Friday, April 24, 2009

The Art of Selling: Long Live the King, Is the King dead?

Recently, the SpineBlogger was having a discussion with an industry professional that is employed as an Area Sales Director for an early-stage spine company. The topic of The Art of Selling was tabled for discussion. The question was: Do distributors and salespeople know how to sell anymore? Our consensus was that there are fewer salespeople than there are sales service people and that relationships play an integral role in generating sales since our industry has more surgeon consultants than K Street has lobbying groups. So, why has the art of selling died in our industry? Could it be that there are no features and benefits to sell anymore? Could it be that with over 500 Pedicle Screws, an estimated 275 Cervical Plates, hundreds of interbody devices, a motion preservation market that reminds the SpineBlogger of the early years of the automobile industry (1st Gen, 2nd Gen, 3rd Gen when does the marketing stop for TDA and the truth prevail), a Dynamic Stabilization Market that no one can agree upon its efficacy, synthetic bone grafts with more buzz words than a Stryker Total Hip commercial, is it possible that our industry has commoditized itself into a selling coma? Let's be honest, how long does our industry believe that it can continue to generate 80-92% gross margins in light of what is transpiring in the financial community along with an Administration that will eventually pass some form of a single payer system? For those of you that are managers at companies with Independent Distributors, when was the last time that you spent a day making sales calls? How many times have you heard, "I have a surgeon that would be interested in using your product but would like to be involved as a consultant?" Could it be that the commission are too high? In all likelihood, market forces will eventually force a contraction. This will result in some of the smaller companies aligning themselves with others, or these companies will eventually shut down. Of course, the only caveat is that if these companies revenues are generated by surgeon investors they will only prolong their misery until these investors realize that the tax write-off outweighs the aggravation of dealing with an inexperienced CEO's. What about Commission Rates? How long can some of the smaller players continue to exist when they offer 35-50% in commissions? In addition, if these companies have outside investors, how long is it before the investors want their ROI? Distributors have become "mini-WalMarts!" How can you focus on selling when you carry 2-3 Pedicle Screws, 2-3 Cervical Plates, 2-3 bone grafting options along with other products? There is something to be said of a "Direct Sales Model." Unfortunately it only works for the full line portfolio companies. This is not an attack on distributors, this is an observation about an industry that is out of control. Let's be honest with one another, "The genie is out of the bottle." It is only a matter of time before companies cut commissions and consider remodeling their distribution opportunities. The SpineBlogger wants to know what you think!

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