Launching a Medical Device, Healthcare or Life Science Product: Fail Fast, Marginal or Worth Pursuing?
By Kevin Schimelfenig, Managing Partner of SalesForce4Hire®
Why Medical Device Companies Suffer Launch Failures
The speed to market, accelerated sales growth and risk mitigation for a medical device, life science or healthcare product is critical to the success of a business. Whether you are planning to launch a new product, a non-progressing asset, or a product acquired into your portfolio due to recent merger or acquisition, there are critical considerations vital to a successful launch.
Often a medical device company postpones investing adequately in sales force resources, to the detriment of a timely product launch. Months of lost sales can translate into millions of dollars in lost revenues. An overloaded sales force that must manage the current product portfolio may have little incentive to shoulder the added burden of the new product. Or the sales force may end up mired in procedures and administrative tasks, including: payer analysis, report creation, and order procurement, instead of spending time actually out in the field selling.
Another pitfall occurs when a company’s existing sales representatives are unable to develop strategies suitable for the new product. Often a sales force that is inexperienced with a new product launch will fail, even though they are successful with other, older company products. Sometimes launch failures are not so much the fault of the sales force as the result of poor coordination and communication among other departments in the company.
For Top 100 Medical Device companies, ensuring a successful launch for a new product and finding innovative ways to defray risk by shedding upfront costs is critical to the bottom line. To succeed, companies need to ask themselves: “What creative deal structures are available to our large, global firm that mitigate financial and HR risk? What products should be launched, and how should they be launched with the best probability of success?”
Questions That Must Be Answered Prior To Full-Scale Product Launch
Prior to the full-scale launch of a new product, you must decide whether the product is worth pursuing and whether it fits into your core business. A prototyping process allows a company to quickly identify the value or viability of the product while minimizing financial and HR risk. Many multi-billion dollar market segment leaders are very good at scaling up a sales force, but lack the expertise to prototype a sales force prior to full-scale product launch.
There are three questions involved during this critical prototyping stage:
- Will the product “fail fast”? Companies need to be capital efficient and the faster you discover if a product is going to “fail”, the less money spent. This also provides additional time and money to quickly adjust product design, target market, and launch strategy, etc…if it makes sense to continue with project.
- Will the product be marginal? Companies need to validate if the product fits into the core business channel, and if so, what margins it will deliver. Many large companies require high profit margins to justify placing a product in a core sales channel. If margins prove to be simply marginal, the company may decide to divest the product.
- Is there a proven sales prototype? If the product is worth pursuing, companies want a proven prototype, with objective and quantified data, which ultimately becomes the blueprint to base decisions on when executing a full-scale product launch.
To find the answers to these three questions, you must first develop a scalable sales model to accelerate revenue.
A New Paradigm is Required
The old model of sales outsourcing no longer provides answers to today’s ever-changing economic climate and is incomplete. Healthcare reform has altered market dynamics. Both Medicare and Medicaid have put forth new pay-for-performance initiatives. And medical institutions are demanding that new products show economic value in addition to clinical benefit. A new paradigm is desperately needed.
Many leading companies are looking for new and innovative “shared risk-shared reward” partnerships, with a focus on customizable and scalable sales solutions.
What a medical device company needs is a strategic partner with an invested and aligned interest in its success. In this type of “shared risk-shared reward” business model, if the medical device company does not win, neither does the strategic partner.
The final piece of this new model is that clients will benefit significantly from leasing an accruing asset which is managed by a strategic partner who can focus on building customizable and scalable sales teams. Once the sales team is generating revenue, it is now ready to be transferred back to the client, who has benefited by acquiring an asset that has increased in value, without the financial and HR risk.
What To Look For in a Strategic Partner
To succeed in the complex process of launching a new product, the strategic sales partner must have a highly successful track record in building sales models, with sales support and operational infrastructure, as well as have the ability to manage all aspects of the sales execution, mitigating financial and human resource risk. The function of the strategic sales partner is to accelerate sales and revenue through a custom sales engine designed specifically for your company and your product or service.
In response to this market need, SalesForce4Hire, LLC, a McGeever company, has developed a proprietary new business model called Sales Prototyping®. Each sales force we develop is a prototype, carefully designed and targeted to help determine a particular product’s ultimate viability in the marketplace. We align our interests in our client’s success by operating a “shared risk-shared reward” business model. If our client’s don’t win, we don’t win.
What is Sales Prototyping®?
The healthcare market is a highly competitive and dynamic space. Companies attempting to sell a product in this market without the benefit of a focused, direct sales force can find it a futile exercise. Sales Prototyping® is the blueprint we use to design small, focused sales teams and to validate a product’s appropriate exit strategy. Our proprietary Sales Prototyping®process, which guides us as we create a scalable sales force, is designed to optimize market launch speed while minimizing business and financial risk.
Whether you are introducing a new, potentially disruptive technology or seeking to reinvigorate sales of an existing but previously underserviced line, we create a scalable sales force by using any or all of the following four SalesForce4Hire® services:
- SalesNetwork4Hire®
- SalesManager4Hire®
- CustomSalesTeam4Hire®
- BusDev4Hire®
The objective of the process is to provide real world feedback that accelerates the sales learning curve prior to a product’s full-scale launch.
SalesNetwork4Hire®
SalesForce4Hire, LLC has a continuously updated database and network of independent commission-only sales reps we can use to create a sales force for our clients. Typically these networks are designed for those clients wanting a short sales cycle for their product or trying to get a feel for how their product may perform during a short time at market. Once we have assembled the team that we have agreed works best for you, we stand back and allow you to manage your new team.
SalesManager4Hire®
Our SalesManager4Hire® services provide dedicated management of the sales channel for clients seeking a more economic road to market. This service deploys a professional, seasoned manager or management team to oversee and drive daily sales activities through a variety of sales agencies, independent sales representatives, and distributors. The service can extend to include sales support functions and field training, as well as the development of standard operating procedures and sales kits.
CustomSalesTeam4Hire®
SalesForce4Hire, LLC can deliver to its clients a dedicated turnkey sales organization more quickly and cost effectively and with lower risk than comparable in-house initiatives. Our CustomSalesTeam4Hire® service offers you recruitment, hiring, training, and deployment of the field sales organization and sales support team. We develop and customize standard operating procedures and a sales kit for your specific product, and support the entire purchasing cycles.
Once this fully functioning, revenue-generating business asset has achieved market traction, it is transferred to the client at a mutually agreed upon, contractual timeframe.
BusDev4Hire®
Whether your product is best served by “feet-on-the-street” or through a direct licensing agreement, the success of its launch can hinge on decisions that are negotiated at the executive C-level. Our BusDev4Hire® service executes agreements on behalf of clients, and here are just some of the ways how:
- Negotiating a GPO contract in order to sell a particular hospital-based disposable product.
- Obtaining accreditation for a product, thereby earning it a position on an MCO’s formulary.
- Negotiating a licensing agreement with an international pharmaceutical company interested in your product.
Once the sales prototype is designed, we deploy The SalesForce4HireSales Accelerator System® to literally build a revenue-generating sales team. There are four key steps to sales acceleration, and this white paper looks at each step in turn.
Step 1: You must qualify the right prospects
Step 2: You must prioritize your resources, measuring risk, barriers and reward, then creating a decision matrix
Step 3: You must create your operational infrastructure
Step 4: You must execute the sales process, including deployment, measurement, management and reporting
Step 1: Qualify the Right Prospects
To be categorized as a primary sales prospect, a prospect must possess the intellectual ability to embrace the value proposition, the authority to execute a purchase and the ability to support it with appropriate funds. IA²® (Intellect, Authority, Ability) is a strategic business tool we use to qualify prospects.
Step 2: Prioritize Your Resources
Prioritizing resources involves the measurement of risk, barriers and reward. We call our system of accomplishing this Dynamic Parallel Targeting®. We use this strategic decision-making tool to evaluate market risk and prioritize competing market opportunities. This is especially effective for clients with operational or capital constraints but with a variety of revenue opportunities in different market segments. We evaluate each market segment in terms of barriers to entry, market risks, adoption rate, and market penetration cost. We also consider the value the product or service offers the customer, as well as the associated earnings potential. The resulting decision matrix reveals the priorities for maximizing ROI.
Step 3: Create Your Operational Infrastructure
You must decide what your sales support and infrastructure will look like. Our Tactical Sales Platform® creates operational infrastructure, including sales support, sales kit, sales training, IT support, standard operating procedures (SOPs) and reporting. It includes the development of elements such as sales collateral, brochures, website information and sales kits.
Once we have identified our client expectations using the IA2® and Parallel Targeting Processes®, our next step is to customize the Tactical Sales Platform, the operational framework by which we assemble all the tools needed to succeed (e.g., laptop, collateral, target list). The Tactical Sales Platform may include the following:
- Target database integration into customer relationship management system
- Managerial reporting system
- Customer and field sales support procedures
- Adverse incident reporting, recall and quarantine procedures
- Sales training materials, curriculum and tool kit
- Telecom and e-mail
- Order fulfillment and distribution support
- Customer support personnel and training
Step 4: Execute the Sales Process
The SalesForce4Hire Sales Accelerator System® culminates in the Customer Acquisition Process®. Each phase of The SalesForce4HireSales Accelerator System® builds the value of:
- The revenue-generating asset
- The emerging sales team
- The supporting infrastructure
The process helps us gain insight into the value exchange at the point of sale with the target prospect - insight that guides the sales team’s building process in terms of optimal skill sets, intellectual capacity, motivational factors, required experience and sales sophistication, compensation considerations, and required detailing and sales intensity.
The Customer Acquisition Process® includes:
- Sales model optimization (direct, shared-bag, independent or custom mix)
- Sales team recruitment (missionary, hunter, farmer, commodity/distribution or telesales)
- Sales team training
- Sales team motivation and leadership
- Sales team management
Conclusion
While the healthcare, life science, and medical device markets continue to grow exponentially, so does the cost and risks associated with launching products into this ever-changing marketplace. The impact of a launch delay or failure can run into the millions.
Causes for launch failures are varied and multifaceted. However, a company can maximize its product debut through proper preparation. To succeed in the complex process of launching a product, the medical device company should seek a partner who operates a “shared risk – shared reward” business model, which ensures an aligned and invested interest in the success of the project. The strategic partner must also have a highly successful track record in building sales models, with sales support and operational infrastructure.
In today’s complex, volatile market, the right strategic sales partner can help with the detailed implementation of new strategies accelerating your sales and revenue through a custom sales engine designed specifically for your company and your product.
About SalesForce4Hire:
SalesForce4Hire, LLC is the premier full-service source for custom sales solutions in the medical device, life science and healthcare industries, from investor-driven start-ups, to multi-billion dollar global segment leaders. Clients include Alcatel-Lucent, BD, Kimberly-Clark, Gojo (Purell Surgical Scrub) and University of Pittsburgh Medical Center. The SalesForce4Hire business model is one of “shared risk – shared reward,” long -term success and profit sharing. The unique Sales Prototyping® strategy of SalesForce4Hire helps its clientele increase the value of their assets by determining if products are worth pursuing and by providing real-world feedback that accelerates the sales learning curve prior to a product's full-scale launch. A holding of McGeever, LLC, SalesForce4Hire, LLC is headquartered in Cary, N.C. For more information, visit http://www.salesforce4hire.com
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