Medical Device Link.

Originally Published MX May/June 2004

ADVERTISING, DISTRIBUTION, & SALES

Medtech sales executives can get ahead by building solutions that are tailored to meet buyers' needs.

Steve Gielda

Just 30 years ago, medical device product sales managers followed a simple formula: sell advanced technical products to physicians and sell all other products—essentially commodities—to the hospital's purchasing arm. With the emergence of managed-care organizations, sales managers are noting that many purchases formerly made by individual physicians are instead being made by managed-care buyers or purchasing panels.

To succeed at selling to the managed-care buyer or its panel, medical account executives need to understand—and tap into—the new decision-making processes used by such entities. In this era of managed care, the decision to buy or not to buy a particular medical device is often determined as much by business concerns as by client-care concerns. Specifically, hospitals are experiencing enormous pressure to simultaneously reduce risk, lower costs, and increase revenues (see sidebar).

This new reality offers account executives from medical technology companies an opportunity to bring added value to their sales strategies. The new role of the account executive is to discover and address each of the buyer's concerns, thereby building a solution that is tailored to meet that customer's needs. In a way, selling itself creates the value.

To understand how to tap into this value, account executives must consider three important factors that have changed the way medical products are purchased.

• Increasing importance is placed on business issues.
• There is correspondingly less emphasis on product differentiation.
• Overall, customers are savvier and more informed.

Taking into account these three factors, an account executive can win the business opportunity for the product—and for the added value of the sales process—by being a consultative partner that expands his or her role beyond that of the typical salesperson.

Building on Business Issues

With the emergence of managed care, medical device products must not only solve problems of effective patient care, but must also offer a cost-effective means of solving business problems. Too often, account executives sell by appealing solely to patient-care concerns and fail to satisfy the latter requirement. To be successful, account executives must address the buyer's business issues and the ultimate effect of the product's use on the physician's or hospital's bottom line.

For example, account managers at a multibillion-dollar cardiology device company, one of Fortune magazine's most admired companies, were responsible for informing customers about the company's diversification into new areas. With traditional heart procedures quickly becoming cost-ineffective due to staggering declines in reimbursement, account executives were able to help customers identify new solutions and procedures that would help hospitals improve patient care and recoup revenues. In this case, account managers were able to communicate the company's expansion into solutions that provide communication technology for external cardiology monitoring and other cost-effective solutions.

Figure 1. Projection of U.S. supply and demand for FTE registered nurses, 2000–2020. Industry trends such as the projected shortage of registered nurses affect the decisions of medical product purchasers. Source: Bureau of Health Professions. (click to enlarge)

However, business issues are rarely that simple. One model that helps to bring the customer's business issues into focus is the ICE model. This model begins with an understanding of how industry trends affect the customer, followed by assessment of that trend's impact on the corporation and on the healthcare executive's goals and strategies. Unlike past shortages, for example, today's nursing shortage trend is not considered cyclical and is expected to be exacerbated by the aging baby boomer population (see Figure 1). Understanding how such trends affect a customer's business strategy will enable an account executive to link a solution to the customer's concerns more effectively.

For the next step, the account executive must note how these trends are affecting the corporation. It is the job of the account executive to ask a healthcare organization's senior management team about its corporate strategy to overcome or leverage the trends taking place in the market. For example, a healthcare provider who is strongly affected by the nursing shortage may choose to leverage technology more effectively in the future. Only through such an understanding can account executives form a clear picture of how specific products and solutions can add value to the healthcare organization.

Finally, knowing an executive or buyer's responsibilities relative to the corporation's strategic goals can enable account executives to best position their company and product solutions. For instance, a buyer may be charged with finding ways to support the nursing staff with tools to increase their efficiency without losing their effectiveness or increasing risk for the healthcare provider. A solution designed especially to meet this need would likely find a ready buyer.

Decreased Differentiation

All account executives know that they should listen carefully to buyers' concerns in order to match them to the differentiating features of their solution. However, with the exception of patented products, the unique features of most products are being imitated in ever-quicker time spans of 9–18 months. This development is a result of shorter product development cycles, advances in technology, and growing competition.

Once a product hits commodity status, the only way to avoid a price war is to determine how to provide added value to customers. The value of one offering over another, then, no longer resides in the product itself, but in the acquisition process.

When dealing with complex medical equipment that carries a large price tag, a sales force with the right skills can be a real competitive advantage. Buyers of such equipment typically don't enter the buying process knowing enough to make a sound decision—either because they have an incomplete understanding of available products, or because they have not fully defined their problems, needs, and concerns. Often, they are willing to pay a premium to work with someone who can help them make the right decision.

For large capital purchases, price is not always the deciding factor. Buyers consider variables such as cost over time, reliability, support, and interface with the hospital's infrastructure to be equally or more important. Herein lies the opportunity for the sales process to play an increasing role in helping customers reduce risk, lower costs, and increase revenues.

For hospitals, risk continues to grow. For instance, a hospital that buys different versions of automatic external defibrillators (AEDs) runs the risk of having a doctor trained on some versions but untrained on a new model. That doctor may be unable to perform lifesaving actions if the new AED is the only one available. But requirements developed by the Joint Commission on Accreditation of Healthcare Organizations certainly imply that any doctor in the area should be trained on all of the institution's defibrillators.¹ By standardizing on one or two versions, hospitals can reduce the risk of noncompliance and keep patient care at its highest level while also minimizing the risk of being without a machine in the event of a product recall. In the same market, savvy hospitals are discovering revenue streams by renting durable medical equipment to the home market.

Selling to a Savvy Audience

It's becoming easier and easier for medical product buyers to gain access to information about vendors and their products. Today, using convenient on-line sources, purchasers can compare one company's product features, purchasing terms, customer support programs, and locations against competing solutions. Busy professional buyers no longer want to meet with account executives who waste their time with an elaborate show of features they've already researched.

Successful consultative account executives focus most of their attention on the early stages of the acquisition cycle. They emphasize efforts to help customers gain new insight into their problems and discover new solutions that will offer superior value. Two elements involved in making a sale typify the differences between consultative selling and the traditional sales approach.

Getting in the Door. Many account executives have been taught that access to the decision maker is a prerequisite for success. But in the medical products industry, in which several people actively influence sales decisions, this can be a trap. Decision makers, especially if they are professional purchasers, are frequently removed from day-to-day concerns. Consultative account executives who want to create value must help influencers and specialists who have the best understanding of the issues to sell their product internally. The larger the sale, the greater the number of people in the organization who will need to be consulted. For large capital purchases, it is not uncommon for dozens and sometimes hundreds of people to be involved in the process.

Defining the Nature of a Relationship. The consultative sale is advisory, with both customer and seller sitting on the same side of the table. While it's not a relationship between equals, it isn't confrontational either. The goal is to be familiar with the situation of the buyer beforehand, to uncover that person's needs and recommend a solution to meet those needs.

"Ignorance is our biggest competitor," says Bill Beckman, South Atlantic regional sales manager for Spacelabs Medical (Issaquah, WA). He advises account executives to "keep the product in your bag until you completely understand what the client's issues and concerns are."

Too many sales executives "data dump," trying to impress a customer with product features and advantages too soon. This means that they miss hearing about any needs that, unbeknownst to the customer, could be addressed specifically by the product.

Creating Customer Value

When selling in today's healthcare environment, sales executives must be prepared to create value beyond the products that they offer. Buyers focus on the severity of a problem and the relative benefits of alternative solutions. The role of the account executive is to discover and address each of the buyer's concerns and build a solution that is tailored to meet those needs.

Successful consultative account executives are highly skilled at helping buyers understand their problems, issues, and opportunities in a new or different way. A skilled and well-trained account executive should be capable of showing customers new and better solutions to their problems and acting as an advocate for the buyer within the seller organization.

The job of the medtech sales force is no longer merely to communicate value but rather to create value for the company's customers. For account executives who spend the time necessary to make how they sell as valuable as what they sell, the sky is the limit.

Reference

1. 2004 Comprehensive Accreditation Manual for Hospitals: The Official Handbook (Oakbrook Terrace, IL: Joint Commission on Accreditation of Healthcare Organizations, 2004).

Steve Gielda is a senior consultant and partner with the Advantage Performance Group (Tiburon, CA), which specializes in human performance consulting, including sales and management training, for the medical device and other fast-paced industries.

Illustration by JONATHAN EVANS/Artville

Copyright ©2004 MX