Do more with less using "Smarketing, with an S" - aligned digital marketing delivers sales-force efficiencies.
Do more with less using "Smarketing, with an S" - applying digital marketing thought leadership to deliver sales-force efficiencies
There is a simple truth for any business that operates on the basis of a field sales team:
"Prospecting for new customers is an expensive and time consuming business"
When the majority of prospecting is carried out by the field sales team, as it is across much of the Pharmaceutical and Medical Device & Diagnostics industries, it is also startlingly inefficient. Digital marketing should be utilised in these markets to take up the slack but some managers in MD&D today will feel a little uncomfortable with this idea. They are concerned that it might somehow undermine the vital customer touch-point represented by the traditional sales call.
In truth, given the challenges faced by the industry right now, Digital Marketing is the perfect complimentary marketing activity for medical devices, because the insights it grants should be a boon to a capable sales representative.
With a well-aligned Sales and Marketing team (or “Healthcare Smarketing Team") the digital marketing experts can attract prospects, nurture them until they become leads and develop their trust and relationship with the company until they are Marketing Qualified Leads that can be passed onto a ready and waiting sales team
The intelligence that goes with those qualified leads, gathered through this nurturing process, will cover much of the information that an extended one-to-one interview could glean. Because much of this nurturing can be automated & integrated into your other marketing activities, it has a relatively low cost-to-convert.
Digital marketing in healthcare related industries can dramatically improve the sales efficiency and effectiveness of any team if applied with rigour and imagination.
Here are three reasons why:
1. Digital Marketing can reduce your field sales preparation time
Your sales representative’s time is a very expensive resource, perhaps costing as much as €500 [i] a call for a fully-loaded sales representative. Yet perhaps up to 40% [ii] of that time is eaten up by call preparation where the rep prioritizes his customers, plans out his calls, prepares for individual calls by researching the customers, etc.
Healthcare Smarketing would not eliminate this preparation time, but it should shorten it. Given the ability to segment the digital user into pre-defined “buying personas”, built in-line with your pre-existing sales segments (with supporting sales literature and pitches), a sales representative should be easily able to recognise the customers need and best approach to win the business. The customer should come to him pre-categorised as an A, B or C opportunity all integrated into and accessible via his CRM.
Assuming 52 sales weeks in the year, with four weeks of holidays, we can see that a sales representative has just 240 selling days to hit her numbers. If preparation time is 40%, then actual time spent on sales calls is just 144 days. Every 1% drop in preparation time releases 2.4 days of selling time back to the sales representative.
2. Digital Marketing can improve your sales hit rate
Your sales representative’s hit-rates further eats into their effective selling time. Perhaps you feel pretty happy with a hit-rate of 75%, winning three-out-of-four sales calls, but, going back to our earlier model, if a call costs €500 then that success is costing you €625. The lower the hit-rate, the higher the cost.
Clearly, by having well qualified and segmented leads, and supported with the appropriate business intelligence and a clear picture of the customers’ needs, a sales representative is much more likely to convert a customer and win business. Healthcare Smarketing can deliver all of those to the medical device sales representative.
3. Digital Marketing can reduce the length of your sales cycle
A Medical Devices sales cycle is rarely only 1 call long. To embed a product, and genuinely win the business many sales representatives will go through a number of stages
Generate Interest – where the sales representative attempts to discover and align the customer needs to the product she has decided to sell (or uncover unknown needs that might match other products in her bag). If the clinicians needs match to another product additional calls may be required.
Demonstration & Use – here the customer uses the product in a clinical setting for the first time, with the representative in attendance, reinforcing the messages associated with the product. Depending on the complexity of the product this could require several additional calls and/or a Professional Educational component.
Budget Holder Negotiations – Here, having generated initial clinical interest, the sales representative must now negotiate with the appropriate budget holders in the context of the purchasing environment of the organisation. This can be complex and may take several calls, depending on the established relationships between the sales representative and the budget holders.
Installation – An old adage says that a product hasn’t been sold until it has been reordered. The sales representative may have to intervene to ensure the product is added to the appropriate preference lists, codes have been shared with purchasers, systems updated, discounts updated, etc.
It is quite conceivable that all of this could take up-to-4 calls or more. Reducing such a cycle by only one call would release a significant amount of sales time back to the sales representative, as well as accelerating business growth in-and-of-itself. Even a 1% reduction in the length of the sales cycle can have dramatic results as we shall see next.
How do these combine to accelerate growth?
Let us make a few assumptions and work through an example:
In the table above I have separated out each additional benefit as it accrues to illustrate the value of an improvement of 1% per item. As you can see, even with this conservative approach to valuing the activity, a single 1% improvement of performance is worth €12,188 in efficiencies per sales representatives. If your national sales organisation runs 5 teams of 5 representatives each, this represents a sales efficiency gain valued at €304,700. The effort required to build and maintain a digital marketing process to generate and qualify the leads is the same to run for one representative as it is for 25. This makes it a very cost-effective improvement to your business.
Clearly, using a sales team to hunt down prospects prior to conversion is an expensive way to do business, far better to build a digital marketing engine to attract leads, nurture and qualify them, while letting the sales teams focus instead on conversion.
Check back here for more on how to make this a reality.
Click below to see a presentation on this topic:
[i] Cahners and Reed Publishing companies found that the average cost of a Business-to-Business sales call in 2001 to be about $392, or approximately $550, or €480 in 2015 money: http://www.reedbusiness.com/
[ii] Forrester: https://www.forrester.com/home/