Building a new go to market model in Life Sciences

A middle-aged sales rep pulls up outside the doctor’s surgery.? He pops the trunk on his car and takes out a case of samples.? He stuffs a few product sheets into his suit pocket and heads inside to meet the receptionist - smiling sweetly and asking if the doctor can spare him 10 minutes.

You could imagine this as a scene from a movie from the 1970s - but it still plays out consistently today - even in the aftermath of the COVID pandemic.

For decades the life sciences industry - consisting mainly of medical device manufacturers, pharmaceutical companies, and biotech firms - has relied on an army of field sales reps to criss-cross the country meeting clinicians directly to help convince them of the value of their products.

The traditional field sales model has challenges

Prior to the pandemic 64% of sales meetings with health care providers (HCPs) were in person.??

But this model has significant challenges:

Travel time - for a sales rep to travel to each of the physicians in their territory it required a huge amount of dashboard time as they traveled to, waited for and returned from their customers.? Traveling time is not selling time.

Complexity of customer networks - it differs country by country - but the healthcare industry is fragmented into patients (who receive the care), providers (who deliver the care) and payers (insurers who pay for the care).??

In most scenarios it is the healthcare provider who is the customer that the field sales rep travels to visit - but increasingly patients are influencing the type of treatment they want, and payers are requiring certain treatments based on the patient outcomes.??

Over the last decade we’ve seen the rise of telehealth companies and the emergence of entirely virtual doctors and influencers.

So who is the customer, and how can you visit them if they are only online?

Large deals become centralized - Increasingly Group Purchasing Organisations (GPOs) negotiate contracts covering many HCPs in bulk, and Integrated Delivery Networks (IDNs) operate groups of aligned healthcare facilities including multiple HCPs.

Traveling to meet your friendly physician might result in a nice chat - but no longer do they have the authority to decide what devices or medicines they’ll use in their own facility.

Medical sales become more complex - life science companies are facing extreme pressure on their top line revenues - they expect to see a 1-2% decline in net price growth in the US over the next five years - below the historical average of 4.3% growth.

They are countering this by moving away from selling individual products towards selling more complex solutions that connect them not just to the provider - but also to the patient and payer.

Instead of just selling a heart rate monitor - they’ll provide the app that logs the data for the patient and deliver the data feed into the insurer.

As the complexity grows, healthcare providers want more from life science companies than product information - they want to be educated on how to support their patients to a successful outcome, how to help patients remotely and how to help them with digitized patient information.

This is a much more intricate sale, with different commercial models, new data security issues and involves selling to multiple new personas - it requires much more than a two sided datasheet carried in the trunk of the car.

Sales reps need to move from selling to actually making the physicians more successful so that their patients receive better health outcomes.

These are some significant challenges to the traditional medical field sales model.

BCG recently surveyed 8,500 employees in commercial functions in medtech companies along with 200 senior leaders and found that on average - medtech companies spend 2-3 times more in selling, general and admin (S,G & A) expenses as a percentage of revenue than a typical technology company,?

Medtech companies spend 2-3x more on Sales, General and Administration expenses per $ of revenue than pure tech companies

And yet the average salary of a medical device sales rep is $155k ($94k basic salary and $60k commission), a way behind the average tech sales rep at $215k - i.e the productivity of a medical sales rep is significantly below that of their tech counterparts.

What does a modern life sciences commercial model look like?

BCG proposes six design principles that can help companies to build a next generation commercial model for the life sciences industry.

Design the future customer journey

Instead of just trying to make the rep in the car more efficient, consider how buyers want to interact.???

Just as in tech sales, buyers want to educate themselves first - from peers, from analysts, from events.? They only want to speak to a sales rep when they need to get hold of information they cannot access elsewhere - pricing, contracts, order forms.

Develop persona based selling - patients, physicians, maintenance teams, budget holders, insurers, GPO’s, IDNs.? Create personalized content for them to find and self-serve from.? Make it easy for sales reps to find the right content for the right individual.

Deliver omni-channel content - written, audio, video, social - create bite sized content that can be shared and consumed quickly.? Think 2 minute video instead of 20 page datasheet.

Put marketing in pole position

Instead of generic product content, create highly personalized, data driven and digital content.

Focus in on specific personas across the patient, provider and payer spectrum using Real World Evidence (RWE) to demonstrate proven patient outcomes not just marketing theory.

BCG found that companies that have followed this approach have seen a 30-fold increase in search engine visibility and up to 90% of their opportunity pipeline value has been influenced by performance marketing.

Build a bionic sales force

Instead of sending your rep on the road with a box of samples and a brochure, keep the rep at home and augment them with technology.

Just like tech companies do for their sales teams, provide them with a winning tech stack including analytics, next best action, sales engagement, self-dialers, virtual demo kits, automated call reporting, training and coaching tools.

Reps can get rid of the travel time, and refocus that on selling to customers.? Accenture surveyed HCPs during the pandemic and 87% wanted all virtual or a mix of virtual and in person post-COVID.? Only 10% wanted to go back to pre-COVID norms.? Virtual selling is here to stay and buyers want it.

And against what you’d think - more advanced products and solutions are easier to sell remotely - they are easier to demonstrate and it is easier to add in product specialists from your team that couldn’t attend in person.

Make customers successful

On the road field reps do a lot more than selling - they take the heat for any supply chain issues or invoicing challenges.? They are the face of the company and dealing with customer support issues can take up a significant portion of any sales visit.

BCG recommends building out a formal Customer Success Management function to take on this responsibility from the sales rep and free them up for selling.

Use an agile design approach

Tech companies have been using agile methodologies to build their own products and processes for decades.? Instead of trying to rebuild your entire lead to cash process in one mega project that will take five years, introduce new digital processes for specific use cases such as digital marketing or call analytics.

Deploy a minimally viable solution targeted at a specific sales team or customer segment.? Deploy it in weeks and learn from how your sales teams and customers interact with it.

To borrow a phrase from the renowned book The Lean Startup - build, measure, learn and repeat, repeat, repeat.

Build Digital Enablers along the way

The final strategy BCG recommends is to define the new skills, technologies and platforms that you will need in parallel to rolling out your first test use cases.

Companies will need to have these new digital skills inside their business if they are going to turn this new model into a real differentiator that can accelerate them away from their competition.

Summary

The Life Sciences industry is going through a rapid transformation - they must evolve their business model quickly or risk missing new opportunities.

Patients expect more.? Solutions are increasing in complexity.? COVID has disrupted the field sales model.

The companies that win will be the ones that can enable their sales teams to be better trained, more highly skilled, more motivated and ultimately more productive.

Sources: