If you are in health care manufacturing (medical devices and technology), do you miss the good old days of selling when your reps talked to clients they had long relationships with? Do you remember when clients were eager and ready to be educated and guided to purchase the latest and greatest you had to offer without much price sensitivity? Sadly, those days are pretty much over.
It used to be that doctors, hospitals and patients wanted the latest technology, regardless of price. Now, in a new era of regulation, negotiation and price transparency, the focus has shifted to the value that new technology can provide and the impact it will have on patient outcomes. The growing power of buying groups like GPOs (group purchasing organizations) just adds to the complexity, and often it seems like customers have more insight into broader market pricing than reps do. In this environment, health care manufacturers run the real risk of price exposure from complex pricing agreements and contracted dependencies. Meanwhile, margins will continue to slip away for manufacturers that fail to align their pricing strategy to buyers that are increasingly focused on value and patient outcomes.
An example of a company who addressed these challenges head-on is Hologic, a developer, manufacturer and supplier of diagnostic and medical imaging systems related to women’s health. To compete and maintain its competitive edge in today’s environment, the company knew it needed more than just great products. It also needed to sustain investment in innovation while combatting price erosion driven by many of the factors mentioned earlier.
When waging this battle, Hologic discovered it lacked clear visibility into customer profitability and insight into pricing differences among individual hospitals. Many of its customers leveraged the purchasing power of GPOs to negotiate highly complex pricing structures. The complexities of these contracts often leads to significant price exposure risks for health care manufacturers, where a single misstep in pricing could lead to millions of dollars in downstream repercussions. Due to the high stakes involved in every price negotiation, sales reps need detailed insight into their markets. Acquiring the needed information historically required manual reporting and tedious analysis, crippling the sales team’s ability to respond quickly in providing mutually beneficial purchasing options.
Starting with a vision of where they wanted to go, Hologic used analytical insights and data-science driven pricing to move very quickly from a reactive, manual process to a mature, disciplined pricing methodology. With this new approach to pricing and price strategy, the company can now answers some important questions that will help them grow their business in the future, including:
-Are our prices defensible? -Who are our best customers? -Where is our growth coming from?
By undertaking this pricing transformation, Hologic has been able to hold pricing while continuing to grow market share. With renewed confidence in its pricing strategy, discounting is down and pricing insight is accessible via just a few clicks, rather than days of labor-intensive analysis.
But the story doesn’t end here. Find out how Hologic achieved the quick pricing success that is fueling the next phase of its journey by watching this on-demand webinar: Do Customers Have More Visibility into your Pricing than You?
About the AuthorMore Content by Valerie Howard