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Here Are Three ‘No Regret’ Moves to Ensure Your Sustainable Success

By: Sudhanshu Bhatnagar

In recent conversations with clients, we’ve been hearing a lot of the same concerns from medtech’s commercial leaders, who feel stymied by conflicting priorities. They see the healthcare ecosystem changing around them, sweeping up some of their customers along the way. They want to make investments to start adapting to these changes, and to future-proof their organizations for the inevitable changes to come, yet they’re also facing significant revenue and SG&A pressures today. These executives are telling us that they’re feeling forced to “have a foot in both worlds,” supporting business as usual and addressing today’s needs while planning and preparing for medtech’s evolution tomorrow. As one medtech leader reflected, “Are we focusing too much on transforming for this unclear, fuzzy future state, and leaving money on the table today?”

U.S. healthcare is changing, and there are many disruptive forces at play that potentially could affect how medtech companies conduct their business. Medtech customers are evolving as hospitals throughout the U.S. continue to consolidate and other care delivery models, like urgent care clinics, play increasingly larger roles in healthcare delivery. And customers’ priorities and decision-making processes are changing, too. The shift from volume to value continues, as does the decline of physicians as the predominant influencer on purchase decisions.

Medtech companies also face legislative and regulatory changes, and even more change is visible on the horizon. Look no further than the recent marketplace commentary about the potential decline in importance of the hospital in the healthcare equation, for example, as other delivery solutions such as at-home care and telemedicine grow more popular. There’s also the rise of digital and connected health, and the preventative-care-focused model of healthcare delivery that AI-supported technology enables.

There’s no denying that medtech needs to prepare itself for these changes. Medtech companies’ “burning platform” is being lit by so many separate fires, and some companies are investing in innovative initiatives in an attempt to adapt. For example, Medtronic is making headlines for diving into outcomes-based contracts with providers, and Johnson & Johnson is promoting its tool to help hospitals deliver higher-quality care more efficiently and cost-effectively.  

Such initiatives are important. Medtech companies need to be trying new things to ensure that they’re relevant partners to their customers. However, the problem is that not all customers are adapting uniformly. My colleagues and I recently explored this issue by conducting interviews with more than a dozen medtech commercial leaders. Their overall feedback was that, while it’d be great if all customers uniformly interpreted and adapted value-based healthcare, economical buyers began consolidating suppliers to single-source contracts, and the medtech supplier who brought the most value emerged as the winner, the reality is that this shift is happening neither at a uniform speed nor in a consistent way. Some customers have moved fast, while many customers are still working in the old way or making very slow, incremental changes.

This variability has resulted in a need for medtech companies to both preserve existing high-touch selling models and fund new models—however incremental the need may be—thereby putting a strain on SG&A. The good news is that the high variability in how customers are changing also can be a source of opportunity if medtech companies build the ability to systematically recognize, analyze and take advantage of this variability. The even better news is that this ability will not only serve them well in the short term, but also remarkably improve their ability to adapt to variations that the future will bring, making them more nimble in meeting customers’ needs.

It’s pivotal for medtech companies to start reacting to marketplace forces now, even if their customers’ own evolution lags behind. Based on our interviews and analysis, we’ve come up with three “no regret” moves that can serve as a starting point. These moves don’t require large investments, but they can create benefits that will serve medtech well no matter what the future brings by improving revenues and profits in the short term, which can then be used to fund the more novel and transformative business initiatives, and by improving the organization’s ability to be agile in responding to changes in the environment.

We discuss these moves in further detail in our recently published article, “Creating Forward Momentum,” and ZS experts will dive deeper into these themes in the near future, but here they are in a nutshell:

1. Customize your sales model to fit local dynamics and reduce selling costs.

Local markets work differently and therefore need to be treated differently. Many senior executives know this intuitively. It’s worth overcoming any fear of disruption and short-term change management burdens both internally and externally to transition from a national go-to-market strategy. This change can be implemented methodically, and it can help companies overcome short-term disruptions in a way that eventually makes them more customer-centric and decreases unnecessary SG&A costs.

2. Shift from intuition to data-driven insights to drive both top- and bottom-line growth.

Medtech companies don’t need wait until all of the pieces fall into place to implement analytics. Some of our clients have seen significant improvements in their ability to target customers with minimal investments in infrastructure, and using data that they were already collecting.

3. Optimize your pricing and contracting strategy to realize hidden profits.

Given medtech customers’ slow shift from volume to value, lowering the price per unit often is still considered a primary source of value, and medtech needs to improve its ability to operate in this environment without giving in to unnecessary discounts just because all customers are asking for it. Some companies that have begun working to improve their pricing and contracting through governance, processes and analysis can already feel the difference.

Medtech companies have significant opportunities in front of them to keep driving growth, even in an environment that seems to stretch them in two directions. It’s hard not to feel stuck when you want to invest in future-proofing your organization, but you’re burdened with revenue pressures today. These “no regret” moves can help create that much-needed forward momentum.

For more on ZS’s three “no regret” moves, read “Creating Forward Momentum.”

ZS is the world’s largest firm focused exclusively on helping companies improve overall performance and grow revenue and market share, through end-to-end sales and marketing solutions—from customer insights and strategy to analytics, operations and technology. More than 5,000 ZS professionals in 22 offices worldwide draw on deep industry and domain expertise to deliver impact for clients across multiple industries. To learn more, visit www.zs.com or follow us on Twitter and LinkedIn.

This article was created in collaboration with the sponsoring company and our sales and marketing team. The editorial team does not contribute.
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