A decade ago, the Medical Device and Diagnostics (MedTech) industry was basking in the glow of over 10% revenue growth every year. More recently, this has declined by more than half. According to Boston Consulting Group (BCG) Partner, Barry Rosenberg, there are multiple factors impacting growth, ranging from changing customer expectations to more complex decision-making processes. Sales cycles are now more getting dragged longer, leading to slower revenue growth.
In the coming years, it is predicted that growth will be driven by sales volume . In order to stay on the growth trajectory, medical device and diagnostics companies need to identify opportunities to counter changes in purchase methods and sales processes.
So where do you begin the transformation and how do you move at the pace of business? To get a competitive advantage, you must look at building operational efficiencies, establishing innovative business models and diving deeper into data and analytics.
A high percentage of sales and general administrative (SG&A) costs can be indicative of sales productivity issues. Productivity issues arise from sales reps having to look up product and pricing information manually, precious selling time is being spent on administrative tasks.
According to a recent BCG study, 70% of medical device and diagnostics related purchasing decisions are heavily dependent on price due to increased competition. According to this report, “MedTech companies need to build robust and automated pricing and discounting guidelines that establish clear discount criteria based on customer attributes”
Growing competition and new regulations in the marketplace demand efficiencies in order to maintain healthy margins and sustain growth. When reps have no constraints on discounting, you are left with dramatic price inconsistencies and oftentimes, declining margins.
In a marketplace that is extremely price conscious, you need to determine how you can differentiate your products and services. BCG estimates that from 2016 through 2020, the MedTech services market will grow by roughly 50%, from $50 billion to $75 billion. Value-based offerings have become the decision driver for many hospitals and care providers. It is no longer just about the product - services, warranties, and consumables subscriptions need to be an important part of your go-to-market strategy.
The advantage of building a holistic solution versus focusing on product is twofold. Firstly, it delivers tangible value to the customer. Secondly, it builds a recurring revenue stream that provides a steady cash flow. As you start thinking about new revenue channels, ensure you have the infrastructure to manage the recurring nature of revenue.
At the executive level, a lack of real-time insight into the average selling price, discount trends, and sales forecasts makes it challenging to make smart decisions for resource allocation within certain markets and geographies. Market intelligence around product revenue by product line, by channel or by region helps sales leaders make smarter decisions.
Gilson is a life science company that develops products used in labs around the world. It helps advance the pace of discovery, and it includes 14 organizations globally and holds over 750 patents. It’s best known for PIPETMAN pipettes, a lab tool for transferring or measuring liquid. Gilson’s PIPETMAN was the world’s first continuously adjustable variable volume pipette.
Gilson had been using the Salesforce platform in its US organization for 10 years, but it was now ready to use it globally. In particular, Gilson needed to implement Configure Price Quote (CPQ) software throughout the entire company, and it needed to find a Salesforce partner to help them.
Gilson’s sales teams were using Excel spreadsheets to configure systems, and the strategy became too bulky and difficult to control. The spreadsheet method didn’t allow for reporting or quote approval, so there was no oversight in discounts being given across Gilson sales organizations. To complicate things, much of the process relied on email which became a block for progress and agility.
Previously, it could take 30 minutes to an hour to configure a quote, get it approved, and complete any associated tasks. With Gilson’s new and improved CPQ process, quotes are finished in 15 minutes or less. It’s a win-win for both Gilson’s customers and its sales reps.
“Customers get quotes faster,” Monica Anderson, CRM Manager said, “And sales can spend more time doing what they do best, selling.”
Market challenges underscore the need for MedTech companies to bring in automation and intelligence in their sales processes. Salesforce CPQ helps establish pricing guardrails, build contracted pricing and drive rep productivity. Want to hear how CPQ customer, Gilson cut their quoting time by half? Check out this webinar!