some businesses to mistake behavior for loyalty. Just because customers buy a large percentage on a regular basis, does not mean that they are loyal or that a relationship exists. It is possible to have a high level of “behavioral loyalty,” without having any EMOTIONAL LOYALTY. Many customers, for example, will buy a large percentage of their groceries from a supermarket that is close to their homes. They shop there every week and may have been doing so for years. When asked why they are “loyal,” customers will point to factors such as the convenience of location, 24-hour access, large parking lot, short lines at the checkouts, one-stop shopping, and so on. All of these reasons relate to more functional factors that drive repeat buying. These customers are exhibiting FUNCTIONAL LOYALTY.

With functional loyalty, there is a noticeable absence of any sense of attachment to the enterprise; there is no emotional connection. If they were to move across town or to a new city, the customers would likely seek out an equally convenient supermarket for the bulk of their grocery shopping. Their form of loyalty is very vulnerable; there is no relationship from the customers’ perspective. [pp. 51-54]

The foregoing however seems moot and academic in the world of med reps since geographical factors are of no consequence in the pursuit of doctor’s loyalty.

What is LOYALTY anyway?

The whole point of a relationship is to keep and grow a customer. Isn’t that fundamentally the same as building loyalty?

So what is customer loyalty?

The attitudinal definition of loyalty implies that loyalty is a state of mind. Customers are loyal to a brand or company if they have a positive, preferential attitude toward it. They like the company, its products, or its brands, and they, therefore, prefer to buy from it, rather than from the company’s competitors. In purely commercial terms, the attitudinal definition of customer loyalty would mean that someone who is willing to pay a premium for Brand A over Brand B, even when the products they represent are virtually equivalent, is loyal to Brand A. But the emphasis is on WILLINGNESS, rather than on actual behavior, per se. In terms of attitudes, then, increasing a customer’s loyalty is virtually equivalent to increasing the customer’s preference for the brand. It is closely tied to product quality and customer satisfaction. Any company wanting to increase loyalty, in attitudinal terms, will concentrate on improving its products, its image, or other elements of the customer experience, relative to its competitors.

Note: Attitudinal Loyalty and Brand Preference are THE SAME

The behavioral definition of loyalty would mean that someone is willing to pay a premium for Brand A over Brand B, even without respect to the attitudes or preferences that underlie that conduct. By this definition, customers are loyal to a company if they buy from it and then continue to buy from it. A company wanting to increase customer loyalty will focus on whatever tactics will in fact increase the amount of repurchase behavior ----- tactics that can easily include, without being limited to, raising consumers’ general preference for the brand or their level of satisfaction with it.

And in the world of commerce, where profits are the bottom line, this definition by far best suits the purpose of this study.

REALIZATIONS:

1. Marketing is a large umbrella involving four (4) key activities. CRM is only a portion and should not be confused with other key concepts, ideas, approaches, methods, and practices involving production, pricing, promotion, and distribution.
2. The concept of “thought leadership” should be addressed and emphasized to all client doctors to ensure the maximum security and health care of patients.
3. Direct Marketing Approach of one-on-one method in marketing may be a precursor or ideal for relationship building but is not actually C.R.M yet.
4. Only Relationship Building is CRM, any method which does not foster relationship building is and will never be CRM.
5. Loyalty is relative: what may be perceived loyalty to one may not be to another. It is self-defined by the individual parties involved.
6. Longevity may or may not be loyalty. It is dependent on the individual’s definition of both terms.
7. A positive reinforcer is a consequence that increases the frequency of a behavior or maintains the frequency. What is reinforcing is defined by what happens to the frequency of the behavior. It has nothing to do with whether the organism finds the reinforcer 'pleasant' or not. For example, if a child gets slapped whenever he/she says a 'naughty' word but the frequency of naughty words increases, the slap is a positive reinforcer.

A 'pleasant' consequence is not necessarily a positive reinforcer. Getting a birthday gift is not a positive reinforcer. There is no behavior that will increase (or be maintained) in frequency. When deciding whether or not something is a reinforcer or not, the basic criteria is whether there is a behavior that is increasing or being maintained in the frequency of its occurrence. It is the aftermath.

Consequences are not universally reinforcing. For example, happy face stickers may be effective reinforcers for some children. Other children may find them silly.

The critical factor in the industry that should push for FULL CRM will be the territory management skills of the rep to properly identify MD/MDs who are capable of helping him achieve his targets. Interpersonal/social skills with the sincerity of the rep will also play a critical factor in developing a lasting relationship with the MD. At some point, the flexibility of the rep is an additional asset for the company.

CONCLUSION:

Loyalty is concerned with repurchase activity, regardless of any internally held attitudes or preferences. In the behavioral definition, loyalty is not the cause, but the result of brand preference.

The concept of customer loyalty should have an as direct connection as possible to a company’s financial and operational results. That is, we ought to be able to “connect the dots” between whatever strategies and tactics a company employs to increase its customers’ loyalty and the actual economic outcomes of those actions. An enterprise should be able to see the clear and direct economic benefits of some kind, as a result of a customer’s loyalty.

Given this definition of loyalty, it is somewhat easy to determine the support of client doctors thru the orders that the MD is making on a regular basis. After all, given a handful of reps offering them a milieu of gifts and servicing, they still chose to purchase from only a particular pharmaceutical company. If it is not an internal decision on the part of the MD (based on only the merits of the product) then it could only be the result of the med reps' efforts at doing CRM. In a simplistic view: It can only be one or the other. In a world of gray areas though, even if it was honest to goodness internal decision by the MD outside of the gifts and rewards, the pharma company would still consider a repurchase activity an act of loyalty.

Why? It is the law of causation. The effort was done in the form of gifts; a result was achieved (in the allotted time) in the form of a recurring purchase. Event A happened sometime after event B. So event A must have been caused by event B. It may be flawed logically, but if there are no other dots to connect, the two remaining dots visible somehow do connect seamlessly. After all who bothers asking doctors about their unvoiced-out decisions or their subconscious musings? If they already purchased or are continually purchasing, what’s the difference?

But the bigger “Why?” is this:

Why is it that in all the interviews conducted, no mention of Loyalty, regardless of definition, was ever upheld and back-up with force?

Interviewees would often cite, RECIPROCITY and GRATITUDE, but seldom loyalty. In fact, go back to Figure 1, replace the icon of LOYALTY with GRATITUDE, and the whole framework would still make sense. Why is that? Is our Conceptual Framework flawed?

Surprisingly it is not.

And the answer was just right up under our noses. To reiterate: Loyalty is concerned with repurchase activity, regardless of any internally held attitudes or preferences. In the behavioral definition, loyalty is not the cause, but the result of brand preference.

Note, the operational word here is RESULT. Loyalty is from the start and the aftermath, result. And so, no matter how objectively you design and deliver the interview questions, both reps and doctors would always go back and dig deep into their respective roles inside the cycle (Figure 1) in answering these questions. And when they go back to their roles within that cycle, they go back to the “process”, and in the process “loyalty” will not be found because again, it is not part of the process. It is the aftermath, visible only to onlookers, outsiders, and those with an objective eye.

Robert B. Cialdini, in his theory of Social Proof, illustrated that if a guy walking on a crowded street suddenly looks up at the sky, chances are people will not take notice. But make that five men walking on the same street stop suddenly to gaze up, most pedestrians would also look up in unison.

But ask any adult if his purchases or behaviors are motivated by the influence of others – even thought leaders – and surely, they would say NO. Psychologically, we are narcissistically hardwired to tell ourselves (more, others) that we are objective people and are not easily influenced. More so, professional doctors are under much social pressure to be “RIGHT”.

So, looking at the current Marketing Practices of a pharmaceutical company on servicing Client Doctors, do Client Doctors consider these as CRM Practices that develop loyalty towards optimum profits?

The answer is YES… but they WILL NOT ADMIT it.

REFERENCES:

• Ewin, R.E., 1990, “Loyalty: The Police,” Criminal Justice Ethics, 9 (2), pp. 3-15.
• McConnell, Terrance, 1983, Gratitude, Philadelphia: Temple University Press.
• Gewirth, Alan, 1988, “Ethical Universalism and Particularism,” Journal of Philosophy, 85 (6), pp. 283-302.
• Royce, Josiah, 1908, The Philosophy of Loyalty, New York: Macmillan.
• Keller, Simon, 2007, The Limits of Loyalty, Cambridge: Cambridge University Press.
• “Marketing,” Encarta ® 2009. © 1993-2008 Microsoft Corporation
• “Loyalty,” Encarta ® 2009. © 1993-2008 Microsoft Corporation
• Walzer, Michael, 1970, Obligations: Essays on Disobedience, War, and Citizenship, Cambridge, MA: Harvard University Press.
• Miller, Jeffrey B., 2007, Pharmaceutical Company Marketing Practices, Microsoft
• http://ethisphere.com/ethical-standards-for-pharmaceutical-marketing-in-the-philippines/
• http://www.physiciansnews.com/law/907miller.html