Evolving the Commercial Model for Sustained Value Co-creation
As the healthcare landscape continues to undergo its seismic shifts, one thing is clear. Medical Device / MedTech companies must force themselves to focus on identifying the operational levers that matter most in reshaping how they approach customers and engage in value co-creation. The old models have expired in their effectiveness. One of the most critical commercial functions at the core of these changes is that of Key Account Management; both the individual KAM and an organization’s ability to embrace KAM as a customer engagement mindset.
Among the KAM pressure points MedTech companies are experiencing:
- – Deciding which key accounts to target and how to prioritize opportunities within each one
- – Addressing a wider audience of stakeholders and influencers, many of which now exist as a direct result of industry change
- – Staying out in front of the customer community and leading the charge of value co-creation
6 Keys to a Winning Medical Device Commercial Model
The time has come for Medical Device companies to implement a new commercial model. Medtech companies are facing the dual challenge of lowering costs while also adapting their go-to-market approach to fit with new buying processes and decision makers. Companies must also move beyond traditional sales and enhance capabilities in cross functional areas including value added services, outcomes based marketing, key account management and reimbursement. Read on to learn about the 6 Keys to implementing a successful commercial model for medical device companies.
1.Tailored Go to-Market Strategy
To create a customised go to market strategy, medtech companies must prioritise the right market segments, understand how to succeed in these segments and tailor strategy accordingly.
A “dynamic” segmentation strategy is critical because hospitals have significantly different needs and those needs constantly evolve.
To prioritise market segments, an assessment of opportunities in the market should be conducted. This can lead to substantial shifts in focus by geography, customer segment, and product category. To determine how to succeed in each segment, medical device companies must gain a deep and rich understanding of all relevant stakeholders. Winning in today’s environment requires a compelling value proposition for institutional stakeholders, from hospital procurement and formulary committees to group purchasing organizations to regional market-access bodies. The combination of using HEOR data, leveraging outcomes based solutions and a highly skilled, strategic sales force will provide competitive advantage. Once the keys for success are identified, tailor the commercial model accordingly.
2. Clinical Selling
The old “one size fits all” clinical selling model needs to evolve.
Medtech companies must do less but more focused clinical selling while also investing in new administrative selling capabilities. It’s important to do extensive research and understand the various stakeholders, decision making power and motivations involved. Once there is a greater understanding of stakeholders, companies can target only the clinicians who have real influence. It is also a good idea to adjust the amount of clinical selling by type of institution, allowing for different procurement practices. By employing these tactics medtech companies will see an optimised approach to clinical selling.
3. Key Account Management
Key Account management focuses on building long-term, strategic relationships with large profitable customers.
KAM is particularly well suited to the new medtech environment where a focus on outcomes and valued added service is prevalent.
The medtech industry is far behind other sectors when it comes to key account management. Often, average performing sales reps are tasked with serving key accounts and act more as bundled discounters. Key Account Managers must have a high level of business acumen and think strategically, rather than tactically. They must focus on the customers’ needs and offer a solution that aligns with them.
To determine your key accounts, you need to develop an offer that differentiates them from the rest of the customer base. Once you’ve decided what is considered a key account, train and appoint your KAMs. Many organizations make the mistake of simply moving their best sales people into key account manager roles. KAM is about changing the way people work — it is not just a sales technique. Converting your best sales people into key account managers might mean you’ve put a bunch of people into a role they are not really comfortable with, and you have just lost your best sales people as a result.
Done correctly, key account management can yield increased sales, reduced costs on both sides, and improved clinical outcomes.
4. Compelling Value Propositions
In today’s competitive market, marketing must be leveraged to develop commercial strategies and tactics based on deep market and customer insight.
Compelling value propositions are essential to combat increasing pressure on prices. Building a case for the value offered by medtech products is one of the most critical jobs facing medtech companies today. A change in HCP priorities to health outcomes and added value means that manufacturers should change their approach. Product centric messages should be replaced with marketing messages that promote the advantages that those products offer in outcomes and efficiency through reduced cost of care, shorter hospital stays, or lower rates of repeat surgeries.
5. Reimbursement & Pricing
Pricing and reimbursement activities can translate into a competitive advantage for medical device manufacturers.
Companies that develop the capabilities to provide evidence of their products’ health-economic benefits, as well as local teams to influence reimbursement decisions, will see a significant ROI.
Beyond key products, companies must create satisfactory prices for their entire suite of product offerings. Companies must cover the strategic aspects of list-price setting and alternative-pricing arrangements. Local relevancies in terms of pricing execution must also be taken into account by the sales force in negotiations with customers or in tender situations.
6. Service As A Differentiator
Services can be leveraged as a competitive advantage for medical device companies.
Services can add value by creating a differentiated value proposition for customers. BCG reports that revenue from services is increasing at three to four times the rate of product revenue growth for medtech companies. Services can also have the effect of switching the focus from the price of the product, to the price of the overall solution, which can be highly profitable for manufacturers. Many medtech manufacturers are just beginning to develop services that help hospitals control costs and improve profitability. These include inventory management and component tracking, consignment, training for nursing and other staff, and other capabilities that help providers understand and manage risk.
Clarity Engagement Solutions provides B2B consultative account management training for Medtech Field Sales Teams.
To learn how Clarity help you build strategic relationships with your customers, request a private executive briefing with our team.