Introduction:
What is the optimal sales model, and what factors should you prioritize when deciding on an efficient and effective sales approach?
In my previous post, I discussed an easy guide to being an effective sales manager or marketer, by understanding the sales force model.
Here, we’ll take several steps further and learn about the sales models; that is, fundamental for any medical device company entering a new market.
No doubt; selecting and identifying the right sales model is not always easy; hence, in this post, I would like to suggest some factors to evaluate when deciding between the 2 main approaches; direct or indirect.
1. Financial Factors
How critical is the financial risk for the company? How important is the need to control the cost of sales?
Implementing a direct sales force requires a robust investment, whereas a distributor helps to control the costs that are proportional to the sales level.
For some companies, they are left with one choice as only an indirect sales force is viable. And as a result, they have profits sharing with the distributor.
2. Market Factors
How fragmented, complex, and heterogeneous is the market?
A concentrated and homogeneous market; can easily be managed with few direct sales reps. Whereas a highly fragmented market; may be better serviced by a distributor; who is already established in the market.
When evaluating the market, here are some of the factors that promote the direct sales force:
What about the nature, amplitude, and profitability of the product portfolio?
The answer is not far-fetched: as large portfolios, complex products, and high margins are in favor of the direct sales force.
How strong is the brand in that specific market?
The popularity of a strong company’s brand in the market is another factor that favors a direct sales force.
On the other hand, a new product entry having a weak company’s brand can still benefit from a well settled and well-known distributor; to penetrate the market.
What are the competitors in that market doing?
If all your competitors in that specific market use the same approach, you already have a clear indication of a popular sales strategy; although, it does not mean you need to follow the same pattern.
Thus, you can decide not to reinvent the wheel and instead add some innovativeness to the already proven sales approach.
3. Commercial Factors
Here are some frequently asked questions about commercial factors:
Do sales reps or end-users need complex training?
Products, requiring a highly trained sales force and users, constant users support, center or user certification before the first device implantation, usually need a direct-high touch sales force.
Which sales model is ideal for the long selling cycle?
The long-selling cycle for Big Capital equipment;
is better managed by a direct selling force.
How big is the customer order?
Again, few big orders are customarily in favor of a direct sales force.
How critical is the direct connection with the user for customer feedback?
For instance, if the company requires a direct connection to collect data for product enhancement, design change, post-marketing studies, etc- it should go direct.
How demanding is the implementation of the product for the customer?
Complex implementation involving several stakeholders usually needs support from a direct sales organization.
For how long should you stay with your sales force approach?
The salesforce model choice is a long-term decision, and you will also need time to find and build a beneficial relationship with a good distributor.
After all, it makes no sense to start a business relationship, knowing that after a few years, as soon as the sales reach the defined target, you want to capitalize on profitability and change the model from indirect to direct or vice-versa.
Conclusion
Salesforce is an essential market strategy that involves decisions like knowing when to use a direct, indirect or hybrid sales strategy.
However, the indirect sales model is popular in the Medtech field, and in my next posts, I will analyze its advantages and disadvantages.
You wouldn’t want to miss out on it!