| Current Situation | Desired State |
| The average deal size was low across all specialties, indicating that the company was not capturing the full value of products and services or targeting the right customers. | Increase average deal size by focusing on high-value customers who have a strong need for products and services, and by offering customized solutions that address their pain points and goals. |
| Sales opportunities were siloed, meaning that the sales representatives did not collaborate across specialties or leverage existing relationships to cross-sell or upsell the company’s offerings. Moreover, they often failed to reach the key decision-makers who had the authority and budget to approve the deals. | Enhance cross-specialty selling by fostering a culture of collaboration and communication among sales representatives, and by providing them with tools and incentives to share information and referrals. Also, train sales reps on how to identify and reach the key decision-makers in each account and how to influence their buying decisions. |
| Sales velocity was unclear and unreliable, as many leads generated by the company’s marketing team remained untouched until the deals were closed. This suggested that their sales pipeline was not properly managed and that it lacked a clear and consistent sales process. | Improve sales velocity by implementing a standardized and streamlined sales process that defines the roles and responsibilities of each sales representative, the criteria and stages of each sales opportunity and the actions and metrics to track and evaluate the progress. Also, ensure that sales and marketing teams are aligned on the lead generation and qualification criteria and that they follow up with the leads promptly and effectively. |
| There was a significant variation in the net promoter score (NPS) across different specialties, implying that the company did not apply the best practices consistently or deliver a high-quality customer experience. This could affect customer retention and loyalty in the long run. | Boost NPS by adopting the best practices across all specialties, such as providing timely and accurate information, delivering on promises, resolving issues quickly and satisfactorily, and following up with customers regularly. Also, solicit feedback from customers regularly and use it to improve products, services and processes. |
| The account expansion strategy was ineffective and inefficient, as the company did not use the original opportunity details to identify and pursue new opportunities within existing accounts. This resulted in a slower account growth trajectory and a longer sales cycle. | Accelerate account expansion by leveraging the data from the original opportunities to identify new needs, challenges or opportunities within existing accounts, and by offering relevant solutions that add value to their businesses. Also, establish long-term relationships with customers by providing ongoing support, education and guidance. |
Healthcare
How Digital Health is Driving Revenue Growth
Author
Tray Chamberlin
Principal
Author
Luke Mraz
Director
A Case Study: Achieving differentiated growth, productivity and efficiency
The healthcare sector was negatively impacted by inflation, rising resource costs, recession concerns and lower demand for elective procedures in 2022. These factors affected the financial performance of many healthcare providers, who had to adapt to the changing market conditions. However, some segments of the industry, particularly in digital health, saw a surge in growth and innovation. A recent poll of healthcare executives who participated in Alexander Group’s virtual roundtable discussion, ‘Growth Predictions, Priority Initiatives & Investments’, showed that nearly half of those surveyed increased their revenue goals for 2023, with an average growth rate of 10%.
The digital health industry is evolving with AI, interoperability and consumer-centricity at the forefront. As organizations focus on building better products and evolving their offerings to payors, providers and patients, their commercial organizations must also evolve. Recent research by Alexander Group reveals how leading commercial organizations in the digital health industry are driving top-line revenue growth. In these organizations, marketing is focused on rigorously tracking attribution to increase the efficacy of marketing spend. Sales is deploying enablement programs and non-field-based selling resources to both capture new clients and expand the share of wallet in the existing customer base. Service is driving adoption and utilization of products while ensuring customer retention through customer success teams and other post-land programs.
As the economy recovers, commercial organizations face new challenges in adapting to changing market dynamics to capture new opportunities and increase sales. Many have become accustomed to virtual selling with shorter cycles and less customer interaction, leading to a loss of core commercial skills known as sales atrophy. To address this issue, leaders must implement proactive manager coaching and key metrics that drive accountability.
According to Alexander Group’s recent survey of chief revenue officers (CROs), almost 90% of companies expect sellers to be in front of buyers four to five days per week, compared to the current average of three days. For this to happen, commercial organizations must align Marketing, Sales and Service functions, and equip each sales resource with the tools and strategies to succeed in the post-pandemic world. Sellers need to re-engage with customers, understand their needs and preferences and deliver value-added solutions that differentiate the company from its competitors. Commercial organizations need to overcome sales atrophy and regain their commercial muscle.
Alexander Group can help top digital health organizations like our recent work with an electronic health record (EHR) service provider to achieve differentiated growth, productivity and efficiency.
Challenges Faced by a Digital Health Client
The client was a company that provided EHR services for a specific medical specialty. They had a vision to grow their business and reach new customers in other related specialties, such as Dermatology, ENT, Ophthalmology and Ortho. However, they faced several challenges that hindered their expansion and scaling efforts.
One of the main challenges was their sales team structure and performance. Their sales team covered multiple segments, but they did not have a clear strategy or focus on how to target and prioritize the most profitable opportunities. They spent their time and resources on low-value deals that were easy to close, rather than on high-value deals that required more effort and skill. As a result, their productivity was below the industry benchmark, and their average deal size was low.
Another challenge was their lack of sales tool adoption and discipline. They had a large volume of marketing sourced opportunities, but they did not have a reliable way to track, manage and forecast them. They did not follow a consistent sales process or effectively use the available tools to qualify and nurture their leads. This led to a lot of noise and confusion in their pipeline and a low conversion rate of opportunities to bookings. They also missed their revenue goals due to inaccurate forecasting and poor execution.
Alexander Group conducted an analysis of the organization’s current sales model to identify the root causes of its low performance and to suggest possible improvements. The analysis revealed the following findings:
Better Pipeline Hygiene Led to Increased Average Deal Size, Improved NPS Score and Conversion Rates
The main objectives of this project were to improve the sales performance and efficiency of the sales team by achieving the following expected results:
- Increase sales time with high-opportunity accounts: By prioritizing and focusing on the most promising leads and prospects, sellers were able to increase the quality and quantity of their interactions and build stronger customer relationships leading to increased sales. Alexander Group recommended that the company focus its sales efforts on the top 100 accounts across four medical specialty markets. These targets were identified using an opportunity model developed by Alexander Group to evaluate the accounts based on their potential for conversion and penetration, as well as other specific factors. By targeting these accounts, the company was able to maximize return on investment and grow its market share.
- Increased average deal size: By identifying, coordinating resources and pursuing multi-specialty opportunities, the client increased the value and profitability of each deal and maximized customer share of wallet.
- More accurate bookings forecasting: By using data-driven methods and tools to track and analyze sales activities and outcomes, the company reduced the uncertainty and variability of bookings forecasts, which improved planning and decision-making capabilities. Alexander Group helped the sales leaders align the forecast elements to the sales process to create consistency in performance metrics and enhanced visibility into sales performance. This included specialty-specific steps, activities and criteria for advancing the opportunities.
- Better pipeline hygiene: By maintaining a clear and consistent definition of the sales pipeline milestones, sellers began to eliminate any stale or inaccurate information, which enabled more strategic sales planning of the remaining, viable opportunities.
- Improved opportunity conversion rates: By removing superfluous and unviable opportunities from the pipeline, sales leaders were able to better understand their true opportunity conversion rates and address pain points that were impacting seller productivity in each step of the sales process.
The project was a success for the client, who achieved remarkable results in a short period of time. By focusing on high-opportunity prospects, the client was able to increase their average deal size by 40%, which boosted their revenue and profitability. Moreover, the client improved their new customer conversion rate by 25%, which expanded their market share and customer base.
However, the project also revealed a challenge for the client: they needed more post-sales staff to handle the growing demand from their high-opportunity customers. The client decided to invest in hiring and training more post-sales personnel to ensure customer satisfaction and retention.
Alexander Group helps digital health companies design and execute effective commercial strategies that align with their business goals and customer needs. Join us for one of our upcoming virtual roundtable discussions to learn more from our expertise and your peers.
Need assistance?
To learn more about how to optimize your go-to-market strategy and establish sales compensation programs that support shorter planning cycles please contact our Digital Health practice lead.
