Having more flexibility in how sales roles are deployed and allowing more customization in regions represents the next frontier of productivity.
Pete Masloski, ZSIn today’s dynamic healthcare environment, IDN consolidation and centralized medical device purchasing are creating significant pricing pressure on the medical device industry. In fact, on average, prices for costly medical devices have been declining recently, according to the Emergency Care Research Institute. Medtech business leaders, therefore, have to work to find ways to evolve and grow earnings in this highly competitive and challenging environment.
One of the ways in which industry executives have reduced costs has been optimizing the sales model. Medtech companies have been shifting resources from more highly paid sales reps to lower-cost roles such as clinical specialists, telesales or junior reps to sell to specific customer segments or assume less critical sales reps’ tasks. These new roles have helped reduce the cost of sales but maintain a similar level of customer service and support. Companies have also increased sales manager spans of control and have consolidated back-office functions across business units in hopes of finding efficiencies. However, the desire for earnings growth in this challenging environment means that while the hunt for efficiency isn’t over, it’s getting harder and harder to implement. The low-hanging fruit may be gone in many larger selling organizations.
At the same time, market changes haven’t been progressing at a universal pace across customer segments, geographies or industry sub-sectors. Consequently, customer needs are changing significantly and heterogeneously across geographies. For example, some parts of the country, like Boston, have been more progressive in terms of adopting new payment models or accountable care, and others, like Utah, have unique and dominant systems that have an outsized influence.
Now is the time for medtech companies to push the envelope on more flexible regional sales deployment models. Having more flexibility in how sales roles are deployed and allowing more customization in regions represents the next frontier of productivity. The traditional model of deploying sales forces involves first agreeing on set sales roles and then spreading them like peanut butter—an even distribution, despite regional differences—around the country. But now more than ever, needs vary regionally, resulting in inefficiencies with a national model. There might be some roles that are more appropriate in some geographies than in others. For example, the need for specialized support resources such as reimbursement or clinical specialists is dependent on the specific needs of customers in a given region.