The House That Sandweip Built (1)

Here is an account of a persuasion attempt by Sandweip Banerje, who was a senior sales manager with the Indian arm of a multinational pharmaceutical company. For obvious reasons I have changed all the relevant names (except Sandweip’s) and cooked up a name for the drug to mask identities.

A few years ago, we got to know that two Indian companies were about to launch a generic substitute for our major blockbuster antibiotic, Xolzyn, at a fraction of our price. After a lot of brainstorming we chose the strategy of ‘Stock & Block’ to counter them. We would get our major accounts to stock up on Xolzyn in such a way that they would not consider buying our competitors’ cheaper substitute for five or six months even for poor patients. We expected that our rivals would be demoralized and might even withdraw their product when they found themselves unable to penetrate the market in the first few months of the launch.

I was in charge of the campaign. In my city there was a big hospital whose 20 trustees were all leading businessman. I approached the hospital’s chief purchasing officer Mr Gokhale.  I knew him very well and had been dealing with him all along. The challenge now was to persuade him to place a single order that was large enough to stop him from ordering an alternative or supplement in the next five to six months.

Here is how I presented my proposal to him.

Sir, we’re in a bit of a bind. Because of a communication gap on our part, a large consignment (160,000 vials) of our antibiotic Xolzyn has landed in Mumbai from Europe. The monthly consumption of Xolzyn in the whole of India is just 20,000 vials. So we will have to return at least half the consignment. But returning it is not a real option because of the terrible costs and hassles involved. The whole episode has been a huge embarrassment for us because our headquarters has actually been discouraging the export of these vials to India where it is selling at one fourth of the global price.

Considering all the problems, we’ve decided not to return the consignment. Instead, we thought we would give our most valuable clients like you a special one-time offer. Here is our offer:

We supply 12,000 vials of Xolzyn at one go in response to a single order from you. But you’ll pay only for 2000 vials a month, your average monthly consumption. You can give us six post-dated cheques, one for each month. Thus you pay only after the patients have paid for the medicine during the month. In other words, your investment is nil. On top of this, we will give you a discount of Rs 100 per vial on the existing rate.

Even if the entire stock is not used up in six months as anticipated, there is no problem because the expiry date is four years from now.

And as you are saving us from a major embarrassment, we shall make one more special offer. If you certify on your letterhead that a particular patient is extremely poor and in need of Xolzyn but is unable to afford it, we will supply a few vials free on compassionate grounds.

Mr Gokhale appeared delighted, but because the total bill would come to almost Rs 4 million, he said he would need to get the managing committee’s approval. He presented the proposal to the managing committee. I was called in. As they were all big businessmen and knew finance better than me, I decided to talk about the benefit of the product using liberal doses of medical terminology. I managed to talk on and on using up all the time and leaving little room for any questions.

It worked. I bagged the order - the single largest order for a single drug. I understand that the record stands even today.

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Here is a brilliant piece of persuasion strategy. It appears to be a win-win deal for both Sandweip and the hospital. Sandweip clothed his offer in such a way that no sensible hospital managers would reject it because they had plenty to gain and nothing to lose.

What do you think of this? Is the house that Sandweip built standing rock or on sand? Let me have your views. I’ll give mine in the next post.

Incidentally, you might be interested in reading my recent post, The man who didn’t have to try too hard, in the Random House blog, Random Reads. It is on deceptive persuasion. But if you have come to PersuasiveManager from Random Reads, please ignore it.