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Originally Published MX November/December 2004

INFORMATION TECHNOLOGIES

IT in the Hands of Field Sales Reps

A sales force equipped with mobile tools for interconnection to corporate resources can preserve a manufacturer's competitive advantage.

David Kerr

Sidebars: Mobile Sales Force Automation: How It Works How Mobile SFA Technology Benefits the Institutional Healthcare Provider How Mobile SFA Technology Benefits the Medical Device Sales Rep

The increasing complexity of today's healthcare equipment procurement environment has presented some new challenges for medical device manufacturing companies and their sales representatives. To gain a competitive edge in influencing product selection may require struggle. The emergence of intricate purchasing plans, contract-buying trends, and shifting pricing options constitute one set of challenges. Another relates to the growing complexity of medical technology itself, particularly its incorporation of information technology (IT) capabilities.

Medical device manufacturers and their field reps are discovering several healthcare industry procurement hurdles that need to be overcome. Group purchasing organizations (GPOs), contractual buying arrangements, on-line ordering, and face-to-face selling are each scenarios that present a distinct challenge for pricing and relationship building. A tool that can be of value in each of these situations is mobile sales force automation (SFA) technology.

Face-to-face selling is made easier by the development of personal relationships with physicians and surgeons in situations where they play an important role in purchasing. When doctors demand considerable technical data, product training, and manufacturer support, those sales reps armed with real-time data and interactive presentation tools will be the ones most likely to close a sale.

In an effort to foster better relationships with, and provide more value to, physicians—and to the healthcare industry generally—some medtech companies are investing in integrated sales, marketing, and supply-chain management systems that are known as customer relationship management (CRM) systems. Mobile SFA is a primary tool driving this initiative to meet, on demand and in the field, ever-growing customer needs (see sidebar).

According to a recent report by market analysts Frost & Sullivan (San Antonio, TX), CRM license revenue from mobile SFA applications, for both wired and wireless devices, is expected to grow from a predicted $169 million in 2004 to $293 million by 2008. The fastest-growing segment, wireless SFA, is projected to grow from $20 million to $115 million over that period.1

This article examines ways that mobile SFA can make medtech companies' field-based sales forces more effective in a procurement environment trending toward consolidated purchasing and automatic ordering while also serving the interests of institutional purchasers.

Sales Approaches by Product Category

Three major categories of medical devices—disposable goods, high-margin devices, and capital goods—call for different sales approaches. Handheld sales technology plays a different role in each.

In the hospital environment, purchasing departments and GPOs tend to control vendor selection, product pricing, and the awarding of contracts. This holds true especially with commodity-based products such as disposables (surgical gloves, swabs, and so on) where price is the primary differentiator and organizations are reordering more often than making first-time purchases. Rather than buying directly from a sales rep, these purchasing groups use electronic purchasing technology such as electronic data interchange (EDI) to maximize ordering efficiency and optimize savings.

Since the decisionmaking process and the sales cycle for disposable products are both very short, new purchasing and inventory replenishment tend to be conducted on-line. Here, manufacturers need to distinguish their products from competitors' while offering the lowest price and an efficient ordering process. Despite stringent pricing constraints prevalent in this category, sales reps with real-time mobile access to pricing models, product specifications, inventory information, and delivery schedules during the sales call gain advantage for their employers in terms of better CRM functionality, more-efficient document management, and electronic order submission and tracking. Mobile technology gives reps the ability to capture, store, and view account history during the sales call, and to present new products immediately at launch.

At the other end of the medical device spectrum are capital goods—heavy, expensive, highly sophisticated medical equipment. In this complex segment, product lines are narrow, sales cycles are very long, and purchasing decisions are made by committee.

Mobile SFA tools enable sales reps to access detailed technical information about their companies' products. (click to enlarge)

Reps typically do not stock such inventory in the field, nor can they demonstrate equipment for each prospect. What is imperative for them is keeping a variety of technical specifications and a detailed account history on hand. They can, of course, benefit from mobile SFA functions that aid in selling, such as interactive presentations, video product demonstrations, side-by-side product comparisons, and display of technical documentation and complex pricing configurations. But the handheld technology enables them also to review and update the account history, check the field service and equipment maintenance history, and manage customer contact information relating to every member of the committee.

Selling Complex, High-Margin Devices

In between commodity disposables and capital goods falls the realm of high-margin implantable and diagnostic medical devices. These electromedical products have become increasingly sophisticated as they have incorporated miniaturized electronics and then embedded microprocessors. New IT-based devices in this category now contribute heavily to the ability of physicians to make reliable therapeutic decisions by means of the vital data they gather and record.

Owing to the complexity of these products, the surgeon or physician who uses them typically makes or strongly influences the purchasing decision. New product sales (rather than repeat sales) are common in this category because physicians focus on meeting the requirements of individual patients. GPOs are more price driven, but physicians purchasing highly complex devices base their decisions on specific patient needs, insurance reimbursements, product performance, and manufacturer support.

In this situation, a close, trusting relationship between sales rep and physician is critical. Physicians need to be confident of the rep's recommendations, the product's reliability, and the manufacturer's training support. Mobile SFA tools in the hands of sales reps enable device manufacturers to satisfy these buying criteria. They can help physicians make an educated decision by providing:

- Details of product features, specifications, and benefits.
- Critical data regarding product reliability and accuracy, such as clinical trial results.
- Side-by-side comparisons of competitive products.
- Interactive presentations and video surgical demonstrations.
- Downloadable educational material from the manufacturer.
- Reimbursement guidelines.

The mobile technology provides efficiency benefits for the wider institutional healthcare system as well (see sidebar).

Mobile SFA technology facilitates relationship building by providing sales reps with all the information and resources they need at the point of purchase, which might be the physician's office, operating room, or surgeon's lounge. Physicians are often challenged to sift through and process a great deal of technical and clinical information in order to make qualified decisions. Real-time access to corporate systems via mobile technology enables the sales rep to anticipate and respond quickly to technical questions about product performance and customization options, as well as refute competitive claims, track inventory, and fulfill orders on the spot. Well-prepared, well-educated reps armed with a complete set of easily accessible resources during the sales call are likely to be considered more credible by physicians and surgeons than those who are not.

In addition, SFA technology gives sales reps the tools for introducing new products to customers sooner than traditional methods would allow. They can make a professional and information-rich presentation to educate physicians about each new device immediately upon rollout.

Collateral Benefits

Mobile technology empowers sales reps and makes them more efficient (see sidebar). But by implementing handheld SFA solutions the medical device manufacturing companies that employ them gain in other ways. These benefits include CRM economy, easy field deployment, greater sales force productivity, and enhanced supply-chain visibility.

Alternative to Traditional CRM. Integrated CRM systems are no longer restricted by high cost to enterprises with large sales teams. Advances in system security and data integrity protocols allow companies of all sizes to outsource the SFA function of their CRM system with confidence. Also, the evolution of the application service provider (ASP) model—a hosted, pay-as-you-go arrangement—makes customized sales solutions affordable for smaller organizations. Depending on the functionality and support level required, the cost per user of hosted SFA services is comparable to that of telephone service.

Ease of Deployment. Smaller medical device companies with fewer than 50 sales reps can field-deploy such new technologies as mobile SFA quite rapidly. For reasons of economy, they tend to favor subscription-based services, which can be implemented immediately and independently of legacy systems. And because the IT resources they employ are generally not very extensive, requirements for customization and integration into back-office systems are very manageable.

Larger organizations—those with, say, 500 reps or more—may require more time to deploy SFA technology effectively because of the need to take into account highly complex legacy systems when implementing integrated field solutions. Also, decisionmaking is naturally a slower process, and large internal IT departments have to take time to learn the new technologies before they are prepared to support the mobile sales force. An SFA pilot program involving the rollout of one business unit at a time is one way for a larger enterprise to accelerate deployment.

Using tabbed sections of the mobile SFA system by NoInk Communications, sales reps can recall pricing and other critical account information during sales calls. (click to enlarge)

Sales Staff Productivity. Such administrative tasks as handling order paperwork and entering call notes for management review can occupy a substantial portion of a sales rep's workday. Medtech organizations seeking ways to minimize these burdens so reps can focus on revenue-generating activities such as prospecting, physician visits, and relationship building may find mobile SFA technology helpful in this regard. A secondary benefit is a clearer window into sales activities.

Supply Chain Visibility. Most supply chain technology is focused on the movement and storage of assets in the back office. By contrast, mobile SFA illuminates every facet of the dynamic supply chain: in the warehouse, on order, and in the field. This approach to supply-chain tracking—which makes trunk inventory, consignment inventory, expired products, and rep-to-rep inventory transfers completely visible—enables medtech organizations to be more responsive to customers' needs and to be more accountable for their own assets in this era of Sarbanes-Oxley. With their sales reps using handheld tracking technology to report on the movement of their personal inventory in the field, corporations can maintain accurate supply-chain data in real time.

Conclusion

Mobile SFA technology promotes streamlined management of the technical and administrative aspects of medical technology sales and provides an attractive vehicle for delivering presentations. Medical device sales reps can use the technology to personalize and automate the sales process for enhanced effectiveness in a progressively competitive market. No matter how complex the environment, the reps have the flexibility to close the sale.

Relationship- and education-driven sales and those for which profitability depends on efficient, automated ordering are the two poles of modern healthcare equipment procurement. In each scenario, SFA technology arms field reps with detailed, real-time data to satisfy the buyer and organizational tools to function effectively throughout the entire sales process and deliver the competitive edge their employers seek.

Reference

1. Mobile Sales Force Automation Markets (San Antonio, TX: Frost & Sullivan, 2004).

David Kerr is vice president of Everypath Inc. (Santa Clara, CA), a provider of Web-based handheld applications designed specifically for the medical device and pharmaceutical field sales environment.

Photos courtesy NoInk Communications

Copyright ©2004 MX