Medical Device Link.

Originally Published MX January/February 2002

INFORMATION TECHNOLOGIES

Web Enablement Boosts Medtech Sales

A novel approach to using technology can help medical equipment manufacturers penetrate sales channels more effectively.

Kelly Bayer Rosmarin

The medical device industry relies on product experts to spend time with customers, educating them about the various features and options available on products. Such a human-intensive sales process is expensive, and can be slow to roll out and to execute. With the rapid pace of medtech product obsolescence and new introductions, and a highly competitive market environment—sometimes with relatively short windows of opportunity for explosive revenue intake—companies are eager to adopt methods that will help them close sales faster or reach broader markets.

Such interactive systems can help the manufacturer’s direct-sales force by placing current order information at their ready disposal. But they offer even greater advantages to indirect-sales channels, such as distributors, by offering product-expert expertise that makes it possible to deliver a greater level of service to their customers. The availability of such resources can make indirect-sales channels better at selling the manufacturer’s products, thereby growing their market share.

Figure 1. Typical functions of an interactive sales system. Source: Calico Commerce (San Jose).

Interactive Selling

Interactive sales systems (ISS) have been successfully implemented in a variety of industries, of which the most comparable to medtech is high-technology manufacturing. The premise behind ISS is that a company can distill its most effective sales methodologies, selling strategies, and customer preferences, then code them into a system that automatically follows the right approach for each customer. The systems offer a logical approach to a problem that plagues many industries: how to sell complex products effectively and cost-efficiently.

An effective ISS is programmed to know what questions to ask a customer so it can understand the customer’s needs and requirements (see Figure 2). It is programmed to make product and feature recommendations based on those needs, to help walk customers through alternatives, and to enable customers to configure and order products that suit them exactly (see Figure 3).

An ISS is designed to make selling medical products cheaper, faster, and better by encapsulating all the product, customer, and selling information necessary to sell via direct-sales reps, distributors, and even direct to customers. The solution enables medtech manufacturers to sell more effectively, reduce sales-cycle times even for complex equipment, and decrease the costs associated with each sales channel. Typically, an ISS performs the following tasks.

Figure 2. Designing an interactive sales system for an ultrasound machine. Source: Calico Commerce. (Click to enlarge.)

Implementing an ISS

The first step for a medical product manufacturer that wants to implement an ISS is for the company to develop a good understanding of its customer segments. The next step is for the company to interview its best salespeople for insight into customers’ real purchasing habits and the selling processes that work best. Only when the company has a good grasp of its best selling strategies for various customer segments should it consider working with an ISS consultant to translate the sales logic into the models that are programmed into the ISS.

Figure 3. The end result: an interactive sales system guides a radiologist to the right ultrasound machine and offers extra probes, transducers, and additional loan options. Source: Calico Commerce. (Click to enlarge.)

The process of determining its best sales practices can take an organization anywhere from 2 to 6 weeks. Once the sales models have been defined, creating an ISS takes 2–10 weeks, depending on the complexity of the models and the ISS vendor’s technology. Vendors that offer templates designed specifically for the medical device industry can often offer faster deployment times and lower costs.

The overall cost for an ISS project ranges from $100,000 to several million dollars, again depending on the overall scope of effort and system integration requirements. Once the initial setup is completed, however, ongoing costs are far lower than those for training salespeople or manning call centers.

The implementation of an ISS can offer significant benefits, especially for companies that sell complex configurable products or those that bundle their products on a per-procedure basis. Such systems enable salespeople and customers to configure and customize products without lengthy delays or expensive manual processes. Customers relish the opportunity to understand manufacturers’ equipment better and to make their own choices.

The systems create real, tangible business value for manufacturers. High-technology companies have seen their sales processes accelerate by as much as 90%, and have experienced a shortening of their order times from weeks to days or even to a single session. Sales productivity has improved up to 25%, driving significant top-line revenue growth or allowing companies to redistribute accounts more efficiently. At the same time, order errors have in some cases dropped from as much as 60% to zero, eliminating associated rework and returns costs.

Extending and Empowering Channels

Indirect-sales channels can often serve customers more cheaply than manufacturers can. Some manufacturers consider such indirect channels an essential part of their market strategy, while others rely on distributors only to sell their products internationally. Other manufacturers, however, may believe their products are too complex to sell indirectly.

Because an ISS encapsulates all of a company’s product, customer, and selling information in an intuitive system that requires no training, indirect-sales channels can sell products like experts. Such systems can educate customers and guide distributors through the process of selling the manufacturer’s products (see sidebar).

Putting expert knowledge in the hands of distributors means that manufacturers can sell more products indirectly, potentially extending their reach into markets that would be unprofitable to approach directly.

Up-Selling and Cross-Selling

Margins on services, maintenance agreements, peripherals, and add-on parts are often higher than on the equipment. Manufacturers can thus improve their profitability significantly by up-selling and cross-selling customers on their complete line of offerings. Most companies rely on their direct-sales reps to remember to up-sell and cross-sell, and to understand each of the products in sufficient depth to make the customer a compelling offer. But relying on a salesperson’s memory is not equivalent to ensuring that up-sell and cross-sell offers are made to the customer at the right time and in line with exactly what the customer wants. By contrast, an ISS can automatically recommend up-sell and cross-sell items based on the information it learns about customer preferences from the questions the customer answers.

Customers from one ISS vendor have been able to raise average selling prices by 30–40% through effectively cross-selling customers based on their known preferences.

Capturing Higher Customer Share

Medical device companies live and breathe their products, but their customers don’t. Often, the most challenging part of the sales process is helping customers fully understand their needs and then showing them how the products being offered correspond to those needs better than the competition’s products do. Simply providing physicians and patients with enough information to make informed choices can be a powerful sales tool, but is one that medtech manufacturers often underestimate.

An ISS can be used by direct-sales reps, distributors, and customers to facilitate education about the manufacturer’s offerings. An interactive system that enables the customer to drive the process and learn about the products on offer can give both the direct- and indirect-sales teams an edge on the competition.

Sales reps appreciate having a tool that they can use with customers—and that customers can use even when they’re not around—to interactively educate customers, recommend products, and help customers explore options and alternatives. There is no more effective method to increase the number of sales that are won.

For companies that introduce lots of new products or constantly change product options, it can be difficult and expensive to train sales reps and make sure they understand what products and options to recommend. With an ISS, such expert knowledge is immediately available so that sales reps can be effective at educating customers and selling products even while they are learning about new offerings. This feature can dramatically speed new product roll-outs so manufacturers can gain market traction—and extra revenue—as quickly as possible.

Even for companies that are not introducing new products and simply selling the ones they already have, an ISS helps. The sales expertise and deep product knowledge embedded in such systems can improve the effectiveness of sales reps by walking their customers through the sales process to a closed sale.

The Competitive Advantage

Companies that can provide better information, education, service, and advice to their customers create a sustainable competitive advantage—especially if they do so with less cost than their competitors. Giving every customer and sales rep access to proven sales strategies and product knowledge can greatly improve the quality of customers’ interactions with the organization.

When a healthcare provider has access to a system that guides a patient, in real time, through the selection and configuration of a custom product, the patient is much more likely to purchase that product. It is also unlikely that the healthcare provider will recommend a product from a different manufacturer, where it would take several phone calls to answer questions about different product lines and options.

The medical device industry is characterized by high costs of sales and strong competition. Companies that learn to improve sales and marketing effectiveness and gain competitive advantage in their selling process will be the ones that dominate their markets and win more business.

Conclusion

Medtech companies that extend their reach by using innovative marketing approaches can gain a significant advantage over their competitors. An ISS that can be used to guide customers to products and services that meet their specific needs is one such innovative tool. The proven benefits of ISS are significant: speeding up sales processes, increasing sales productivity, eliminating order errors, garnering greater revenue from up-selling and cross-selling, engaging new customers and channels to grow market share, and engendering more customer loyalty and repeat business.

One thing is for sure: all great enabling technologies eventually find their way to the medtech sector. Any medical device manufacturer that delays adoption and doesn’t have an ISS guiding customers to its products runs the risk that their competitor’s system will be guiding customers away.

Kelly Bayer Rosmarin heads market development for the medical equipment industry at Calico Commerce (San Jose), a software company that offers interactive sales systems.

Illustration by Eyewire.

Copyright ©2002 MX