How Medical Device Companies Can Decrease Costs Today

How Medical Device Companies Can Decrease Costs Today

- March 8, 2018

The 2015 Medical Device Sales Trends Study revealed significant growth constraints facing medical device companies. One of the major reasons is that there is an ongoing shift in how major hospitals buy medical devices and equipment.

Well, something has to be done to decrease cost of sales now. Today, the overwhelming medical industry trend is to increase the usage of less costly resources that focus on lower-value service activities—integrating sales operations that are not only less expensive but also more effective.


Lower-Cost Contract Reps to Improve Costs of Sales and Profitability

Medical device manufacturers need to deploy contract sales reps that are lower cost to improve their “costs of sales” and profitability. Utilizing a sustainable sales and service support by removing the recruitment and management burden can help device companies decrease cost, increase efficiency, and improve the vendor’s bottom line.


Cutting Sales Costs, Not Revenues

The key to these cuts is to be systematic by identifying the effective sales channels and promoting efficiency in the sales organization.

  1. Examine the customer portfolio. Understanding where to focus sales resources that are needed to cut waste, not value, by answering the following questions:
  • How much effort really goes into each customer and transaction?
  • Which services does each of them need?
  • What are their real profit margins?
  • Which customers and markets are growing and which are shrinking?

In fact, if medical device companies reject some traditional practices, such as assuming that big customers need or want big sales coverage, the sales force can become better and less expensive.

  1. Cost cutting without regard to the importance, profiles, or customers’ potential risks losing not only low-margin ones but also their high-value counterparts.
  2. Do no harm. Focus resources where they make a difference. Small changes can have large unintended consequences. Medical device manufacturers must walk a fine line between reducing expenses and maintaining resources sufficient to protect current revenue and future growth.
  3. Match sales resources with customers. Additionally, vendors must analyze the size, service costs, and real profitability of each customer, not just their gross margins—taking into account the size and growth opportunity it represents. That distinguishes between highly complex, competitive transactions and simple ones.

Example: Some customers buy big, for example, but the cost of serving them leaves little room for profit. Others make small orders but are inexpensive to service and thus highly profitable.

  1. Your medical device sales reps’ time is precious. The primary task for any sales company is to maximize the amount of time sales and tech reps spend selling while ensuring that they sell the right products to the right customers.

The solution is to identify, understand, and eliminate anything that makes them less efficient.

Typical Sales Rep % of Weekly Hours

Other 10%
Planning 10%
Selling 22%
Order Processing 12%
Service 10%
Admin 23%
Travel 13%
  1. Squeeze out post-sales inefficiencies. Medical equipment manufacturers shouldn’t lie back after winning business when they undertake tasks such as provisioning and reporting orders. An inefficient after sales processes not only diminish the quality of customer service but also drive up costs, because it forces device reps to spend time correcting mistakes.

 

Getting Started

Imagine a different approach where you can simply rely on a recruitment and placement service that is specifically geared to serve the medical community. What if you could avoid the long and arduous hiring process and got back to the business of doing business? What if skilled field reps and sales professionals are trained in a whole new approach and made them a welcome addition to any medical facility or care clinic?

The Rep-Lite Program can help you get started. Experience next level insider expertise that has been crafted to a specialized medical manufacturer support service that addresses the specific challenges that industry professionals continue to face.

With 27 years of experience in various medical device industries, Rep-Lite has a proven track record of success. Rep-Lite is changing how manufacturers accomplish business in the current environment by providing cost-efficient solutions using overhead reduction revenue generation.

Call Us at 1-833-REP-LITE or Schedule A Consultation to learn more about our step-by-step process.

Rep-Lite only provides high-level sales and technical support to surgeons and hospitals and works closely with manufacturers to customize the program to their specific needs and challenges.

We would love to hear from you! If you have questions and/or suggestions, please leave a comment below.
 

Reference:
alexandergroup.com
alexandergroup.com/resources
mckinsey.com
medsider.com

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