EVANSTON, Ill., Nov. 13, 2012 /PRNewswire/ -- Many medical product companies recognize that in order to achieve strong sales growth they need to move the conversation from product features, benefits, and price and direct it toward the total value their products and services provide for their customers. However, numerous companies have yet to implement many of the advanced selling techniques and processes that enable true value-based selling.
A new study illustrates that when companies excel at articulating the overall value, notably the economic value, of a medical product or service, they have significantly higher customer retention, market share, revenues and profits. These businesses collaborate closely with multiple customer stakeholders within accounts to understand their goals and objectives, tailor their offerings to customer needs, and communicate a compelling message about the totality of value delivered.
The latest study by the Aberdeen Group surveyed 67 medical device, equipment and diagnostics industry executives in the United States. Global consulting firm ZS Associates commissioned the study to understand how the most effective sales teams sell products and services. The report classifies all respondents into two categories. "Leaders" are companies that perform in the industry's top 30 percent in metrics such as market share and sales growth. The study found that this group employs value-based selling techniques more frequently than those classified as "followers" in the report.
Leading companies, as defined by the report, demonstrate compelling performance metrics. They average 89 percent current customer retention, compared with 51 percent among other respondents. They hold 58 percent of current market share, compared with 21 percent for others. Their average year-over-year growth in company revenue is 10.5 percent, compared with 0.9 percent among others surveyed. Finally, leading companies earn a 5.7 percent average increase in company profits, compared with 1.5 percent for other respondents.
"This study confirms what we have found to be true in our work across many sectors, including the competitive and highly-regulated medical device industry. Selling on value often proves simple to understand but complex to execute well," says ZS Associates Managing Principal Marshall Solem. "Hospital systems and other buyers of medical devices and services are under tremendous pressure to control costs and maximize health outcomes. Our report provides a roadmap to help guide companies toward customer, company and individual success by employing value-based selling techniques."
Peter Ostrow, Aberdeen Vice President and Research Group Director for Customer Management and Sales Effectiveness, agrees. "Our report demonstrates how the strongest performers in this industry guide their sales professionals. Interestingly, these best practices indicate it's not always a matter of adding new resources, but reshaping and reallocating those assets already available to the sales team."
Best Practices for Implementing Value-Based Selling
The value-based selling report identifies four best practices that guide leading medical device, equipment and diagnostics companies and their teams of sales executives, field managers and account representatives to superior economic results.
1. Translate Features and Advantages into Economic Value
Top performers are more than twice as likely as other respondents (85 percent versus 34 percent) to communicate their product or service's broad, long-term economic value and visible, customized benefits clearly to their customers.
"If you sell a wound care product, you must consider not only whether your product heals a wound quickly, but also demonstrate the extent to which it reduces the chance of hospital-acquired infection or readmission or the average length of stay for the patient," says Solem. "In other cases, leading companies are able to articulate how their products and services may help a provider increase patient volume by differentiating themselves with new service lines. Members of top selling organizations understand this and communicate the upstream and downstream effects of the products and services they sell in order to demonstrate value to their customers."
2. Communicate with a Broader Group of Stakeholders
As purchasing decisions continue to shift from medical practitioners to administrators, front-line sales teams must become adept at communicating value that will resonate with non-clinicians. To accomplish this, companies must equip their reps with relevant tools and an economic value story that articulates how the organization and each particular stakeholder ultimately "wins" with the product or service. The survey's top performers are nearly twice as likely as other respondents (58 percent versus 30 percent) to practice this.
3. Provide Services Unique to Customer Needs
Leading companies outpace the others (52 percent versus 24 percent) in customizing their solutions, economic value story and communication materials for individual accounts.
"The industry's top performers go beyond the traditional product to look for ways to help their customers' organizations achieve their goals," says Solem. "This may include offering service line specialists like cardiac experts or women's health specialists. It's all a matter of aligning available resources and skill sets with the goals and needs of your customers."
4. Practice a Holistic Approach to Integrating Value-Based Selling
Using technology to empower a rep is a popular endeavor, but leading companies understand that there is no substitute for the intellectual assets required to truly understand and address the needs of every prospect or customer. Top businesses select reps based on a desired set of skills and train them to turn selling insights into the right messages and activities for each customer stakeholder. They also build processes that foster collaboration and enable better information capture. Forty-five percent of the top performers surveyed take this strategic approach, compared to 25 percent of other companies.
Follow this link for a copy of the full report: "Value-Based Selling: Achieving Sales Success in the Medical Device, Equipment and Diagnostics Industry."
About ZS Associates
ZS Associates is a global leader in sales and marketing consulting, outsourcing, technology and software. For almost 30 years, ZS has helped companies across a range of industries get the most out of their sales and marketing organizations. From 20 offices around the world, ZS experts use analytics and deep expertise to help companies make smart decisions quickly and cost effectively. ZS comprises multiple affiliated legal entities. Learn more at: www.zsassociates.com.
SOURCE ZS Associates