Driving growth in CHC pharmacy sales: Focusing on a sell-out sales approach

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Maximizing CHC growth through sell-out strategy

Has your CHC business shifted to a more sell-out focused sales approach yet? To stay competitive and enable a continuous sales growth, it is time to move from a traditional, sell-in focused sales approach to one that emphasizes sell-out. Read what our experts have to say about transforming your pharmacy sales approach from primarily sell-in focused to a more sell-out focused approach.

The overarching sales approach for consumer healthcare (CHC) manufacturers has so far seen limited evolution, remaining rooted in tradition. Most manufacturers still focus on sell-in and place strong emphasis on increasing sales through large orders while spending limited time on sell-out activities that could help increase pharmacies’ sales to end-customers.

A strong focus on sell-in has its limitations. By establishing a purely transactional relationship with pharmacies, manufacturers are not able to capture the full potential of their sales efforts. Ultimately, a pharmacy will not buy more than it can sell. A high sell-in pressure can sometimes help in increasing a manufacturer’s share of wallet, but such a share increase is not sustainable and will only last as long as competitors are not also raising their sell-in efforts. Overall, a sell-in sales approach is costly in relation to the value generated.  

CHC manufacturers invest heavily in building a large sales network, resulting in significant costs for recruitment, training, and travel for sales teams. However, sales reps often spend a majority of their time on administrative tasks and pure order taking, instead of having meaningful discussions with clients during pharmacy visits.  Furthermore, there is a large risk that sell-in pressure leads to increased grey market activities and increased (costly) returns.  

"Order taking costs up to 80 euros if you calculate the expense and time spent by my sales reps – unbelievable in times of digitalization."

- Sales lead, French CHC manufacturer


"Our order taking process is very time-consuming. I have so many products to walk the customer through, there is no time left to discuss sell-out topics"

- Sales team member, Global CHC manufacturer

How does the sell-out focused approach contribute to maximizing business performance?

A different approach is needed to drive sustainable growth in the long-term. Compared to the traditional sell-in way, a sell-out approach focuses on activities that help pharmacies to sell more to end-customers. These activities can range from placement and visibility, merchandising, training for the pharmacy staff on product benefits or business-related topics, joint consumer promotions, and much more.  

Establishing such a sell-out approach as opposed to focusing on purely transactional sell-in offers several advantages: 

1. Helping the pharmacy to increase sell-out also increases the volume demand to the manufacturer, therefore creating a “win-win” situation  
2. Sell-out activities result in a more sustainable growth due to the focus lying on product value and benefit, rather than on discounts and sell-in pressure 
3. A joint sell-out effort reduces the pharmacies’ need for high stock levels, resulting in a lower net working capital 
4. Sales representatives can function in a meaningful partnership-like role rather than executing mainly administrative tasks 
5. Reduction of additional costs created through high sell-in pressure, for example due to grey market sales or increased product returns 


How to shift toward a sell-out sales approach – and why it matters?  

Moving to a more sell-out focused approach requires a well-prepared organizational change and a shift in mindset. We have identified five key steps necessary for a successful transformation, which can serve you as an initial guidance.  

1. Secure your sell-in  

First of all, it is important to secure sell-in to avoid out-of-stock situations at the pharmacy. Different types of sales solutions can be implemented and potentially combined, each one with its own advantages and set of challenges. One option is to utilize your own ordering platforms, although this may not streamline pharmacy operations and can be viewed as cumbersome due to an additional system for pharmacies. Alternatively, sales teams can establish interface connections with pharmacies via EDI, allowing pharmacies to order through their own systems, and use the vendor managed inventory system to track product inventory levels. However, this approach can be very time-consuming for you as the manufacturer, especially when dealing with numerous pharmacy clients. A third option is to establish an inside sales team for order taking and other administrative tasks. In the end, depending on the different customer segments and situations, a combination of different order channels is most likely.

2. Segment and target your customers

To ensure that sell-out activities are meeting your pharmacies' needs and focus on those that generate the highest return on investment (ROI), it is crucial to have a good segmentation and targeting in place. Ideally, segmentation goes beyond potential and revenue, and also considers aspects such as location, proximity to physicians, and positioning of the respective pharmacy.  

3. Develop an attractive offering

When shifting your sales strategy toward sell-out, it’s essential to provide a compelling offering for each target segment. The offering should be tailored to the needs of each identified segment to drive sales growth. An attractive offering goes beyond the types of products available for selling, but also considers other aspects such as specific types of marketing materials or required educational resources and trainings.  

Further, ideal engagement opportunities with pharmacies can largely depend on the respective level of digitalization. Monitoring and realizing such differences allows sales teams to customize educational materials and services better. These additional aspects help CHC sales teams not only to increase sales but to also gain deeper insights into their pharmacy customer base and refine their sales strategies accordingly.

4. Adapt your operating model

Changing the sales approach also requires an adapted operating model. The organizational changes not only affect the way the sales team operates but also have an impact on specific roles that might be needed in addition to the traditional sales employees. Roles such as medical or technical experts should be considered, and assignments of teams to client accounts potentially re-defined or adapted based on specific needs. Such a change to the sales team and role definition can only be achieved through a new organizational structure and should be accompanied by a new incentive scheme which also incentivizes sell-out focused activities. Only with such an organizational and sales team change can the diverse customer needs across different segments be met and a shift toward a more sell-out sales approach be effectively enabled.  

5. Upskill your sales reps

While a typical sales rep excels in pitching products and negotiating, they may lack the expertise to provide in-depth medical and educational insights or to realize specific business and growth needs of respective pharmacies. Training sessions and workshops can be used as important levers to provide pharmacy staff with the knowledge and skills needed to effectively develop sales of specific product segments. Therefore, comprehensive sales training and upskilling is necessary to equip all sales reps with the knowledge, skills, and tools necessary to implement a more effective sell-out approach.  

There are additional factors to consider when moving toward a more sell-out sales approach, such as assessing and potentially remodeling trade terms. However, the above-mentioned steps are a great starting point for organizational change. 

"I believe we are at an 80/20 ratio of sell-in vs. sell-out – if I could decide we would flip this ratio around as soon as possible."

- Sales lead, German CHC manufacturer


Embrace a more sell-out focused sales approach for sustainable growth

Shifting toward a more sell-out focused approach is key to drive sustainable growth in the future. The traditional sell-in sales approach has many drawbacks and can put manufacturers at a competitive disadvantage as the market environment is evolving. Many CHC manufacturers are rethinking their sales models and making necessary adjustments.  

Moving from sell-in focused sales operations to a more sell-out focused approach is neither easy nor quick. But it is critical to rethink the sales strategy and execute it after thorough preparation for it to be a long-term success.  

Our team of consumer health experts at Simon-Kucher has strong experience in this field, having worked with multiple large manufacturers on sell-out strategies and related business challenges. Our commitment is always to understand the specific issues at hand and jointly create actionable plans and strategies to establish long-term and sustainable growth for you.  

If you’re ready to transform your sales approach and need support to translate strategies to tangible outcomes, reach out to us today. 


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