We have all seen the shift from volume-based to value-based selling in this ever-changing healthcare industry. The announcements by some private insurance companies and Medicare to value-based payments has pushed for this reform. Also take into consideration hospitals operating on tighter budgets and health insurers controlling costs. The idea of selling value gets complicated because it goes against the traditional focus on individual outcomes and now on population effectiveness. The result is a trend where healthcare professionals (HCPs) are seeking products and services which are “good enough” at a competitive price. The following are some tactics we found to be effective in this move towards value-based selling strategy.
The first thing is to recognize that HCPs have changed their buying behavior. It is no longer effective to use premium differentiation techniques since they demand a higher price. These selling strategies were effective when you could sell based on strong customer relationships or a strong brand. You need to prove that your products and services produce an overall improvement seen within a population for a certain amount of spending. That means implementing a shift in your sales tactics. Train your sales team to move from a feature-function product pitch to a value-based selling to secure market share.
Second, truly understand the needs from HCPs and what they are willing to pay to satisfy their needs. For example, what are the features they want in a medical device? How soon do they want to see the effects from a medication? How can your device make their job easier? Can your service cut down on procedure time? Based on their needs, your selling points can focus on how your product or service can be a solution to their problem, adding higher perceived value.
The third tactic is to evaluate your products and services to make sure they are priced based on value. To be successful, all areas of the business needs to adopt a sales model that focuses on value-priced products and services. This may involve reducing sales and servicing costs. Other areas to control costs can come from R&D, cost of goods sold as well as distribution. Understanding market conditions, competitive products and alternatives is key to identifying the perceived value HCPs are expected to have. Keep in mind that while HCPs are concerned about price, there are expectations on the level of quality, safety and service.
Design to Value (DTV) is a concept created by Mckinsey and Company, a global management consulting firm that has been created due to changes in the healthcare market. The idea of DTV is that by linking the cost of features offered along with the value perceived by customers, you will be able to offer more at a lower price. They have seen companies with higher than expected margins and projects that were self-funding. This has also resulted in departments working more efficiently together to gain enhancements to their products.
The change in adapting value-priced strategies has moved the focus to eliminating excess costs to gain flexibility in order to sell in tight budgeted traditional markets and now the arising price-conscious ones. The companies that will succeed are the ones that can deliver exactly what HCPs want without the frills at the best price possible. Are you ready to adapt to a value-priced model if you haven’t done so already?
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