Crawling Inside Your Customer's Head

Edition: September 1999 - Vol 7 Number 09
Article#: 481
Author: Suzanne Houck

‘Don't even bother sending us a salesperson who doesn't, first and foremost, understand our business and what we're facing today,’ the CEO of an East Coast academic medical center recently told me.



Today more than ever, understanding the operational and financial forces shaping health care providers is critical to the success of health care suppliers. Well-informed vendors can leverage provider knowledge into genuine long-term customer solutions that go beyond traditional features-and-benefits selling. Vendors that can weave a common knowledge of provider business needs into their sales processes can better differentiate themselves from their competitors.





One way to ensure that your selling efforts are customer, rather than vendor, focused is to match your sales strategy to the provider's decision-making process. That process comprises three steps: identifying a need, comparing solutions and selecting a solution.



Identifying The Need



During the initial decision-making phase, buyers clarify their need for the product, gather data on required features and begin to form selection criteria. Many salespeople neglect this phase, jumping in too quickly with product presentations, thereby missing out on an excellent opportunity to pinpoint needs. Suppliers who do so, or who enter the sales cycle later in the decision-making process, are often at a disadvantage vis-a-vis competitors who have been mapping strategies from the start.





During this initial phase, the seller should make every effort to understand the customer's relevant circumstances and organizational strategies. For example, is the IDN planning to standardize lab equipment across the entire system or just at several facilities? Is the purchase funded? Will it be made from the capital or operating budget? Is budgeting done quarterly or annually? (Many a well-intentioned salesperson has spent countless hours developing a potential sale only to find that the capital budget was frozen for the next year.)





While conducting an assessment during client fieldwork in Florida, our firm discovered that a provider customer was entering into a Medicare global risk contract for coronary bypass surgeries. The contract would reduce revenues per procedure from $40,000 to $17,000. The product we were selling tracked costs per procedure better than that of the competitor. Using this information, we built a solution that won the business.





Thoroughly exploring provider needs and their implications early in the decision-making process can also enable the seller to influence a provider's selection criteria. Suppose that an IDN is replacing its bedside monitors systemwide. During the seller's needs assessment, the provider's vice president of finance mentions that the facility's length of stay is longer than average for the local market.





In the process, the seller informs this key buyer that the product line being considered includes portable monitors that travel with a patient from the ICU to the step-down unit, thereby reducing unnecessary ICU days. As a result, the CFO insists that the RFP require vendors to provide both bedside and portable monitors, thus shutting out a key competitor from consideration.



Comparing Solutions



In the second phase of the purchasing process, providers consider the solutions offered by different suppliers. At this point, the vendor must determine who is making the purchasing decision -- clinicians, managers or both. Then she must work with internal champions to match the benefits of the product with key provider organizational strategies.





Just as vendors must try to understand their customers' overall organizational goals, so too must they understand the needs and accountabilities of each of its key decision-makers.





For example, front-line users are concerned with how the product looks, feels, operates; how it fits into the departmental budget; and how it will help their performance on provider ‘report cards.’ But the vice president of purchasing of materials management is concerned with bottom-line cost -- often, that means purchase price. Top-level buyers, on the other hand, are looking at the big picture. They're concerned with how well the product or piece of equipment will fit into the organization's strategic plan, payer mix or outcomes goals.





The vendor's marketing materials must speak the language of all of these individuals. Technical talk and data sheet product details just don't cut it with top managers, who are concerned with reimbursement, accreditation and outcomes.



Selecting A Solution



As the provider actually formulates its decision, the seller must identify and resolve possible concerns or misunderstandings, negotiate final terms and close the sale. Suppliers who rush a customer to this stage will pay for it later.





A capital equipment salesperson jumped at the chance to quickly close a deal involving used portable diagnostic equipment for ER physicians. The hospital was part of a large IDN. The equipment was complex and had a steep learning curve. As such it was better suited for a trained technician than a busy ER physician. Not surprisingly, the physicians were frustrated in their attempts to operate the equipment and rarely used it. Consequently, it gathered dust in a corner. Hospital administration was not pleased, the physicians resented that they'd been sold a bill of goods, and the IDN hasn't bought anything from that vendor in three years.



Selling to Management



Managed care's complex sales involve a greater number of people using more sophisticated selection criteria. That's why suppliers today need to sell more effectively to both middle and top level management.





Salespeople often complain about the sale that they almost locked up, but that was stolen by a competitor who went over their head, directly to the customer's ‘carpeted area.’





Why does that happen? Perhaps because that competitor offered the customer business solutions instead of bells and whistles-- things like Y2K assistance, electronic commerce, clinical protocols.



No doubt that competitor also prepared its salespeople to meet with executives, and then supported their efforts.





The importance of sales management support in this regard became apparent to me one day in Minnesota as I was driving through a snowstorm during field sales work. I sat in the back seat as two salespeople from different companies that had a strategic alliance discussed the challenges they faced in getting in front of top managers.





Mary, who had little success in top-level selling, commented that her vice president of sales had told her that she should be arranging her own meetings and presentations with CFOs. Steve, meanwhile, said that his vice president of sales routinely assisted in both scheduling and meeting with CEOs.





The result? Steve's company has a much higher success rate nationally in selling to the top.



Measuring Performance



Although educating staff about vital sales strategies for the new health care market is important, ultimately, what gets measured gets done. Performance evaluations and financial compensation plans send the strongest message to staff about expected behaviors. In our work with clients, we've found, unfortunately, that the performance evaluations of most health care suppliers are in major need of updating from yesterday's outdated benefit-feature selling mindset.





Redesigned performance appraisals should measure how well the sales staff demonstrate an understanding of the financial forces shaping the market as well as their skill in developing individualized customer solutions that maximize vendor profit over time. Evaluation criteria should also include whether a salesperson regularly initiates contact with management buyers, focuses on important strategic sales vs. fast closes, demonstrates an understanding of IDNs, etc.





Of course, tying new sales behaviors to compensation can create strong opposition and should be done with great care. Start slowly by changing several performance criteria each quarter. Then after the new criteria have been field-tested for at least three to six months, gradually match performance evaluation scores to a percentage of pay. Consider having sales staff rate themselves by completing a performance evaluation before meeting with their sales managers.






Barriers to Being Customer-Focused



It seems obvious that to get better sales, a vendor must be customer-focused. Yet many are not. Why?





Many vendors are victims of their own assumptions and habits. For years, the health care market was based on bells and whistles. ‘If you make it, they will buy it.’ There was no such thing as standardization. Many firms and salespeople find it hard to break out of that mold.





Salespeople haven't been properly trained on how to sell to different levels of decision-makers.



Salespeople can be intimidated when meeting with top-level provider managers. Their reflex is to revert to the dog-and-pony show. Sales managers fail to make themselves available to help the front-line salespeople sell to different levels.





All of these factors can be overcome with training, motivation and management support.






About the Author: Suzanne Houck is author of the book and audiotape series, ‘Healthcare Sales Strategies.’ Her firm, Houck & Assocs., Boulder, CO, provides sales and marketing training and consulting to health care suppliers nationwide. She formerly served as COO of Critical Care Inc., health care consultant for KPMG Peat Marwick, and head of sales and marketing for GeriMed of America, which developed outpatient centers for hospitals. She can be reached at (303) 443-9597 or at www.houckhealthcare.com.