Raj Sharan: Hi, everyone. Raj Sharan here from the Alexander Group, along with my colleague Anna Predleus. We’re both leaders in our life sciences practice, and we’ll be discussing coverage strategies to drive growth. As for a quick AGI introduction for the folks that don’t know us, the Alexander Group is a revenue growth consulting firm. Before we dive into coverage study findings, we want to share life science industry trends from having talked to many chief commercial officers, heads of sales and marketing over the past two months. Firstly, return to normal growth and business development that is predicted to pick up, especially in H2. There was a wobble over the past 2 to 3 months. Q2 ended up being soft for many of you, but there seems to be a return to cautious optimism, especially with CPI coming in below expectations. Europe and Canada cutting rates. We’re also hearing from many leaders that H2 is shaping to be much better than H1. Growth for core pharma remains soft. Biotech, especially emerging biotech, is showing signs of life after a challenging couple of years. Academia, we are seeing continued strength because growth drivers, albeit from a small base, are the applied markets, PFAS testing batteries, semiconductors. We are seeing high growth in all those markets. Anna what else are you seeing in terms of industry trends?
Anna Predleus: Overall, most life sciences companies made cuts across the board sales, marketing, operations. All commercial functions were impacted. However, leaders that we spoke to did make some pockets of investment, adding headcount and targeted areas such as Boston or the San Francisco Bay area. Leaders also mentioned that M&A activity is likely to pick up, with interest rates poised to drop in the U.S. For example, Agilent just acquired Biovectra, a CDMO. Thermo just completed the Olink acquisition. We’re hearing chatter, more to come. Raj, let’s dive into the coverage study details.
Raj Sharan: Thanks Anna yeah, in terms of the inputs of this coverage study. Firstly, we interviewed more than 15 chief commercial and revenue officers across life science companies. We also interviewed 50 plus leaders across sales, marketing and service functions. The study also includes feedback we’ve gathered from speaking to over 100 of your customers. Finally, we also incorporated findings from 30 plus projects we’ve executed in the past 12 months. So those are all the inputs that have gone into the study. With that, I’m going to turn it back to Anna, who will share the key coverage archetypes before we go into the executive summary.
Anna Predleus: Thanks, Raj. So clients ask us all the time what’s the ideal go-to-market model? What types of roles should we deploy? What’s the right mix between generalists and specialists? Who owns the post-sales experience? The answers to these questions really depends on a few factors. Some of the factors include, how narrow or broad is your product portfolio? What is the complexity of the sale? And do you serve a broad variety of customer and markets like research versus applied and so forth? For example, if you offer a broad portfolio of instruments like high versus low mass spec, reagents, kits and software offerings and target a whole host of different end markets like pharma, biotech, research, applied and so forth, you might have a coverage model that’s more representative on the top here of this page. The most important note and thread that we would like to pull through is one. There is really no perfect coverage model, and two, while there is no perfect model, there are go-to-market structures that lend themselves better to stronger productivity and top-line growth based on the maturity of your organization and other elements that we shared, like the portfolio as well as the complexity of the sale. Additionally, as part of this study, we asked commercial leaders, what do you expect from a go-to-market evolution over the next three years? And the results were really interesting.
One, 70% of leaders do expect a major change to their coverage model. They expect AI to drive a lot of that change. The biggest change will likely come through specialization, and this can be through three different layers. One being through product specialists, two being through market specialists, and three being through the evolution of the PFAS role moving more into post sales adoption motion. From an AI perspective, around 60% of life sciences companies are investing in AI capabilities. However, just one-fifth of them have implemented use cases. Emerging use cases that we see are, through content creation, things like mining, first-party and third-party data sources to create literature and provide videos in any language more efficiently. Some are even creating videos with human-like avatars. Another use case is through the chat function, utilizing AI to provide a conversational portal to retrieve educational or product information, as well as understanding product availability. A third use case is through utilizing AI as an internal assistant, providing general sales guidance, or providing upsell or cross-sell recommendations. Raj, talk to us about some key growth plays.
Raj Sharan: Yeah Anna, here are the five coverage growth plays that we are seeing. So all of these enhance the account management coverage model. Anna will walk us through the inside sales coverage trends, Anna.
Anna Predleus: Thanks, Raj. Well, there are different inside sales models we are seeing working well in the market today. Good news is that 42% of companies are increasing their inside sales headcount in FY24, while only 17% are increasing field headcount. What organizations deploy really depends on the product portfolio. For example, it’s much harder for an inside sales rep to sell complex instrumentation, and those complex models you might have inside sales acting more as a paired resource to sell more transactional parts of the portfolio or acting more as a sales development resource. And in another model, you can have dedicated inside sellers owning their own set of zip codes, individual quotas, and essentially acting as a field rep without a car. This is a prevalent model today, and we have seen a significant amount of scale and reach for such organizations. I want to talk a little bit more about the inside sales account ownership model. We’ve seen many companies build and scale this type of organization. There are even companies who have revenue parity between the inside sales rep and the field rep. Some of the characteristics for these organizations include one, having really strong account segmentation, sourcing the right talent, but while also providing really strong onboarding and professional development. And lastly, co-locating to offer effective coaching and mentorship. We’re also starting to see inside sales owners move up market. Generally, the next evolution of the market will include having inside sales proactively target a set of mid-market market accounts while reactively targeting smaller inbound leads. Lastly, some organizations are also allocating a self-service-only model down market. Raj, why don’t you talk to us about the last trend in customer service?
Raj Sharan: Yeah. Thanks, Anna. Lastly, customer service right there is a natural evolution happening in the customer service organizations. This includes creating dedicated versus pooled resources depending on the customer segments and their needs, but also the combination of digital self-service portals. And we’ll talk a lot about that. So much of our project work in the past year has considered transformative work associated with how we deploy our customer service resources. If you go back to three years ago, all you heard was reps highlighting they’re spending 2 or 3 days a week on customer service type activities. We hear that even today, actually. If customers didn’t like the answer from customer service, they just call their reps. Not to mention, like all the unwinding the customer service reps have to do to sometimes track order or to find the right answer. So although the slide highlights the different models, it’s critical to make sure you have the right data feeds going into the pipe. So order management, supply chain. If you don’t have that data, the AI model or customer service will not be able to solve that problem for you. Now do note the premium versus pooled support model that companies are now deploying. Premium support is either offered separately or pay it on top or embedded in the initial sales, so that that’s how you pay for that premium support. And that is it for today’s episode. Please do tune in for next episode when we talk about the specialization layer. Thank you, Anna, for a very engaging conversation. The Alexander Group offers the community many ways to connect, engage, and accelerate performance-like growth initiatives. Alexander Group has many events and studies. Please reach out to Anna or myself to learn more. Thank you.
