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Andy Kach
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Brian Chapman
Principal
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Don’t Let Potential Sales Go to Waste

Posted by Andy Kach on February 2, 2016



shutterstock_246730048Every year in the U.S., the average family wastes more than 1,000 pounds of food, according to National Geographic—food that could provide sustenance, and that represents wasted money for cash-strapped U.S. consumers. Surprisingly, the same thing is happening in the medical device space. We’re leaving more and more opportunity on the table.

With shrinking margins, lower reimbursement and the commoditization of once unique products, medical device organizations are finding themselves in an ever fiercer battle with competitors for market share.  The challenge is that selling, general and administrative budgets are also shrinking, but the most expensive resource tends to continue to be the top (and often the only) option for device organizations to reach stakeholders: the field sales team. 

I won’t get into all of the potential lower-cost alternatives that exist in the marketplace instead of field sales people, as some of my colleagues have already covered those points, but I do want to speak to the field sales team’s biggest limitation: They can only visit so many stakeholders and can only do it so often when you incorporate travel, administrative efforts and internal meetings that take away time with customers. This limitation leads to one massive challenge for medical device companies: We are leaving dollars on the table, missing out on potential sales, or at least the opportunity to beat our competitors, in locations that we can’t cover well enough.

Sales teams are missing out on sales for two main reasons: Either there’s no coverage, or there’s insufficient coverage. The first one is a conscious choice. With limited resources, you have to make decisions on where you’ll spend your time. There are many ways to decide where to go or not to go overall. I’m less worried about this challenge, although companies should, and often do, find low-cost alternatives to cover nearly all potential accounts, at least to a minimum degree.  

I’m more concerned about the concept of insufficient coverage. Think about your organization: How much does the HQ team dictate to medical device reps where they should and shouldn’t spend their time? Is that a day-to-day decision for the rep? With my clients, it’s usually left to the rep to make the decision on how to spend his time, and the best reps excel at this. But with a turnover rate of 15 to 25% in many sales organizations, at least one-quarter of your sales team isn’t “the best reps” (and I would argue much more than that).

All companies define targeting (coverage or no coverage) and many define a call plan, but too often, the call plan is one-dimensional, based on how much a company is selling to the customer. Too often, it isn’t based on what we could sell to that customer. Our reps often go to our best customers because those customers are an easy target to ensure that we continue to get the sales, but if we have high sales in these accounts, there’s very little room for growth. That means that we’re not visiting customers who have opportunity that we could tap into. So how do we know who these potential growth companies are?

The insufficient coverage equation can be solved in a number of ways, but I’ll describe what I think is one of the better and simpler ways to do so:

  1. Start with segmentation. Either use the segmentation that you have, or think about how your customers can be categorized into similarly minded groupings based on their purchase behaviors.
  1. Look at the leaders. In each segment, there are accounts that you’re doing well with and accounts that you aren’t doing well with. You’re succeeding with the leaders, for some reason. You also have accounts in a given segment with which you have average share. If you built your segmentation so that accounts have similarities, you should be able to replicate what you’re doing with the leaders.
  1. Calculate the opportunity. While there’s no way that you can get every account in the segment to be your top account, what if you could bring many of them to the 75th percentile point? Those accounts that are on the middle end, particularly, are ripe for increased sales. They’re already buying from your company a decent amount. Can you gain more share by bringing them up to a higher level than by trying to squeeze more out of your best customers?
  1. Adjust your targeting and call planning. Too often, companies concentrate on the accounts where they’re winning consistently. In many markets, they go to these accounts more than they need to because those accounts are “friendly,” but if your rep showed up fewer times per month, would you lose sales? If not, that means that you have the ability to shift effort to the average accounts that present the greatest opportunity.

Sales reps spend an inordinate amount of effort on the last drop of opportunity with their best accounts when they should be going after the opportunities in accounts that aren’t to that level yet, but that likely will not drive a high level of growth. Think about how you deploy your team to average customers to make sure that you’re getting the most out of your most expensive asset.

Topics: medical devices, Andy Kach, targeting, segmentation, Field Sales, call plan, coverage, wasted opportunity

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AUTHORS
Brian_Chapman_thumbnail
Brian Chapman
Principal,
ZS Associates
Tobi_Laczkowski_thumbnail
Tobi Laczkowski
Principal,
ZS Associates
Will_Randall_thumbnail
Will Randall
Manager,
ZS Associates
Matt-Scheitlin-London_thumbnail
Matt Scheitlin
Associate Principal,
ZS Associates
Andy-kach_thumbnail
Andy Kach
Associate Principal,
ZS Associates
Bhargav_Mantha_thumbnail
Bhargav Mantha
Associate Principal,
ZS Associates
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