Keeping It Simple

Edition: November 2001 - Vol 9 Number 11
Article#: 1096
Author: Repertoire

Henry Schein Medical Group has a simple strategy for success: Make it simple for the customer to do business with you. It's a strategy that has brought the Melville, NY-based company growth that is well beyond industry averages, according to Art Moran, vice president of Caligor Physician Sales in the Northeast, and Brad Connett, vice president and general manager of Caligor Regional Physician Division.


Through its Caligor field sales division, GIV telesales division and the Henry Schein telesales division, the Medical Group ''serves its customers the way they want to be served,'' say the two. Consequently, the company has experienced a five-year compound annual growth rate of 43 percent.


The Henry Schein Medical Group currently serves over one-third of the physician practices in the U.S., as well as hospital customers in the metropolitan New York area under the leadership of Vice President Manny Losoda.


With 2000 sales of nearly $800,000, the Medical Group accounts for 33% of Henry Schein's $2.4 billion total revenue. The company's other main business is dental.


One Company, Several Names


Moran and Connett typify the make up of today's Henry Schein, in that both worked for distributors that were purchased by the company.


Moran, whose background is in medical sales, was with Landauer Hospital Supply when it was acquired 17 years ago by Caligor, a company whose sales then were mostly generated by inside reps. He was charged with setting up an outside sales force for the company. Over the years, that business has grown significantly.


Connett was vice president of Roane Barker in Greenville, SC, when it was acquired by Henry Schein in 1997. At the time of its purchase, Roane Barker was one of the largest independent distributors in the non-hospital market, generating annual sales of $30 million.


Today, Moran and Connett set the direction of the Caligor field sales force and establish profit objectives.


''Besides planning and implementing sales programs, one of our responsibilities is driving our sales force in the single-company, single-goal philosophy,'' says Moran. And that job is becoming ''easier and easier to do,'' he adds, as the majority of the acquired companies front-end systems have been unified.


Full Service


Schein remains committed to its philosophy of totally meeting the needs of its customers by offering a wide range of procurement capabilities under several different company names. The company has retained the Henry Schein, Caligor and General Injectables & Vaccines (GIV) names, which underscores the varied ways its customers can buy products from them.


''Ultimately, the customer decides whether they want a field rep to see them every week, or if they want to get on the phone with a telesales rep and order something, or order through a catalog,'' says Connett. ''They want to do it on their terms, and we don't want to change how people purchase.''


Although the potential for conflict exists among the different divisions' sales forces, it hasn't been a factor, adds Moran. In fact, there is little overlap among them. ''Someone who is used to a relationship with a direct marketing and telesales company usually doesn't want to buy any other way,'' he says. ''And someone who wants field reps to call on them usually wants to put that field rep to work for them.''


''So, the customer is either a telesales person, a direct marketing person or field sales consultant person,'' he adds. ''They are creatures of habit. And the Henry Schein Medical Group has a three-pronged strategy to serve all of them.''


A fourth option, e-commerce, also figures prominently in the company's future. All three brands have their own unique Web-based ordering platform. Since its launch in the first quarter of 2000, Caligor's e-commerce business has grown to account for approximately 4% of its sales.


''It's a big advantage for us,'' says Connett. ''Sales reps collect the same commission whether an order is received in person, by fax, telephone or the Internet. But with e-commerce, the customer frees up the sales consultant's time to focus on building revenue for that customer.''


Simple Things Simply


Despite the fact that they are both sales consultants at heart, Moran and Connett understand the importance of ''great distribution capabilities'' for the success of the company and its sales consultants.


''There's nothing more important than delivering what the customer wants on time and correctly,'' says Moran. ''For 69 years, we've been outstanding at distributing products to the office-based practitioner in the medical, dental and veterinary markets. That means less frustration for our sales consultants, our sales managers and our customers.''


Henry Schein serves the majority of its medical, dental and veterinary customers through four major distribution centers in the United States – Denver, PA; Indianapolis, IN; Grapevine, TX; and Sparks, NV. These distribution centers offer more than 1.5 million square feet of state-of-the-art automated warehousing and distribution, and a 99 percent fill rate.


Caligor made a significant commitment to its New York area acute-care business when it opened a state-of-the-art distribution center in Secaucus, NJ, in November 2000. But the company's real growth target remains the primary care market.


''Our target is to be the No. 1 distributor to office-based practitioners in the country,'' says Connett. ''There's no limitation on where we can go in the 50 states. We're at the top of our game, and we'll continue to focus on expanding our market share.''


While the rest of the industry is growing between 3 percent and 4 percent a year, Henry Schein's Medical Group is growing at a rate four times that, reporting a


16 percent increase in sales in the second quarter of 2001. Part of that growth may be attributed to the broad spectrum of products that the Company offers its customers, says Connett, including med/surg products, capital equipment, lab and pharmaceutical injectables.


''Why are we growing so fast?'' asks Moran rhetorically. ''Because we don't frustrate our sales consultants. We do simple things simply. We allow our sales consultants to go out and do what they do best – build their businesses and build their incomes.''


''Since we have made numerous acquisitions, we have a clear understanding of the frustration that sales consultants are forced to endure – it's enough to tear their hearts out.'' he continues. ''Many end up leaving a job they love. At Caligor, we are committed to enabling our sales consultants to spend their time maximizing their earning potential, not solving distribution errors.''


Adds Connett, ''We're not only doing the blocking and tackling, but we're providing the sales consultants with more products to help them grow their business.''


An important part of that product growth came from Henry Schein's 1999 acquisition of Bastian, VA-based GIV, a provider of vaccines, injectables and other pharmaceuticals. These products are now available to the entire Henry Schein Medical Group.


Sales-Driven Company


''We are a sales-driven company,'' says Moran. ''One of our greatest strengths is our sales consultants and their relationships with their customers. Our growth is better than four times the industry average, meaning our sales consultants are provided with the opportunity to make significantly more in commission dollars. And that's because we consistently deliver the service that we promise.''


''In the evolution of distribution in the alternate care market,'' continues Connett, ''some key companies have been the leaders. Their models have been very sales-driven and very focused. Today, Henry Schein is clearly very focused. And the industry is taking note that Henry Schein is a leader in the market right now.''


''We offer consistent quality in our service,'' says Moran. ''With over 69 years of experience, we have figured out how to ship correctly the first time. It's easy to make customers happy over the long term, which provides our sales consultants with an environment where they can flourish.''