CEO speech! High fives! Champagne! Somehow you got your new medical device through the FDA. Time to get this product on the market and start selling. You won’t have long with the last round of cash you raised to get to break-even, or to an exit, or at least to a revenue milestone that shows you are a serious contender. But no pressure!
To excite investors and motivate the team, emerging med tech companies must weave a compelling commercial tale. Achieving those hypothetical 50% CAGRs modeled at Series B is just not as easy as it seemed back then. You could leverage the farm (probably literally) to supercharge a sales force and just sell, sell, sell – a reasonable approach if you have all your data, reimbursement, etc… all buttoned up at launch, e.g. your product is a drug-eluting stent and the year is 2002. Otherwise, it’s probably a good idea to get a toe-hold somewhere and make sure you have a scalable sales model before hiring the former college varsity athletes and booking the 30’x30’ booth.
We recently came across an innovative service provider (in the spirit of S2N) that helps med tech and diagnostics companies with their product debuts. SalesForce4Hire has built a nice business around developing specialized outsourced sales teams to pilot market introductions for new medical technologies, emphasizing the importance of testing the market waters before diving in – regardless of company size or technology type. We asked Julia Mills, Director of Client Engagement at SalesForce4Hire, a few questions about selling new medical technologies in the current US healthcare environment, and to do perhaps a bit of start-up fantasy myth-busting along the way.
First we asked Julia what’s different about launching new medical technologies today as compared to 5 or 10 years ago. No surprises there: “Now it’s all about delivering a product that will produce a better outcome at a lower price,” says Julia, noting that “better outcome” doesn’t mean the same thing to all the people involved in deciding to purchase your technology. Julia added that the recent trend of physicians becoming direct hospital employees is shrinking the physicians’ sphere of influence in purchase decisions. “Gone are the days when doctors could demand a particular technology and threaten to take their patients elsewhere,” noted Julia.
Then Julia offered up some words of wisdom on what’s most important to “get right” when commercializing a new medical product.
1. Focus your Market Entry
“Think big, but start focused and smart,” advises Julia. Pick your first customers carefully, and make sure those first reps have a deep understanding of the complex purchase decision process and all the people they need to touch, from the physicians, nurses and administrators all the way up to the C-Suite. The reps also need the right pitch for each touch point, e.g. economic messaging for the business folks around how the product will improve patient outcomes while containing costs, the reimbursement, story, etc…. For the caregivers, the reps must be clinically savvy and understand the product’s use context. “Driving adoption requires relationships at all these levels, and being able to identify quickly who has the buying power within the hospital, office or lab is critical to success,” says Julia.
2. Understand Your “True Market Viability”
The first couple of years on market are a terrific opportunity to assess and refine your product’s value proposition and target customers, as long as you listen closely to the market. Riffing on the term “forecasting,” SalesForce4Hire is coining the concept of “Fact-casting,” i.e. gaining real world market and sales cycle intelligence as efficiently as you can while in early selling mode. Clinical advocates can be particularly helpful with your “fact”casting. “This group is genuinely engaged and utilizing the product in relevant clinical situations, generally willing to give very candid feedback, which allows you to test your market viability and tweak to your positioning (or kill it) early on,” says Julia.
3. Track Meaningful Metrics
Engaging the pioneering sales force in customer and market reconnaissance is critical, but also puts added burden on the organization, so you want to be smart about directing this effort. Most crucial are sales and market metrics that will truly shed light on what’s working, what’s not, and whether success is on the horizon. “You need ways to measure ROI and sales channel alignment on a small scale first, and use those early Metrics that Matter™ to decide if you are ready to scale up, have to modify your strategy, or quickly shut down and rethink,” advises Julia. Meaningful metrics support effective sales force management and optimized sales cycles, thereby reducing launch risks and accelerating revenue. “The best indicator of success is repeat purchases, meaning real purchases customers are stepping up to pay for,” says Julia.
Now for the Myth-Busting
Myth: If you have a great product, it will sell itself. Reality: a lot of elements have to be in place for a successful product launch. The product needs to be easy to use. It needs to have a strong clinical AND economic value proposition. The sales team needs to have clear goals, effective management, and on-going support. “If the product doesn’t have all of these things, it will struggle,” warns Julia. In the end, the most important goal of the first year or two on market is to learn how to sell (and not to sell) your product – to which customers, for which situations, with what message, and so on – before you inadvertently launch an expensive, unguided commercial missile. Also critical is establishing a few on-market wins you can talk about with your Board, your team and other potential customers. If you play it really smart, and have some luck to boot, your next gig might be selling fine wine from your own little vineyard.