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.
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.
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.
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?
There are several steps life sciences sales leaders can take to get in front of these market changes. Consider the following actions:
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 Alexander Group’ s Life Sciences practice.