For medical products companies, 2012 is shaping up to be the year. ZS s Benchmark Study on Medical Products Companies Commercial Operations

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1 EXECUTIVE SUMMARY ZS s Benchmark Study on Medical Products Companies Commercial Operations For medical products companies, 2012 is shaping up to be the year of mobile customer relationship management (CRM) deployments, realizing the potential of customer analytics, and automating pricing and contracting. That s according to a new ZS survey that asked industry leaders in medical products and services about their companies current status and plans for their commercial operations. Specifically, the survey focused on their customer relationship management platforms, business intelligence capabilities, information technology and pricing-contracting operations. Survey participants felt that many of their sales and marketing operations have numerous shortcomings, both in terms of technology and approach, that need addressing. This executive summary of the report analyzes key results in each survey area, and what the findings mean to the industry. Bret Caldwell, a ZS Principal based in Evanston, Ill., and Saby Mitra, a ZS Manager, also in Evanston, provide their commentary and perspectives on the survey results.

2 About the Experts Bret Caldwell, Principal ZS Associates, Evanston, Ill. Bret focuses on medical products and service clients. He has an extensive range of experience with sales and marketing issues, including sales force sizing and structure, and commercial operations. Saby Mitra, Manager ZS Associates, Evanston, Ill. Saby is a leader in ZS s CRM solution area. He has many years experience in helping clients realize business value through process improvements and enabling technology adoption. ZS Benchmark Survey: Customer Relationship Management How important is mobile CRM for medical products companies? According to the ZS survey, it s extremely important: By a wide margin, respondents reported that developing mobile platforms and applications is their top priority for Although medical products executives said that they need to develop other important capabilities, mobile CRM is the most critical. This focus on mobile technologies is an overdue opportunity for medical products companies to modernize their existing CRM capabilities, according to Saby. Mobile technology can afford companies the opportunity to develop platforms and apps faster than ever, and enable those platforms and apps to make a sizeable business impact. For example, tablet computing can offer sales reps the opportunity to demonstrate products through video, improving their interactions with physicians. It can also allow video conferencing with peers or clinical specialists for expert commentary, creating a collaborative environment during sales calls, Saby says. Mobile CRM also offers the promise of closed-loop marketing solutions, which can allow sales reps to provide immediate feedback on physician responses to marketing materials, such as informational charts and graphics. However, fulfilling the promise of mobile CRM presents an enormous change-management challenge in the form of rollout and adoption, Saby says. You can t expect your entire sales force to start using tablet devices during physician interactions without adequate training and support, he says. Medical products companies invest heavily in marketing, but how well do they actually monitor those investments? Monitoring marketing programs is not easy, but is essential in measuring effectiveness. It s also an area in which medical products companies say that they could improve their game. 2 ZS Associates

3 Although the study showed that most companies have formal processes to measure marketing-program costs, far fewer respondents felt they could measure program effectiveness, and fewer still have analytics to measure ROI on marketing investments. Measuring marketing impact is often ignored in the medical products industry, Bret says. But it s an area that marketing teams should be looking at closely, and represents an opportunity to improve their sales and marketing ROI. Bret notes that rapid sales growth made it less urgent for medical products companies to measure their marketing effectiveness. However, with overall growth slowing, Bret says that medical products companies recognize they are behind in measuring marketing effectiveness, and there is an interest to initiate projects like this that will lead to better marketing results. MAJOR SURVEY FINDINGS ON CRM: Current focus is on account management and opportunity management processes. Lead qualification and prioritization processes are capabilities most respondents have opportunities to improve and automate in the future. Majority of respondents identify mobile CRM as a priority initiative for ZS Associates

4 ZS Benchmark Survey: Business Intelligence Can medical products companies leverage business intelligence to identify opportunities? Traditionally, medical products companies have focused their business intelligence efforts on sales performance analytics, a practice that the ZS survey found to be widespread; they ve placed less emphasis on diagnostic or other types of predictive analysis. To date, medical products companies have had relatively abundant data on sales performance, so it s not surprising their business intelligence efforts center on performance more than potential. However, data that identify opportunity can be the most valuable data in your system, Bret says, and next-generation business intelligence systems need to include that information. Identifying opportunities and other types of predictive intelligence needs to become a mainstay of medical products data management, because the opportunities of even a few years ago are no longer available. For some companies, this will require investment in their business intelligence systems; relative to other industries, medical products is underinvested in BI capabilities, according to Saby. One finding in the ZS survey suggests that data reporting for medical products companies can take days or even weeks to complete. Companies can begin to consider the issue by rethinking the role of operations and the key functions that operations are currently fulfilling, and then determining what investment in business intelligence is needed to achieve those goals, Saby says. What about predictive analysis that pinpoints customers needs and buying patterns? Survey participants identified predictive analysis as a major push in the coming year. Such types of predictive analysis are not that far away from reality in fact, Bret says, a small group of companies is already doing such, predicting customer behaviors using data analysis, leading to competitive advantage. 4 ZS Associates

5 Further out, systems will automatically issue alerts in regard to opportunities, which could have enormous implications. You could get warnings about sales declines, competitors activities, contract expirations, opportunities for contract renewals and many other things that are critical to detect early, Bret says. MAJOR SURVEY FINDINGS ON BUSINESS INTELLIGENCE: Focus is on sales results and personnel performance reporting. Few companies currently focus on opportunity identification, the use of account potential in reports, and tracking effectiveness of sales and marketing activities. Predictive analysis is the most common priority initiative. 5 ZS Associates

6 ZS Benchmark Survey: Information Management Do companies feel the need to improve data integration? According to the ZS survey, most medical products companies feel their commercial data are well integrated, especially when it comes to integration of multiple product lines. However, they feel less positive in regard to integrating sales data with third-party data sources or integrating sales data with customer profile data from CRM systems. A comprehensive data warehouse solution can help address dataintegration challenges, which would enable companies to improve their business analytics, Saby says. Data integration is always hard, Saby says. Systems are in different maturity cycles; they are not monolithic; some are Excel-based, and some are homegrown. Extracting data and making meaning out of it is difficult, but is worth the effort. So just how are medical products companies handling information management and how much are sales forces using analytics? Field sales reps and managers gave information management systems mediocre satisfaction scores in the ZS survey. This dissatisfaction may be partly because supporting systems do not scale; however, the overall lack of investment in these systems is probably more telling. Is data governance one reason data quality is not particularly strong in medical products? A striking survey finding is that while medical products companies have data-quality processes, they often lack comprehensive governance. Data governance includes management of the integrity, visibility and security of the data employed. At the same time, survey respondents overwhelmingly said they had data challenges like incomplete customer information and customer potential, fragmented customer relationship info and difficulty linking data from multiple sources. 6 ZS Associates

7 Companies are recognizing the concept of data as an asset, Saby says, but a central data governance group to ensure data quality is often missing. MAJOR SURVEY FINDINGS ON IM: Most companies said information on account demographics, account hierarchy (GPO and IDN affiliation) and market potential are the most critical pieces of information for decision making. Respondents rely mainly on CRM and homegrown solutions to manage information rather than more mature solutions for customer master management. 7 ZS Associates

8 ZS Benchmark Survey: Pricing and Contracting Management How do companies ensure their pricing strategies are effective? Of all the survey topics covered, field sales reps and managers were least satisfied with pricing and contracting processes. There are many reasons for this, including unclear definitions of what constitutes an account; poor, outdated status of IDN and GPO memberships and status; and a slow decision-making process for pricing. Saby says that medical products companies should develop solutions that can guide decisions throughout a contract lifecycle. Not only does this kind of solution give reps and managers access to pricing data, but has analytics that provide insights into the profitability of individual deals and where revenue leaks occur. Unfortunately, with the contract and pricing data and processes currently at their disposal, many companies cannot significantly improve pricing analysis. Saby says that auditing the pricing process is often a first step, which can address questions such as Where are the revenue leaks coming from? or Do I have access to data for similar deals, so I can use them as a reference for other related deals? Can medical products companies put it all together, integrating data from many sources to optimize pricing and contracts? Most medical products companies have formal processes for using centralized terms and conditions for contracts, but were far less likely to use integrated systems to generate and expedite pricing quotes and approval, the ZS survey showed. Part of the reason is that many companies are reticent to give pricing authority to the field, and therefore haven t built systems that automatically generate price quotes. But this capability is becoming important for companies to remain competitive; while contracts aren t won only on pricing, Bret says, reps that can react quickly to pricing challenges can be more successful. The future of mobile apps and platforms for medical products companies field sales force may have a profound effect on pricing and contract management, which are likely to be supported as a part of mobile platforms in the future. 8 ZS Associates

9 Reps need better access to the pricing and contracting systems, Bret says. It doesn t always mean giving pricing authority to the field, but setting up systems that have managerial rules in place to more efficiently provide the right pricing for different customer segments. MAJOR SURVEY FINDINGS ON PRICING AND CONTRACTING: Common areas for improvement include processes for generating price quotes and pricing approval, and automated tools for profitability analysis and compliance monitoring. Management is least satisfied with pricing and contracting management of the four areas. About ZS Associates ZS Associates is a global leader in sales and marketing consulting, outsourcing, technology and software. For almost 30 years, ZS has helped companies across a range of industries get the most out of their sales and marketing organizations. From 20 offices around the world, ZS experts use analytics and deep expertise to help companies make smart decisions quickly and cost-effectively. ZS comprises multiple affiliated legal entities. Learn more at ZS Associates ZS Associates, Inc All Rights Reserved All trademarks within this document are either the property of ZS Associates or their licensors.