Life Sciences 2.0 – the science of selling scienceBy: Arshad Carim Life Sciences, Sales Analytics, Sales Benchmarking, Sales Compensation, Sales Coverage, Sales Strategy, Sales Transformation
For many life sciences companies, the selling of science has reached the science of selling. Yesterday’s life sciences world focused on in-depth product knowledge and scientific features–explained to scientific buyers by sellers who related well to people like themselves—namely, other scientists.
A Transforming Business Model. The buying model for life sciences companies is changing rapidly, marked increasingly by a buying process for life sciences equipment and services that involves business buyers. These “economic buyers” represent sophisticated, large accounts–often with powerful procurement departments. In addition, product and market evolution is driving traditional research-oriented companies into the hospital and doctor’s office, which represent different buying needs and selling challenges, with less “science” in the sales process.
Life sciences sales leaders are grappling with these new realities. They face both slow-to-no growth traditional markets and fast growth, resource-hungry emerging markets. The need to optimize sales models and increase sales productivity in this diverse and changing marketplace has never been greater.
Lessons from high tech. Recent Alexander Group sales analytics benchmarking reveals that life sciences companies spend far less on a per-rep basis than high technology companies and even medical device companies. Furthermore, life sciences’ spend on productivity investments such as deal support, pre-/post-sales support, sales operations, training, and demand stimulation is 56-75% lower as a proportion of total spend compared to technology/medical device. More dollars are going towards “infrastructure” or “cost center” type expenses such as benefits, T&E, sales meetings, and telephony as a proportion of total sales operating expense (see chart below).
The current life sciences sales investment profile supports the traditional product-focused, science based selling model that has dominated the life sciences industry for many years.
Questions for life sciences sales leaders. But life sciences sales leaders must begin asking the question – is more sales-focused talent needed to address these market changes? How must we equip our sellers differently to tackle this new environment? Can we shift sales investment dollars away from infrastructure and into productivity enablers like skills training and demand stimulation? Will this require a net increase in sales expense, or can we keep total sales spend neutral while making these changes?
And, perhaps some answers. There are several steps life sciences sales leaders can take to get in front of these market changes. Consider the following actions:
- Carefully analyze and benchmark your sales investment profile. Is your allocation of sales dollars aligned primarily with the old scientist-to-scientist selling model? Or are you adapting your sales investment model to include more sales enablement?
- Evaluate your selling roles. Are new or modified roles required to effectively reach today’s economic buyers? How might inside sales play a role to create higher efficiency selling at reasonably low cost? Evaluate rep and first-line sales management talent/competencies to ensure capability for responding to Life Sciences 2.0 challenges.
- Create sales operations and sales support structures that will maximize rep productivity and return selling time back to reps. Strike a balance between strategic/enablement operations functions (e.g., sales strategy, capacity modeling) and more basic support functions (e.g., order management, data management, compensation administration, etc.).
- Redesign sales compensation to match desired selling behaviors. Our research shows that life sciences companies spend about 30% of total sales compensation on variable pay – compared to technology and medical device companies at 40-50% spend on variable pay vs. base salary. Carefully consider the use of more aggressive plans to attract, retain and motivate the Life Sciences 2.0 seller.
A recent Alexander Group client engagement focused on benchmarking the sales investment portfolio, identifying key account management coverage options (vs. multiple specialists calling on the same customers) and redefining pre- and post-sales support groups with appropriate resource pooling to drive greater efficiency and more focused sales effectiveness. Improving Sales ROI through a careful “redistribution of sales investment wealth” drove key recommendations for the client.
The DNA of life sciences sales organizations is evolving, and Sales ROI is the new mantra. Having the courage to challenge traditional sales models will be a hallmark of sales leadership success going forward. The ability to skillfully manage sales operating expense to tune the sales model engine to a lean but high-impact machine—this is the game changing skill set for Life Sciences 2.0.
Learn more about AGI’s Life Sciences practice.