Changing sales paradigm in healthcare deva rangarajan brecht cardoen

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THE CHANGING SALES PARADIGM IN THE HEALTHCARE SECTOR

PROF DR DEVA RANGARAJAN PROF DR BRECHT CARDOEN

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© Vlerick Business School 3

“THE WINNERS WILL BE THOSE WHO DELIVER SOLUTIONS

FROM THE USERS’ POINT OF VIEW.”

Jack Welch

© Vlerick Business School

AGENDA

1. The Changing Environment

2. Trends in Strategic Procurement

3. Challenges Facing the Sales Executive

4. Findings from a research study with Deloitte

5. Selling in the future

6. Conclusion

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1 THE CHANGING ENVIRONMENT


THE CHANGING ENVIRONMENT: UNIVERSAL TRENDS

Aging populations putting stress on health care systems

Increased pressure on cutting costs in healthcare

Need for increased transparency

Increasing awareness by customers to focus on their core activities

Era of Shared Alliances

The increased clout of the purchasing departments/buying groups

Rise of the intermediaries or the Value Added Resellers

Multi-channel communication

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EVOLUTIONS - HOSPITALS (FLANDERS, BELGIUM)

“We are focused on delivering an excellent customer experience”

“All non-core activities have been put on due diligence”

“We are being asked by the local government to work together with local hospitals”

“We decided to invest in elderly homes and quickly found out that we could have synergies in purchasing along with our division that managed hospitals”

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EVOLUTIONS - HOSPITALS (FLANDERS, BELGIUM)

“We plan to quadruple our purchasing department and create a separate function that’s sole purpose is to scan the globe for the best possible solution with the right value/price to recommend to our medical council”

“Never before has been such emphasis on bringing outside professionals to manage the hospital functioning”

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QUICK 10 MINUTE EXERCISE

IF YOU REPRESENT A SUPPLIER , THIS IS FOR YOU

To what extent are the above mentioned factors being considered as challenges for your organization?

What are you doing to tackle these challenges?

IF YOU ARE A HEALTH CARE PROVIDER/INSTITUTION, THIS IS FOR YOU

In your opinion, to what extent is your organization being affected by the factors above?

What struggles do you face with these changing market dynamics?

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2 TRENDS IN STRATEGIC PROCUREMENT

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TRENDS IN STRATEGIC PROCUREMENT

1. Reduce the “black-box” effect of solution selling

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Source: Rethinking Procurement in the Era of Globalization: Frank den Butter and Kees Linse, Sloan Management Review, 2008



2. Increase internal visibility within the organization

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3. Strategic Transaction Management

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CLASSIFICATION OF TRANSACTION COSTS: OBJECTIVE FACTORS

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Search/Information costs

Acquisition costs

Transport costs

Quality assurance

Installation and maintenance costs

Intellectual property costs

Training

Disposal

Internal to Company External to Company

Trade legislation

Currency effects

Import/Export permits/levies

Labor costs and safety standards

Government rules and regulation


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CLASSIFICATION OF TRANSACTION COSTS: SUBJECTIVE FACTORS

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Internal to Company External to Company

Sourcing decision on existing jobs

Effects on reputation and brand value

Will staff support new suppliers

Will staff be able to deal with the risks associated with new supply options

Sustainability considerations in relation to local and global environments

Unions/political stability

Customer views on desirable sources/suppliers

Labor costs and safety standards

Environment




4. Accountability

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5. Optimization

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6. Compliance


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To what extent are the above mentioned factors being considered as challenges that your salespeople face?



In your opinion, to what extent is your organization being affected by the factors above?

What struggles do you face with these changing dynamics?

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3 CHALLENGES FACING THE SALES EXECUTIVE

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CHALLENGES FACING THE SALES EXECUTIVE

Six things keeping sales executives up at night:

Source: Neil Rackham session at the Global Sales Science Institute meet- Milan 2011

1. The end of the “better mouse-trap” model

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INSIGHTS: EXTERNAL ENVIRONMENT


2. The death of F2F transactional selling

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3. Unsustainable hybrid sales force

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4. The ever extending sales cycle

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5. The decline of RFP selling

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6. Skyrocketing costs of chasing an opportunity

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How do you think the above factors affect the effectiveness and efficiency of your sales force?



In your opinion, what are the characteristics of a successful salesperson?

What steps if any do you undertake to partner with a supplier?

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© Vlerick Business School 28

SO CAN SALES AND PROCUREMENT GET ALONG?

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4 FINDINGS FROM A RESEARCH STUDY WITH DELOITTE


WE LOOKED AT RELATIONSHIPS

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sales procurement

Overall understanding, perceptions & frustrations

Internal challenges

Internal challenges

• Procurement management

• End-users such as engineering, R&D

• ICT • Finance • …

• Sales management • Marketing • Production and

supply chain • Finance • …

http://www.google.be/url?sa=i&rct=j&q=thinking+guy&source=images&cd=&cad=rja&docid=sa-b-chDV0G0VM&tbnid=dt9eUf_glJNC_M:&ved=0CAUQjRw&url=http://www.loanmodsmadeeasy.net/&ei=8bMcUanpD8O60QXtk4HwAQ&bvm=bv.42452523,d.ZG4&psig=AFQjCNFT-q_Z3NDrMwdaD8_eFcgDZOX4iw&ust=1360921956231712


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32%

active in procurement

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respondents

BROAD SET OF RESPONSES

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68%

active in sales

113

respondents


STILL LARGE DIFFERENCES IN PERCEPTION OF OVERALL RELATION

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35%

35%

27%

3%

17%

63%

20%

0%

0% 10% 20% 30% 40% 50% 60% 70%

Combative

Cooperative

Partnership

Super Collaboration

Procurement Sales

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OVERALL FINDINGS

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sales procurement

Overall understanding, perceptions & frustrations

Internal challenges

Internal challenges

• Value-adding partner • Demonstrating added

value • Convincing internal

client • Internal visibility

• Too much focus on short term

• Internal alignment on customer

• Internal misalignment, communication and company politics

Actions Sales: • Deliver on promises • Efficient and proactive

communication

Frustrations wrt Procurement: • Focus on cost and price • No access to other

stakeholders

Actions Procurement: • Clear requirements • Communication • Open communication about

selection • Sharing benefits

Frustrations wrt Sales: • Information sharing /

communication • Not first contact • Opportunistic


CONCLUSION FROM THE DELOITTE STUDY

SALES CONCERNS

Commoditization

Ever extending sales cycle times

Managing the right Go-to-Market Strategies

PROCUREMENT CONCERNS

Too much “black-box selling

Increasing accountability

Managing transaction costs

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5 SELLING IN THE FUTURE


THE SELLING WORLD

Source: Zoltners et al., Building a winning sales team, 2009

Company

Company strategy

Marketing and sales strategy

Sales force

Environment

Customers

Competition

Results • Customer • Company

External forces

Sales system

Effectiveness hunt

• Company goals and objectives

• Mergers and acquisitions

• Product portfolio strategy

• Market segmentation

• Value proposition

• Sales process • Go-to-market strategy

• Market segmentation

• Value proposition

• Sales process • Go-to-market strategy

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IMPLICATIONS: SALES SYSTEM

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Company results

Sales force structure and

roles

Customer results

Activities Salespeople

Definers

Shapers

Exciters

Enlighteners

Controllers

The Sales force effectiveness drivers

The Sales System Forces outside the Sales

System

Company factors - R&D - Operations - Finance - Marketing - Product

offering - Pricing - Services - Channel - Strategy

Environment - Market growth - Competition - Consolidation - Government - Technology - Random

Shocks

Source: « Sales Force Effectiveness : A Framework for researchers and practitioners » by Andris Zoltners, Prabhakant Sinha and Sally Lorimer, Journal of Personal Selling and Sales Management, Spring 2008


SALES FORCE EFFECTIVENESS DRIVERS

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Shapers

• Recruiting • Training • Coaching • Culture formation • Compensation

Enlighteners

• Customer Research • Targeting • Data and tools • Customer relationship

management systems

Exciters

• Leadership • Compensation • Motivation programs • Meaningful work

Controllers

• Performance Management

• Coordination systems • Vertical and horizontal

communication • Compensation

• Sales strategy • Customer

segmentation • Customer offering • Sales process

• Go-to-market strategy • Sales force design

• Structure and roles • Size • Territory alignment

Definers

• Skills • Capabilities • Values

• Customer insight

• Inspiration • Motivation

• Expectations • Success

measures

• Roles • Territories • Selling Process

Impact

Impact The Sales job The Salesperson

Salesperson / activity

Source: « The Sales Force as an engine of organic growth » by Bernard Quancard and Andris Zoltners, Velocity 2009

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STRATEGIC SELLING: A JOURNEY

1. Segment customers based on needs

2. For every segment, identify the customer’s work flow and identify pain points

3. Identify the right combination of product(s) and services that will meet customer requirements

4. How well do we communicate the unique nature of our value offerings?

5. Factor transaction costs for the customer when pricing your offer

6. Follow up on after-sales relationship

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CUSTOMER ACTIVITY CHAIN- GE MRI SCANNER

1. Determining requirements and whether having a scanner is justified.

2. Financing the scanner

3. Installing the scanner

4. Testing, calibrating, and validating the scanner

5. Maintaining and replacing parts

6. Replenishing materials (gases and imaging media)

7. Training

8. Preparing the patient for a scan

9. Scanning the patient

10.Interpreting the scan

11.Updating the software

12.Updating the hardware

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GE Healthcare

GE Capital

Third party

Customer

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VALUE PROPOSITION

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To all stakeholders

To specific customer segment

To individual customer

Top Management

Market Managers, Product Managers,

BLM, Sales Managers

Key Account Managers, Sales Executives,

Account Executives

Mission statement

Value proposition

USP for customer

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VALUE PROPOSITION TEMPLATE

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RATE THE PERFORMANCE on a scale of 1 (very bad) to 5 (very good)

NATURE OF BENEFITS Importance ABC Competitor 1 Competitor 2 Comp. adv.

Product benefits

1.

2.

3.

4.

Service benefits

1.

2.

3.

4.

Brand benefits

1.

2.

3.

4.

Total benefits 100









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6 CONCLUSION


IMPLEMENTATION VS. DIAGNOSIS

Source: « Sales Force Effectiveness : A Framework for researchers and practitioners » by Andris Zoltners, Prabhakant Sinha and Sally Lorimer, Journal of Personal Selling and Sales Management, Spring 2008

Implementation

Diagnosis

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Company results

Sales force structure and

roles

Customer results

Activities Salespeople

Definers

Shapers

Exciters

Enlighteners

Controllers

The Sales force effectiveness drivers

The Sales System Forces outside the Sales

System

Company factors - R&D - Operations - Finance - Marketing - Product

offering - Pricing - Services - Channel - Strategy

Environment - Market growth - Competition - Consolidation - Government - Technology - Random

Shocks

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SALES FORCE EFFECTIVENESS DRIVERS

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Shapers

• Recruiting • Training • Coaching • Culture formation • Compensation

Enlighteners

• Customer Research • Targeting • Data and tools • Customer relationship

management systems

Exciters

• Leadership • Compensation • Motivation programs • Meaningful work

Controllers

• Performance Management

• Coordination systems • Vertical and horizontal

communication • Compensation

• Sales strategy • Customer

segmentation • Customer offering • Sales process

• Go-to-market strategy • Sales force design

• Structure and roles • Size • Territory alignment

Definers

• Skills • Capabilities • Values

• Customer insight

• Inspiration • Motivation

• Expectations • Success

measures

• Roles • Territories • Selling Process

Impact

Impact The Sales job The Salesperson

Salesperson / activity

Source: « The Sales Force as an engine of organic growth » by Bernard Quancard and Andris Zoltners, Velocity 2009


TOPICS TO PRIORITIZE

Needs immediate attention.

Measure and continuous

improvement!

There are other priorities

Nice, but there are bigger fish to fry

Impact of the drivers on

performance

Current performance on the drivers LOW HIGH

LOW

HIGH

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Changing sales paradigm in healthcare deva rangarajan brecht cardoen

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