The healthcare ecosystem is evolving at a rapid pace. Revenue growth has returned to the industry; however, margin pressure continues to constrain SG&A. Sales leaders must do more with less and are looking beyond the traditional model. To stay ahead of competition and continue growing, healthcare revenue leaders look to implement innovative commercial models that drive customer success and offload low-value tasks. Our ongoing research has identified key areas where revenue growth leaders can differentiate themselves from the industry and achieve a strategic and competitive advantage over their peers.
The research divided participants into High Growth and Low Growth groupings. “High Growth” (HG) companies achieved YoY Recognized Revenue Growth above 8%, while “Low Growth” (LG) companies had YoY Recognized Revenue Growth below 4%. Although both groupings had similar average revenue and average number of commercial sales resources, they also demonstrated several key commercial model investment and leadership strategy differences. Below are a few of the findings. Contact us for a full briefing.
High Growth companies are more likely to invest in customer success, low cost resources and digital enablement than their Low Growth peers. The average Expense/Revenue ratio (an indication of level of investment) at HG companies is 60% higher than that of LG companies. HG companies also have 15 more resources per $100 million in revenue. This higher level of commercial model investment allows for more role specialization.
Deploying key account managers is a growing trend within the healthcare industry due to IDN and payer consolidation. Both HG and LG companies realize the importance of key account managers. However, while both groups identified “Expanding Key Accounts” as a key priority for growth and both deploy a similar KAM headcount in their commercial models, High Growers invest more in terms of total compensation. They also pay their KAMs 21% more in order to attract and retain the best talent in this key role.
High Growth companies place a higher value on aligning overall sales compensation to the organization’s growth strategy and recognize the importance of accurate quota setting. Field representatives at HG companies achieved their quota 34% more often than their LG peers. This variance in quota attainment resulted in a significant difference in total compensation for field sellers. On average, High Growers pay 16% more in total compensation than Low Growers. These differences in compensation resulted in higher employee satisfaction and 55% lower employee turnover.
As you kick off the new year, assess your current organizational capabilities and go-to customer model to understand gaps relative to the key attributes of High Growth companies and organizations. Use these gaps to prioritize key investment areas as you look to adapt your commercial model to the evolving healthcare ecosystem.
Contact us to learn more and schedule a personal briefing gathered as part of our ongoing industry research.
MedTech High Growth Investment Strategies Briefing