It’s fair to say that life sciences sales teams have encountered more changes in the past five years than they did in the past 30 years.
Furthermore, it appears the changes will not only continue but they will accelerate.
Medical device and pharmaceutical companies are facing pricing pressures and the need to cut sales costs to improve margins. Revenue growth for many is flat or declining in commoditized, undifferentiated product segments. The common reaction for salespeople operating in a commoditized or undifferentiated market is to lower the price to effectively compete or win.
Evaluating sales opportunities that were both won and lost, a common culprit frequently rears its ugly head: price. In fact, in 74% of our loss analyses conducted, the salesperson has blamed a lower cost competitor as the reason they lost. Yet, when we interview their customers, “price” or a lower cost competitor was the reason only 22% of the time.
Price is easy to blame and sometimes it really is the culprit. But frequently it isn’t.
Digging Deeper
At a large life sciences company, salespeople were constantly complaining to management about losing deals because their price was not competitive in the market. Management thought the current pricing model was correct, but to be sure they needed a deeper analysis with real feedback from lost prospects.
Interviewing past clients and former prospects, the first things explored were the decision criteria used to evaluate against other companies being considered.
Although the definitions used by the prospects to describe their decision criteria weren’t always the same, the most common criteria mentioned were patient care, physician adoption, supplier innovation, service and support, and price.
Prospects were asked to rank their top two criteria. Surprisingly, price was only in the top two for 15% of those potential customers surveyed. Instead, most prospects cared more about patient care and physician’s use of the product.
One customer was even quoted as saying, “If the physicians are not comfortable in using the product, then it would only mean more work for our hospital nursing staff.”
The second area explored was around the key influencers involved in making the decision. The company had assumed, based on sales team feedback, that in most cases the physician had the final authority. Unfortunately, the prospects said otherwise. Yes, the physician played a role, but in the end, other influencers had far more say in the decision than the salespeople believed.
Action Plan
After the analysis, the feedback surprised the salespeople and their manager. Even more, they were disappointed. They had industry reports proving that their product was the safest solution on the market. They had references that could speak to its ease of adoption and patient safety, yet they still lost. And equally important, they discovered that their competition was speaking with individuals that they weren’t.
What’s the call to action? Ask your sales reps:
- If they know the top two or three decision criteria (other than price) that their customer is using to compare their solution to the competition.
- What unique capability of their solution is this customer undervaluing and what is their plan to create stronger value for those one or two unique capabilities of their solution?
- If they know who the competition is speaking to and they're not. Who can they talk to within the account to find out?
Unfortunately, this is a common scenario. Many salespeople don't know the decision criteria, much less which criteria are most important to the customer. Salespeople also assume, often incorrectly, that they are working with the person most likely to help them seal the deal.
Keep Looking
If you’ve lost a major opportunity recently, why did you lose? If your answer is price, then peel back the onion to see if there is more to that answer.
Maybe this will help. Answer the following questions about a recent lost opportunity:
- Other than price, what were the customer’s decision criteria they were using to compare you against the competition?
- Which of your unique capabilities were not considered in this customer decision criteria? Why not?
- How did this customer rank the decision criteria from most essential to least essential?
- How did this customer perceive your company’s ability to meet these criteria compared to the competition?
- Based upon the top three key influencers involved in the decision, whose criteria mattered most?
- How did the decision criteria differ from the top three key influencers?
- What did you do to validate the decision criteria you were provided?
- Who is your competition speaking to that you’re not?
If you’re not able to truthfully answer most of these questions, it's time to look in the mirror and ask yourself if you might be making some assumptions that led you to lose your last sale.
Conclusion
Many salespeople often spend much of their time evaluating opportunities on their own. However, experience has shown that the best plans are developed with opinions and input from multiple people, including managers, peers and maybe even an internal champion.
These alternative perspectives can help ensure that you’re not making assumptions and an opportunity is evaluated from a variety of angles. When done right, it takes a little more time to explore the answers to these questions, but in the end, you will win more and lose less.