Study: Sales force effectiveness initiatives in medtech industry can boost performance up to 8 percent
— Global sales and marketing firm ZS proves how investing in sales force effectiveness helps medtech companies hit growth targets —
EVANSTON, Ill. – Feb. 23, 2016 – The sales force is a key engine of growth for medical products and services companies, but data is often scarce on the impact of sales force effectiveness (SFE) initiatives. As a result, many sales leaders in the industry struggle to define success and demonstrate measurable return on investment.
To address this lack of evidence, global sales and marketing firm ZS conducted a year-long study to measure the effect of SFE initiatives (e.g., sales territory redesigns, account planning processes, training or coaching initiatives, new compensation structures, etc.) on company-wide growth. The Explorer Study found that, for medtech companies, strategically investing in SFE can boost sales performance 2 to 8 percent.
“The wide mix of products in the industry and the differences in SFE engagements often make it difficult for medtech leaders to define accurate competitor benchmarks and a target return on investment,” said Tobi Laczkowski, ZS principal and a leader in the firm’s medtech practice. “Our study helps them by revealing for the first time the true impact of these initiatives and proving that, for medtech companies, they can often generate gains significantly greater than the initial investment.”
For instance, if a $150 million medtech company spends $600,000 on an SFE improvement program and realizes a 4 percent increase in sales, it can see a return of 500 percent.
For the Explorer Study, the ZS team tapped into qualitative and quantitative data from three key sources: sales professionals from the Sales Management Association, a robust literature search of academic and professional papers, and ZS case studies and interviews with sales leaders. In the aggregate, the research led to more than 800 specific data points, from 171 companies across industries, on the impact of various SFE initiatives. The latest release of the study highlights the impact of these initiatives in the medtech industry.
Medtech companies plan to increase investment in SFE
As the health care system changes, medtech companies plan to invest more to equip their sales forces to succeed in this new environment. The Explorer Study found that medtech companies plan to increase their investment in SFE initiatives as a percentage of their overall budgets from 11 percent to 13 percent over the next two years.
“Payer and provider consolidation, the rise of value-based care and other changes in the health care system pose challenges for medtech companies,” Laczkowski said. “Sales force effectiveness initiatives offer companies a major opportunity to boost organic growth and profitability in this environment.”
When they invest in SFE initiatives, medtech companies seek to ensure the right customer coverage plan, increase the impact of customer interactions, create a performance-focused sales team, and enable efficient and effective sales operations.
The study found that medtech companies are more likely than companies in other industries to invest in territory design, targeting, territory sizing and allocation, as well as sales processes and account planning. Medtech companies are less likely to invest in training initiatives and data management and analytics, according to the study.
“The medtech industry is beginning to recognize that information management will be vital as customers and the payer landscape continue to evolve,” Laczkowski said. “It will be an increasingly important part of the industry in the years ahead.”
For more information about the Explorer Study for medtech, download an infographic and a copy of the study’s findings.
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 4,500 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.