Do you know why you lost that big sale to the hospital lab? Chances are you don’t. Not really. All you know is that you submitted the RFI/RFP response and…nothing.
MDxI (Market Diagnostics International) surveyed a sampling of laboratories and found that the main reasons vendors weren’t chosen to provide services were:
- Failure to meet the basic requirements of an RFI/RFP
- Delays and lack of focus on the customer’s evaluation process
- Absence of a solid relationship with decision makers
- Ability to meet the customer’s requirements efficiently and economically
- Challenges in prior service delivery
- Aggressive sales tactics or personnel
- Lack of appropriate assays
If anything here rings a bell for you, then you’ll want to dig into the following information.
How Customers Make Buying Decisions in Hospital Systems and Laboratories
M&A in the hospital and laboratory space has increased in the last several years, leading to fewer opportunities due to consolidation. But, the vendor selection process hasn’t changed. The length of the buying decision for lab and hospital laboratory systems has also remained the same – a nine-to-24-month time frame.
MDxI reports that virtually all labs have a similar 13-step process for identifying needs and potential vendors, producing RFIs & RFPs, evaluating vendors, and ultimately choosing a supplier. As a sales rep, you’ll want to study this process to ensure that you understand what your target customers will expect from you.
Behind the Scenes in the Lab – 13 Steps to Successful Vendor Selection
- Identifying the Need: Lab staff drives the process when older equipment needs replacing.
- Establishing an Evaluation Team: Participating team members typically include the lab manager, section supervisor and key medical technologists. Team members may also include the medical director and an IT representative. The lab manager is the team lead.
- Gathering Preliminary Information: Team members research and identify potential vendors through web searches, laboratory trade shows and conferences, and conversations with lab colleagues.
- Notifying Potential Vendors: Once the evaluation team has qualified a selection of vendors, they invite those companies to present to the team.
When can you ask to be included in the evaluation process? If your company already sells to the lab in question, or if you have developed a relationship with the potential customer, you can ask to be included in the evaluation process at this stage.
- Developing and Prioritizing Evaluation Criteria: The team will create a categorized list of requirements in order of importance.
- Issuing the RFI: During this key phase, all potential vendors are provided the lab’s list of requirements. You may need to visit the lab to ensure your company thoroughly understands the lab’s layout and workflows. You must make detailed recommendations on how your solutions will address the customer’s needs.
- Sourcing Additional Input: The lab’s evaluation team will continue to gather information on all the potential vendors. They’ll tap third-party resources to validate your claims. Sources could include: CAP proficiency survey results to review equipment performance, adverse incident/recall information, MD Buyline service ratings, and site visits to labs which use your equipment.
- Rating Vendors: After gathering all of their research and your RFI answers, the lab evaluation team begins ranking the potential vendors against their requirements.
- Narrowing the Playing Field and Sending the RFP: Once the rankings are completed, the team sends out the RFP. Typically only two or three vendors are in the running at the time of RFP.
If you have a strong relationship with the lab manager and your company is not invited to participate in the RFP, you can ask to be included in the RFP process. But, be warned, it may not be in your best interest to participate. Many labs prefer to restrict the RFP process to only those companies they believe best meet their needs.
- Vendor Presentations: Vendors may be asked to present their responses to the RFP directly to the evaluation team.
- Assessing the Finalists: If the finalists are tied or if none of them can provide the perfect solution, the evaluation team requests additional information or alternate solutions from the vendors in question.
- Selecting the Best Vendor: When all the information has been submitted, including the financials, the evaluation team meets to vote on the winning vendor.
- Negotiating and Signing the Contract: Once the team has selected the best supplier, the contract is then negotiated and signed by the business manager or procurement department.
Knowing your customer’s process allows sales teams to add value at critical stages of the buying process.
What Your Sales and Marketing Departments Need to Do
Now might be a good time to review what ‘customer acquisition’ means. As BusinessDictionary.com states, it’s “The process of persuading a consumer to purchase a company’s good or services.” Yes, there’s a cost associated with customer acquisition as well, but what we really need to think about here is the process.
The process involves both sales and marketing. The sales team is responsible for the customer relationship and driving the sale. MDxI shared that there are certain do’s and don’ts to sales rep actions.
- Communicate monthly or quarterly with your contacts. Ask your contact which they prefer and follow directions!
- Connect by email or make an appointment.
- Don’t assume a phone call is better. Customers report it’s hard to get on the phone.
- Don’t show up without an appointment and expect your contact to be available.
- Don’t go around laboratory decision makers. Executive teams, administration, or purchasing will not help you get your foot in the door.
- Don’t try to visit your contact too often – they’re busy.
Marketing is responsible for making sure that sales has everything they need to nurture and close the sale – from marketing collateral to white papers and case studies to web content the customer may access prior to speaking with a sales rep.
Marketing needs to work closely with sales. Regular communication delivers a crucial understanding of what the customer needs to know. With that information, marketing can design exactly the right tools to enhance your sales efforts.
How to Win at Customer Acquisition
What happens when sales and marketing work together? Sales success. When MDxI surveyed labs to understand what was behind successful sales, they found that the key drivers were solid relationships and time and attention to detail.
- Relationships: When sales establishes a solid relationship with all the key decision-makers in a lab system – and maintains those relationships over time – regardless of their status as a customer or future customer, they are invited to bid. These relationships provide the sales rep with inside knowledge of open bids. They also allow sales reps to ask decision-makers to participate in upcoming vendor selections. If you can’t bid, you can’t win a sale.
- Time and Attention to Detail: It takes time to develop a relationship. It also takes time to respond to an RFI/RFP thoroughly – and ensure that each step of the acquisition process is completed by the deadlines requested. Customers are watching and they will notice if your team doesn’t meet expectations. You need to show decision-makers that you value them and their business. If not, guess what? No sale.
But, don’t assume that these are the only keys to winning new lab customers. MDxI found that breadth of product lines, automation capabilities, and other contracts with the customer also played important roles in driving vendor choice. While you may not be able to do much about current contracts with a health system, your marketing and sales teams can certainly ensure that your potential customer understands the scope of your product line and advantages of your automation solution.
Brandwidth Solutions serves the healthcare, life sciences, energy, and contract pharma industries. We work with companies that want to make the most of their marketing – who want their marketing empowered to help drive leads – and ultimately, sales. If you want to move your product or service forward in a smart way, we want to work with you. Call us at 215.997.8575.
Larry Worden co-founded MDxI in 2006 and is now the principal at IVD Logix. Larry has spent 40 years in the fields of medical and scientific marketing research and syndicated data services. Today, he focuses on the in vitro diagnostics marketplace, providing market information solutions to clients using qualitative and quantitative market research methods. Contact Larry at 214.434.1923.