Sometimes the effort developing a sales strategy comes to nothing, because it proves there isn't a business opportunity. ?That seems bad news for the entrepreneur. ?The exciting idea really doesn't seem too interesting anymore. ?On the other hand its great news. If it avoids all the costs, losses and disappointments of a failed startup, that's a bullet dodged. The owner survives to start something with a better chance of success.
We have our own case study, which illustrates how the exercise of defining a sales strategy uncovers a lot of risk factors which might not otherwise come to light, until its too late.
We've recently been involved in a new venture - a consortium with external funding to develop an electromechanical device for diagnosing Parkinsons Disease. ?We ?had an opportunity to be the exclusive distributor. ?At first glance this seemed a licence to print money, but once we'd done the hard yards researching, and validating, and planning, it didn't appeal so much. ?Our failure to find a plausible sales strategy stopped us in our tracks, and saved us a great deal of money and time and effort in the process. Just how we go about developing a sales strategy is explained in Reengineering Sales Management. ?There's even a template people can use to get themselves started. ?But here we'll summarise the theory, to save time and get on with the story.First the market background.
The global market for medical devices is eye wateringly profitable, and growing like crazy. As populations age, the number of neurological disease sufferers automatically expands. ?Health services can't cope with the numbers now - a situation which can only get worse. ?There's a world shortage of specialist clinicians to diagnose patients. ?High profile charities work hard at increasing awareness of the diseases. ?There's a lot of interest in Parkinsons Disease, it's sufferers and its treatment.That sounds like fertile territory for an ambitious sales organisation. ?Now we know something of the market, lets figure out how we might sell the product. ?To do that we need to define the unique value proposition, who will buy it, why they'll buy. and how they'll buy it. ?That sounds easy enough, but is it?
We've got a sort of value proposition, but need to work out a lot of other stuff before we can make it unique, and meaningful. Our first questions are who will be the customer? ?Who is going to benefit? ?Who will have the budget? Who will have the authority to sign a contract?Here's where the problems start. ?
Who is going to benefit from use of the device to achieve a diagnosis? Perhaps the patient? Perhaps the specialist? Perhaps the hospital administrator? ?Potentially each might benefit in a peripheral way. If the clinicians can cure the problem early, they'll improve quality of life for the patient, increase the efficiency of specialist clinicians, and reduce the hospital administrators costs. ?That sounds OK. ?We might persuade patients to insist clinicians use the technology, but the patient isn't going to buy it. ?We might persuade the clinician its a useful tool to improve patient care, but she doesn't have the authority to buy it. ?We might persuade the admin people there's a business case to support the clinical case - more efficient use of scarce resource frees up assets to treat more patients - but they don't have the money to buy it. And they won't find it, unless the clinician convinces them of savings elsewhere.
This is starting to look awfully complicated. But that gets worse when we find out there is no cure for Parkinsons Disease. ?The doctors can only treat the symptoms, so the diagnosis is less relevant than it might seem. ?Who is going to spend money on equipment for diagnosis when the symptoms are the problem which can be treated, not the cause? ?
As if that isn't bad enough, we then find out most clinicians prefer to delay the only available treatment as long as possible, in some cases until 80% of the patient's normal function has been lost. ?They delay treatment because it has significant debilitating side effects, and ultimately makes the patient more sick than they would otherwise be. ?At this point our unique value proposition - early confirmation of Parkinsons Disease - might be valid, but its not interesting. ?Who cares??
To cut a long story short, we don't have a meaningful unique value proposition, we can't identify a customer, and we can't find a reason why they would buy the product if we could.
Then we get to the question of how they'll buy it, which really seals the deal as far as we're concerned.
In the medical devices business sales reps call on clinicians (who are mostly busy seeing patients) in order to persuade them to want the technology and ask the administrators to buy it for them. ?Then the rep calls on the administrator asking for the order. ?Then the administrator asks the clinician to justify the cost, which is impossible, because nothing will change as a result of the investment.
The medical devices industry is awesomely profitable, because the barriers to entry are so high. ?One of those barriers is cost of sale, because of the need for personal calls by sales rep. Another barrier is the capital required to fund regulatory approval for the product, expensive marketing and a high quality sales team. A stand alone product can't generate enough margin to cover the cost of sale. ?That means every sale is going to lose money. ?There is no business case to justify any investment in this opportunity, let alone the $20 million we figured was the minimum required.
We're sales guys, not doctors. We aren't experts in medical devices, and we have no specific knowledge of neurological diseases and treatments. ?Everything we discovered came from researching the internet, and talking to experts wherever we could. Once we developed the full picture, we shared it with consortium colleagues and asked them to correct any errors. ?They didn't.?
You'll understand why we decided to walk away from this opportunity, and save our money for more interesting ideas.
Why doesn?t the traditional approach to selling and sales management work so well any more? What can the modern sales professional do to stay relevant in today?s customer driven markets?? Check out our eBook?Reengineering Sales Management?for ideas on how to embrace the new order of customer driven buyer/seller relationships.Source: http://successfulsalesmanagement.stevensreeves.com/2012/11/case-study-developing-sales-strategy.html
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