Sales and Software: Highlighting the Customer Experience

SOFTWARE

Innovation and cutting-edge R&D are fundamental to success in the medical device industry. But the opportunities for innovation and competitive distinction do not end with product development. Medical device OEMs are faced with equally important decisions regarding how to sell a new product in a particular market. Regardless of the market, how a device manufacturer approaches these challenges can affect a product's success as much as product quality does. Unless the new product finds its way into the hands of the right people at the right time, it may never have the chance to prove its merits and take advantage of a broad market opportunity.

Effective marketing and selling in the highly competitive medical device arena is complex. It is also fraught with challenges that are not present in most other industries. Device OEMs face tremendous pricing pressure from hospital group purchasing organizations (GPOs) and integrated delivery networks (IDNs). This pressure significantly compresses their margins and drives the need to control costs. On top of that, OEMs need to adhere to FDA and other regulatory requirements. And unlike organizations in most other industries, medical device companies must track their customer interaction information. Doing so is not just a means of competitive advantage and customer service; it is a matter of law.

Timing is critical. Every month of delay in getting a product to market risks decreasing its gross profit potential. This drives OEMs to ensure that their products reach potential customers before those of their competitors. With all the time, effort, and money that goes into development, capturing market share can still come down to the manner—and speed—with which manufacturers take their medical devices to market.

Streamlining and accelerating sales and marketing initiatives in device firms requires precision and insight. OEMs must know their markets intimately and must be able to identify key points of influence—the people and organizations that have the greatest effect on sales. Most device manufacturers need a highly coordinated sales force that can be assigned strategically to the appropriate accounts. Market conditions require OEMs to act rapidly on market and customer information. It is essential to have a marketing team that can target the right people with the right message. The team must also be able to quickly identify the most effective initiatives. OEMs need tools that help them manage and expedite critical processes, such as price quoting, change orders, and contract renewals.

The good news is that there is technology specifically designed to help companies meet these kinds of challenges. Customer relationship management (CRM) software does more than just help manufacturers introduce new products. It can help coordinate and unify the operations within a company that interact directly with customers. This unification leads to a more-effective, informed, and personalized relationship with the customer, whether a single doctor or a GPO. In effect, such software enables an OEM to differentiate not only the quality of its product from competitors, but also its customer relationships.

An Alternative to Generic CRM

Despite the appeal of CRM software, historically many OEMs have found that general systems fail to meet the unique requirements of the complex medical device industry. Although some CRM products can be modified to provide a better fit with the industry's requirements, customization can prove costly and time-consuming. Increasingly, however, industry-specific CRM products are being developed. They better match the relationship structures and business processes of the industry, resulting in faster and lower-cost implementations as well as in higher user adoption.

Industry-specific CRMs for device OEMs are designed to accommodate distinctive characteristics of the industry—including complex distribution channels with multitiered supply-chain relationships, complicated contracts and pricing, and government regulation. They can provide sales reps access to information such as product features, specifications, benefits, and reimbursement guidelines. Some CRM systems also offer integration to such related systems as complaints management, for example. That way, a call-center application or field sales automation system becomes a part of the complaints management process.

With flexible, industry-tailored software, OEMs can benefit from greater efficiency and insight across their functions that interact with customers.

Creating the Customer Experience

With so much emphasis on product innovation in device manufacturing, it is easy to lose sight of the importance of the way a company takes its products to market. In the past, OEMs organized their business processes around product lines. Product data was often compartmentalized, which meant that salespeople in one division did not have access to information about customers of another division, even if the customers purchased from both divisions.

A sophisticated CRM platform integrates processes and data. Such integration enables sales, service, and marketing staff companywide to better capture and organize detailed data about existing and potential customers and to understand their needs. Information about customer buying trends and purchase histories can help identify up-selling and cross-selling opportunities. With this information, salespeople can offer appropriate pricing and develop timely sales approaches, which can increase revenues. Equipping employees in different departments and across divisions with tools that help them collaborate productively enhances customer experiences, which in turn results in increased sales and customer satisfaction.

CRM software helps capture the unique attributes of individual customers, enabling an OEM's salespeople to develop the customer intimacy required to build long-lasting relationships. For example, a CRM system can house customer information such as birthdays, hobbies, and family details. Such personal information enables sales reps to personalize their interactions with customers—sending a birthday card, for example, or commenting on the latest golf tournament. At the same time, the CRM system can help reps determine group trends and similarities between customers. These data allow marketing teams to segment and target both customer and prospect groups effectively. This dual insight—on both the individual customers and group trends—helps drive additional revenue and profit opportunities.

Gaining Visibility into Complex Relationships

Medical device manufacturers sell to clients within a complex, multitiered web of relationships. Keeping track of these complicated networks of contacts—much less identifying the key influencers on product choices in specific contracts—can be incredibly difficult. The sales force needs to be able to identify key contacts at each facility and to be aware of those contacts' departments, specialty areas, and level of influence. With such information, reps can target the right people.

This information can also be vital to making the right pitch for a product. GPOs, for example, tend to be highly price driven. But the complexity of certain products is increasing. For example, implantable and diagnostic medical devices may have minute electronics and embedded microprocessors. For such devices, individual physicians and surgeons typically play a large role in influencing product selection. Their selection criteria tend to include a focus on individual patient needs, insurance reimbursement, product performance, and manufacturer support. Knowing these preferences can help the salesperson highlight the areas that will be most relevant to the key contacts.

Industry-specific CRM systems can help sales teams know their markets intimately and can help them identify key points of influence. It allows them to understand the organizational structures and to leverage relationships between contacts, facilities, subsidiaries, distributors, IDNs, and GPOs. In this way, sales reps benefit from the ability to target their efforts and thereby profit from the influential relationships they may have already developed. For example, sales reps should know which facilities comprise each IDN; selling to one facility in an IDN may lead to opportunities with other facilities in the same network. Visibility into the relationships among individuals, facilities, and organizations can help sales reps understand customer and prospect buying processes. It can also help them identify new prospects within a network of existing customers.

CRM tools can also map existing relationships between contacts. Mapping can help ensure that sales reps target the most influential contacts at a facility. As a result, reps will spend less time pursuing the wrong people and, more important, they'll gain insights into which relationships have the most potential for successful sales.

Ensuring that sales reps spend their time with the most influential people can save the reps hours of fruitless information hunting or unnecessary calls. The time saved often enables them to close sales quickly and to have a good insight into customer needs. Because a faster sales cycle reduces the cost of sales (in terms of sales-resource commitment), it ultimately results in a higher profit per sale. Moreover, CRM systems help sales reps to schedule and manage follow-ups, assisting them, for example, with maintaining contact with GPOs. Often, a buying group that is considering renewing a contract with an existing supplier will also entertain presentations of competitive products.

Selling Medical Products

In addition to giving sales reps more insight into customers, CRM systems give OEMs insight into the performance of their sales teams. This insight can help them manage and realign reps more effectively. OEMs segment customers according to criteria that transcend simple geographic boundaries. Criteria also account for existing relationships and familiarity with specific medical specialties. With CRM systems, OEMs can fine-tune the process by monitoring and controlling the way sales members are assigned to accounts.

Depending on the product, a company may need to include training or support staff on a team for a particular account. Just as their sales teams may be segmented by role and by geographic area or facility, support staff may be organized according to similar criteria. Assigning individuals to a team for a specific purpose and assigning them a defined role makes them more accountable and also increases overall team efficiency.

CRM systems can further help build relationships by providing sales reps with information and resources at the point of purchase, whether that be a doctor's office, an operating room, or an association meeting. Physicians often must sift through and process a great deal of technical and clinical information to make qualified decisions. Some CRM systems allow sales reps real-time access to corporate systems via mobile technology, either through wireless devices like cell phones or personal digital assistants, or through device-resident versions of the system and database. This access enables reps to respond quickly to technical questions about product performance and customization options. It also allows them to track inventory and orders, obtain approvals on pricing, and make change orders. Well-prepared, well-educated reps armed with detailed information during sales calls are likely to be seen as more credible by their prospects.

Managing Price-Setting Processes

Optimizing the value of customer relationships requires OEMs to streamline and improve the monitoring, management, and analysis of customer contracts. Companies have reduced sales-related costs and increased contract renewals by actively pursuing renewals and carefully monitoring the application of contract provisions.

Medical device sales reps usually work with a wide range of pricing scenarios. Hospital purchasing departments and GPOs commonly govern purchasing for frequently reordered products such as disposables. For those groups, price is usually the strongest factor in the sales process, but other factors can also play a role. The ease of working with the OEM—the efficiency of reorders, the strength of the relationship, and the level of satisfaction with past interactions—are important areas in which CRM systems can help OEMs gain a competitive advantage. At the other end of the purchasing spectrum are capital goods—heavy, expensive, highly sophisticated medical equipment. In this segment, product lines are narrow, and pricing may be a secondary factor to features. Sales cycles are lengthy and require a high degree of interaction, and purchasing decisions are usually made by committee.

This broad range of scenarios makes it difficult to create one-size-fits-all pricing rules. Accordingly, setting a price on an individual-account basis can be the best way for OEMs to optimize their margins. But making individual-account pricing efficient requires a streamlined and consistent process for escalating discounts and obtaining management approvals. Also, effective case-by-case pricing requires access to data about a customer's budgets and purchasing history, competitor pricing, and the importance of the sale to the manufacturer. For example, an OEM may want to discount the first purchase by a new customer that has strong future sales potential.

Using a flexible CRM system to implement an approval process for pricing and discounting can ensure that only profitable quotes are extended to customers. Standard pricing guidelines can be built into the system along with a process for overriding prices when needed. Suggested quotes can be created within the CRM system and sent automatically to managers for review. Once a quote is approved, the system automatically alerts the sales rep.

Using CRM software to manage pricing, quoting, and contract processes helps salespeople quote the most appropriate price for each product. It can also alert them to price breaks and volume discounts. The system can also ensure that price quotes are accurate. All this can be automated within the CRM application.

Marketing More Effectively

Comprehensive CRM systems contain a centralized resource for customer information. This allows firms to target their marketing efforts to segments of the existing customer base. The marketing organization needs to be familiar with customers' buying patterns to target marketing campaigns. For example, consider a situation in which an OEM introduces a new product and needs to alert all physicians that may be interested in the product. Doing so requires the company to segment its customer base to isolate only those physicians to whom this product would apply. The marketing group can use the customer purchase histories in the CRM system to analyze the customer base. From there, they can segment the list to target those physicians most likely to buy the new product.

The marketing group can also create focused promotional campaigns. It is possible to identify customers that have relevant equipment installed. The group can mine that base for prospective purchasers of upgraded accessories, options, disposables, and services. The CRM system can also automatically create a campaign for the telesales group to use in prospecting and enables them to pass qualified leads to the sales force.

CRM systems can monitor the funds spent on individual physicians each year to ensure that all expenditures comply with laws regulating physician compensation. In addition, these systems provide insight into which marketing initiatives—and alliances with product luminaries—are proving most profitable.

Many CRM systems also include tools designed to help marketing personnel manage events such as trade shows and continuing medical education (CME) sessions. They can also keep track of who attends and how the events contribute to sales. This information can be used to refine marketing programs and to identify and terminate ineffective programs.

Harmonizing the View of the Customer

The sales, marketing, and customer service aspects of CRM systems are most beneficial if they are harmonized to provide one view of the customer. For example, if a customer calls the contact center with a product question, the call should be recorded in the system in such a way that the corresponding sales reps are readily aware of the call. In addition, the salesperson could be tasked with some element of the outcome of the call, such as visiting the customer to deliver collateral materials.

CRM systems can provide this visibility across all departments of an OEM, but doing so can be a challenge if the sales, marketing, and customer service forces are not integrated. System integration is an important decision to be considered by an OEM installing CRM software.

In addition, it's important that customer data are compiled in a master record that has all pertinent descriptive information about the customer. New data can then be added to that record in a way that provides a complete transaction history and facilitates information analysis.

Optimizing Product Development Efforts

OEMs should try to bring as much focus and innovation to their go-to-market strategies as they do to product development. However, this does not mean that product development and customer management are mutually exclusive domains. On the contrary, OEMs looking to gain product advantage should consider the ways in which better customer knowledge and relationships can enhance product development. Sales reps can be in the operating room, for example, to capture comments and answer questions on the spot. Their presence connects them to the physician and allows them to observe the work flow. Later, they can ensure that the appropriate people within the OEM see and respond to the comments.

A CRM system can improve sales productivity, but product innovation is the engine of additional sales. OEMs should make certain that their product development functions are customer-centric. In other words, they must develop products that customers want and need. Gaining this kind of insight requires that product development teams receive continual feedback from departments that interact directly with customers. For example, the field service group needs to keep the development department informed about servicing issues.

Such information enables developers to maximize product quality and minimize service costs. The team can correct reported product deficiencies or develop new and enhanced products to bridge gaps in required functionality. Feedback should also include customer requests for product changes and enhancements. Such comments often guide product development and accelerate the time to market for new devices with needed features.

Selecting a Management Strategy

The complexity of customer interaction in the device industry makes it essential to support that interaction with information technology such as CRM software. Integrated or stand-alone software products are available that offer standard CRM features, such as sales automation, help-desk automation, or marketing program management. Although such products provide a means for collecting vast amounts of information, they may not be specific to the needs of medical device manufacturers. Moreover, they may be unable to reflect the specific information and functionality needs of the industry.

With the device industry's highly competitive landscape and intricate market, OEMs need tools to help them take their products to market. The proper selection and application of customer management strategies and tools can help them go to market more strategically, and faster, than their competitors. Only an integrated, device industry–specific system will make possible the tight collaboration necessary for successful customer management.

Conclusion

A CRM system is not the sole component of a strong, technology-enabled OEM. CRM systems focus on enabling customer-interaction processes, and manufacturers will still need additional software systems to manage back-office processes such as accounting, scheduling, material management, and quality assurance. But CRM systems can be integrated with systems that manufacturers may already be running, such as enterprise resource planning systems. Such integration can create a seamless process that pulls related back-office data into the CRM system and vice versa.

Today's market demands a lot from medical device OEMs. CRM systems can be an important part of helping them meet these demands.

Bruce Cameron is senior vice president, North America, for CRM Solutions, CDC Software (Atlanta).

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