April 6, 2017

Beyond the Surgeon: Value-Based Selling in Medical Devices

Medical device decision making has never been more varied among health systems.  There is a routine struggle between physicians and value analysis committees (VACs) on price and total value.  For many device companies this means the customer is no longer just the surgeon or implanter.  It means great technology alone will likely not be enough to win or command a price premium.  It means more complexity and time in the sales process, which in turn suggests higher selling costs and pressure on the profit line.

To be clear, this is not a new issue – my first project on the subject was completed in 2008 – and there is no silver bullet.  Customers are unique in decision-making processes, VACs continue to evolve, and the role of the payer is varied.  However, I’ve seen companies have the most success when, despite all the customer variability, they bring structure and consistency to the sales and marketing process.   This doesn’t mean using the same value proposition or approach for every company or every product, but it does mean asking the right questions and the same questions.   The five questions below are meant to be approached sequentially and are critical for any company to consider as it launches or maintains products and services in the market.

1.  Who is involved in making a purchase decision?

A simple question, but often overlooked or misunderstood.  People often mistake this question with: who is the customer?  It is easy to revert to the individual using the product or service (like a surgeon, for example), but it is typically more complex.  There are process steps, value analysis committees, GPOs, umbrella IDN leadership evaluating certain purchases, and a variety of other nuances to consider.  Somebody may not be the direct customer but could have dramatic influence in how the solution is purchased.  Critical to keep in mind.

2. What is each decision maker’s remit?

Understanding what all stakeholders care about is critical and the definition needs to step beyond a medical device company’s universe.  Believe it or not, decision makers at health systems have responsibilities and objectives that go beyond selecting a particular product or managing a particular relationship.  An OR Director may be tasked with reshaping processes, a risk officer may be focused on inpatient management.  Understanding the sum of each person’s job responsibility is crucial to identify ways to engage.

3. How is their success measured and what variables matter most?

As with most jobs, people with focus on the tasks they’re being measured against and place the most emphasis on the “biggest” ones impacting performance or reward.  The same holds true for this diverse set of customers.  The best positioned company will be the one who knows the top-10 objectives for each person in the decision-making process (even if the objectives appear to have nothing to do with the technology or service being offered).

4. How does the proposed product or service directly or indirectly align with customer need?

It is great if your widget or service completely stops misplacement of surgical trays, but if that ranks #9 on a list of 10 objectives for somebody, they may not care.  If a secondary, indirect benefit of your widget or service is the ability to optimize (or predict) how shared resources are used and thereby reduce staffing needs or drive up OR utilization, and OR utilization is #2 on that same list of objectives, then you have a story to tell.

This question or step is perhaps the most nuanced and requires leaps of faith on the part of the product/service provider and the customer.  The company needs to put itself in the shoes of the customer who may not see any linkage whatsoever between a product and an indirect benefit.  We have seen numerous examples of companies falling down here or lacking the vision or creativity to flip the value proposition around to meet the customer.  It requires a trained eye, diligent research, thorough VoC, and thoughtful analysis.

5. How do you focus attention on those benefits that do map to customer needs?

By this stage, the customer is understood and how the proposed offering fits (or doesn’t) with their needs is also known, so the next step is communicating the message.  Using a framework to map customers to goals to the proposed offering is at the center of this step.  Often this requires testing messages or engagement/marketing collateral with customers, conducting benchmarking assessments for how best in class competitors engage with each customer stakeholder, or setting new sales processes, incentives, or objectives to drive the right behavior in the market.

The questions above are not exhaustive, but provide a sound and straightforward place to start.  Executing on this approach requires coordination between sales and marketing functions.  It requires a willingness to challenge existing hypotheses.  It also requires many companies to stop and take a breath before charging into a sale.  In the long-run, a cohesive and structured process to manage multiple customer stakeholders will prepare any company for the variability that is certain to exist going forward.

Related team members

Richard Crumb
Managing Partner & Co-Founder Menlo Park
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