Written By: Steve Gielda, Principal – Ignite Selling
Creating Value in the Healthcare Marketplace Challenge – Are You Ready?
The emergence of managed care organizations has dramatically changed who buys medical products – and this trend will just continue to grow. While more than one-half of all medical product purchases are made by managed care buyers today, the percentage is expected to rise to 75% over the next five years.
This means that today’s buyer is the corporation and the physician is an influencer – a very different buying landscape from the recent past when the clinician was the buyer. Account executives must be equipped with the requisite skills to sell consultatively to both audiences. Have you changed the way you sell so that you are truly meeting all of your buyers’ needs? Let’s look at four changes in how your customers buy.
The Increasing Importance of Business Issues
With the emergence of managed care, it is important that the product not only solve problems related to treating patients effectively, but in a manner that is cost efficient as well. For highly specialized products, account executives must address the buyer’s business issues. In managed care, this means the impact on the bottom line of physicians or hospital groups using your product.
MediSense, Inc., a subsidiary of Abbott Laboratories Co. that develops, manufactures, and distributes glucose monitoring equipment for both home and hospital use, is a good example. For people living with diabetes, regular monitoring of blood glucose is essential to maintaining a healthy and high-quality life. But for a health care organization purchasing this product, what is the real value?
A MediSense account executive, of course, could always focus on quality of care. But that’s insufficient for professional buyers. The business benefits are very important to every managed care buying group [and in today’s marketplace, they’re important to individual physicians, too.] Professional buyers focus on how the glucose monitor can help physicians do their jobs more effectively and more efficiently. The true benefit from the buyer’s perspective is faster patient processing which allows doctors to see more patients more quickly. That can be translated into a financial gain. However, too often account executives learn to sell a glucose monitor only by appealing to patient care concerns and not to the business side of the equation.
Not Relying on Product Differentiation
All account executives know they need to listen carefully to buyers’ concerns so that they can match the buyers’ needs to the differentiating features of their solution. Shorter product development cycles, advances in technology, and growing competition decreases the likelihood that the features of your product will be unique for a substantial period of time (unless you have gained patent protection, of course). Rather, these trends are forcing products into the category of commodity faster than ever. With commodity status, the only way to avoid price wars is to determine how you can sell not only your product but also how you can provide added value to your customers. The value of one offering over another, then, no longer resides in the product itself, but in the acquisition process.
With complex medical equipment that carries a large price tag, a sales force with the right skills can truly be a competitive advantage. Buyers are willing to pay a premium to work with someone who can help them make the right decision. These buyers focus on solutions or applications and put a premium on obtaining advice during the sales process. They don’t enter the buying process knowing enough to make a sound decision – either because they have an incomplete understanding of your product, or because they may not have fully defined their problems, needs and issues. Herein lies the opportunity for the sales process to play an increasing role in actually creating value for your customers.
Selling to a Savvy Audience
It’s becoming easier and easier for buyers to gain access to information about your company and your products. This also makes it easier for buyers to compare your product to your competitive products – especially on product features, purchasing terms, customer support programs and locations, etc. A meeting in which you simply communicate the technical value of your product holds little appeal for a busy professional buyer.
So if product differentiation is no longer a distinction that creates value, and account executives can no longer create value by communicating features, how is value created?
Successful consultative account executives focus most of their attention on the early stages of the acquisition cycle by helping customers gain new insight into their problems and discover new solutions that will give superior value. Let’s consider two elements involved in making a sale that differs from a traditional sales approach.
- Getting in the door. Many account executives have been taught that access to the decision maker is a prerequisite for success. When consultative selling, particularly in the medical products industry where several people are active influencers, this can be a trap. More important is access to the people who have the deepest and most thorough understanding of the problems that your product can address. Decision makers, especially if they are professional purchasers, are frequently remote from day-to-day concerns, and, for consultative account executives to create value, they must work through decision influencers and specialists who have the best understanding of the issues. Getting in the door means getting access to the customer’s problems.
- Defining the nature of relationships. 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, but it isn’t confrontational either. Your goal is to familiarize yourself with the situation of your buyer beforehand, so that you can effectively uncover what their needs are and recommend a solution that meets those needs. In order to be effective, you need to get on the same page as your customers to work with them toward a suitable solution.
Creating Customer Value
When selling in this environment, you have to create value outside of the product you are offering. Buyers focus on the severity of a problem and the relative benefits of alternative solutions. The roles of the account executive is to discover and address each of the buyer’s concerns and build a solution that is tailored to meet their needs. Selling itself creates the value.
Successful consultative account executives are highly skilled at helping buyers understand their problems, issues and opportunities in a new or different way, showing customers new and better solutions to their problems and acting as advocates for the buyer within the seller organization.
The job of the sales force is no longer to communicate value but rather to create value for the customers. Account executives must truly understand what represents real value for their customers and rethink their sales strategies to match the customers’ needs. Selling is rapidly being redefined, and account executives must respond to prosper.