Making Services Work
Third in a series of eBriefings from The HSM Group for Medical Device Companies
Despite the barriers that often exist in selling services, several medical device companies have developed winning strategies based on best practices pioneered in other industries. For example, we know the required skills and compensation for selling services are different. In addition, services are best devised and supported in an environment of customer problem-solving, free from the "distraction" of physical goods. These factors have led many companies to create a separate business unit for their services offerings or, at the very least, a distinct sales organization.
Companies have also grappled with striking a balance between tailoring services to every customer's individual needs vs. a "one-size-fits-all" offering. The solution is "mass customization" wherein, based on research conducted by Stephen W. Brown, PhD, some of the services offered are part of a basic package, and the remaining services comprise a predefined menu from which the customer may choose. Dr. Brown is director of the Center for Services Leadership at Arizona State University, and one of the founders of The HSM Group.
Abbott's Mark Wheeler, Vice President of Global Services in the Diagnostics Division, supports the notion of such "modular offerings." "We've created four clearly defined service packages in the diagnostics division," he notes. "The local business manager can go beyond that if he wants to, but he must provide value in the service offering to our customer."
Angelo Rago, Division Vice President of Global Customer Services for Abbott Medical Optics, offers "Tech services keeps the equipment running, but we also partner to drive the attractiveness of the medical practice and get better clinical outcomes." AMO provides marketing and business development services that help grow the surgeon's practice through a "pay-per-procedure" model, reducing barriers to entry of new technologies.
One of the most critical tasks is defining services that support the customer's quest for lower costs and delivering value to their customers. Companies are most successful in this regard when they invest in side-by-side partnering to dissect their customer's business and discover opportunities to coproduce critical services. In this way, services become embedded in the customer's refined and improved work streams, and the seeds of true differentiation and customer loyalty are sown.
Once the service offering has been set, research can quantify concept appeal with a broader group of customers and prospects, and gain insight into price sensitivity. During roll out, a system of regular, formal assessment helps identify and resolve glitches before they become fatal. When service contracts are fully established, satisfaction tracking signals how services need to evolve and helps anticipate changing needs.
With all of these points in mind, medical device manufacturers can evaluate what services make sense for their customers and their company, and improve profitability in turbulent times.
Click here to see a copy of Steve Brown's article in the June 22, 2009 edition of the Wall Street Journal.