Answers

The Pain Curve

Posted by Stacy Jackson

Over the years we have learned a lot about what happens in the first 90 days or so after a manufacturer implements a new contract management system.  We call it the pain curve.  Excitement and expectations for the new system turn into angst over errors that seem to be piling up in the way of pendings, recalculated claims, and deductions.  Things improve, though, after a little work.  The pain subsides and turns into confidence in the new system - deductions are down (often lower than they were pre-integration), contracts are corrected, there is a better ROI on deals, and greater insight into sales information - insight that didn't exist before thanks to ContractPro® reporting.

From an academic point of view, the pain curve makes sense and seems tolerable in light of the pay off.  When you are at the top of the pain curve, the rational understanding of the pain curve can fly out the window.  Fear not - while the pain curve isn't totally unavoidable, there are ways to avoid some of the problems your organization may face when implementing a change this big:

1. First and foremost:  neither software nor an outsourced solution is a magic bullet.  You can implement the world's most perfect system and still have an immense failure on your hands if you aren't ready for the human "drama" that can unfold.  As with any major initiative in business, change comes down to behavior.  It's key to engage users from the very beginning:
   1. Communicate the business reasons for your choice in solutions/solution providers
   2. Ensure that the change is mandated and practiced from the top down
   3. Set realistic, measurable expectations, and tie rewards/penalties to those metrics
      
   4. Train your users then train them again . . . and again
   5. Talk to your customers about how your processes are going to change with regard to where they send their claims, who they need to talk to, how they communicate claims (is there an electronic option), etc.
   6. Celebrate successes so that people know the solution is working - down in the trenches, people may not see the big-picture success
2. Next, don't panic.  Yes, claims are being recalculated, which is probably a contributing factor to the rising deduction balance.  Perhaps, contracts are being entered incorrectly, which is causing claims to go on pending status.  Use these "problems" as learning opportunities:
   • Are the recalculated claims a result of more stringent verification?  If so, these errors have been verified as true recalculations.  Any deductions can be legitimately rebilled with validated back up.  In the long run, claim errors will be reduced because contractual errors will be corrected in the claimant's system - rebill back up will help them understand their claim errors in light of the terms of the valid contract.
   • Maybe contracts are being entered incorrectly - this is an opportunity to delve into field sales performance.  Are contracts entered incorrectly because your sales reps are simply resistant to changing to a more transparent system?  Did they get enough training on the software?  Are there situations where the new system has made a perpetual contract set up errors visible?

Just remember when considering a new trade promotion management system - or any new system for that matter -  you can ready your company for the pain curve by taking the following steps:

• Have a clear vision (what does the post-pain organization look like?)
  
• Understand the organization's need to change (the business case)
  
• Shape the organization's willingness and readiness to change (communications and training)
• State the plan (set expectations, explain business case, describe the metrics)
• Celebrate successes (let everyone know the pain of change yields results)
  

Technorati tags: deductions, trade promotion, sales, pendings

Print | posted on Monday, October 26, 2009 9:39 PM