Category Archives: business development

Why Selling New Technology into Hospitals is Hard: Overcoming the Status Quo Bias

You’re pitching your company’s new device or software solution to a hospital. You believe your product is clearly superior to the outdated technology the hospital is currently using. You know they have the money to switch. Standard economic theory would predict that the hospital decision-makers would rationally choose your product since it would provide them with greater utility. But the hospital decides to stick with what they have. What’s up??

There are a lot of barriers companies face selling into hospitals. One of the most pervasive and misunderstood, is the tendency for customers to make non-rational decisions to stay with the products they have. By non-rational, I mean the decision is based on an emotional preference, not an objective judgement that the current technology is as good as or better then the new one. Psychologists call this emotional preference the status quo bias. It’s a big deal.

Research in behavioral economics shows the status quo bias significantly affects important life decisions like health care plan choices, selection of retirement programs, stock market investments, recommended medical treatments, and all kinds of purchase decisions. It’s one of several biases scientists have identified to explain what appears to be irrational decision-making.

Think about it in your own life. The food you eat, the places you go, the clothes you wear, the things you buy… how often have you stayed with the familiar rather than trying an alternative?

While there are many explanations for the status quo bias, here are three of the big ones:

  1. Uncertainty: Good or bad, clinicians or IT directors know what to expect from the technology they use now. Switching to your product means taking a risk; they don’t know if it will perform as promised. As the old saying goes, “better the devil you know than the devil you don’t.” Scientists call this loss aversion.
  2.  Transition costs: It’s not just a matter of buying your product, it’s also all the  costs – time and money – involved in switching from what they’re using now. Training staff, updating clinical protocols, adapting workflows- all these things go away when a hospital maintains the status quo.
  3. Minimizing regret: People feel worse about problems that come from changing to a new product (action) than problems that come from sticking with what they have (inaction). To avoid regret,  hospital decision-makers choose inaction and keep the technology they have.

How can you overcome status quo bias so that customers buy your superior technology?

  1. Connect emotionally: Acknowledge and empathize with the tendency people have to stay with what they know. Give relevant examples of when that has worked for hospitals and when it has backfired and led to significant negative outcomes.
  2. Recalibrate their status quo: Change the reference point from the status quo being doing nothing to the status quo being doing something. Make the case that most hospitals are switching to new technologies- that’s the norm. The question is which to choose, and when.
  3. Reduce their risk. Demonstrate that staying with what they have is the risker option because it guarantees negative outcomes (be specific, e.g. more IT downtime, unnecessarily complicated workflows, less time with patients, incompatibility with EMRs or other devices, etc.).
  4. Reframe transition costs: Recognize objections related to transition costs. Acknowledge those that are true, then dismiss the remainder with evidence of savings that will result from switching.

Try it and let me know what happens. When you can overcome the status quo bias in these ways – and you can! – customer trust and sales can increase dramatically.

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The classic from the founders of Behavioral Decision Theory: Kahneman, D., & Tversky, A. (1982). The psychology of preference. Scientific American, 246, 160-173.

 

 

 

Med Device Companies: Never Say “We Sell Boxes”

We know several medium and large med device companies that still claim, “we sell boxes.” They may not say exactly that to customers, but inside the company they use those words, and usually with a mixture of pride, arrogance, and I think fear. Unfortunately, that thinking insidiously infiltrates everything the company does, from new product innovation to downstream marketing.

But that’s how some med device execs, engineers, and product managers think about the business they’re in: Making and selling “boxes” with good medical technology inside. It’s an easy trap to slip into – especially if the company has had success. The reality is med device companies do make boxes. However, that’s not the business they’re in.

Every med device company is in the business of improving healthcare and saving lives. Solutions to meaningful problems is what they sell.

In 1960, Harvard Business School professor Theodore Levitt wrote a game-changing article called Marketing Myopia. He posited that businesses do better when they focus on meeting customers’ needs rather than on selling products.

His quintessential example of an industry that got it wrong was railroads. While the need for freight and passenger transportation grew, railroads shrank. They wrongly thought they were in the railroad business. They didn’t see they were really in the transportation business. Why? Because they were product-oriented, not customer-oriented. As a result, railroad companies let others take their customers away.

Though it was over 50 years ago that Levitt wrote about marketing myopia, I believe that product-centric thinking still dominates in healthcare. What do you think?

Why Should Hospitals Buy Your Device (10 Words Or Less)??

Med device and other life science companies often engage us to help them improve their marketing and make more money. One simple and revealing “litmus test” question we ask at the get-go is this:

Why should customers choose your product? (10 words or less!)

Often company execs, product managers, and marcom folks struggle to provide a clear, compelling, and jargon-free answer. Why? They naturally get caught up in their products and in doing what needs to get done. As a result, they lose sight of the “why” from a customer point of view.

The antidote is putting the customer first in all you do, and building that into how you operate day-in and day-out. It’s not easy, and takes long-term commitment, even when money is tight.

One step in a customer-first direction is challenging your team to create a set of answers to why customer should choose you. Keep them short, 10 words or less. Then test them with customers. Compare them to what competitors say and could say. Keep iterating until the answer is both persuasive logically and emotionally with customers.

Do this for every product and service you offer. Build it into your R&D process at the earliest stages. You’re on your way to a set of cohesive, distinctive and effective value propositions that can make all the difference in your marketing success.

Start now with your top of mind answer: Why should customers choose your product?

 

Med Device Companies To Hospitals: Do NOT Buy Everything From Us!

Over the years, many med device companies have pursued a “whole house” strategy in order to increase sales within their hospital install base. We’ve seen the approach fail more fail more often than not because it usually comes across as all about the manufacturer, not about what’s best for the customer.

What device companies essentially say: Buy everything for a care area (say the ICU) from us, and you’ll have maximum interconnectivity that will improve work flow and patient care. And you’ll reduce demand on the your IT department. And by dealing with only one vendor, Purchasing will save time and money.

What hospitals hear: You’re purposely designing your devices to not “talk” to competitor products in order to lock them out. How does that help us? It feels like you’re manipulating us into buying everything for our ICU from you. We’d rather buy “best of breed” and work with companies that enable connectivity with other brands.

And therein lies the golden opportunity: Flip it.

What if instead, you told hospital customers that you recognize they can’t buy everything for their ICU from you, and they probably shouldn’t. In fact, you purposely designed your devices to work well with competitor products.

Note how much more customer-centric this presentation is. And it  still lets you offer meaningful clinical and financial advantages from buying multiple devices from you, without triggering perceptions  that you’re being manipulative and greedy. Because you’re not.

3 Powerful “B4’s” that Put First Things First in Winning Innovation

Let’s say you need to come up with new products and services that will make a lot of money.  Here are 3 customer-centric principles that help you do first things first in new product innovation, and get far better results. We call them our “B4” principles (as in what comes “before” what).

Purpose B4 Profit: Your company exists to achieve a certain purpose (what Simon Sinek calls your “why”). Be clear and passionate about your purpose. And know that turning a profit is not it. Successfully fulfilling your purpose is how you make money; it will always entail satisfying desires of your customers. Which requires…

Customer B4 Product: It all starts with the customer.  The notion of putting customer desirability ahead of technical feasibility is a hallmark of Human-Centered Design.  Avoid the seduction of making things because you can, rather than because customers value what it does for them and will pay for it. This means…

Problem B4 Solution: First focus on identifying meaningful problems and unmet needs that customers care about before diving into technology and solutions. Even if you initially come up with a great idea of a new product, think through the lens of how it will improve the customers’ situation.

What is your experience practicing these “B4” principles?

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More here:

How to Get to Breakthrough Innovation: Desirability First!

New Product Innovation: How to Determine the Winners

“But We’ve Always Done It That Way” – Zen, Zero-Based Thinking, and a Fresh Approach

Co-Creation: Beware Asking Too Much of Customers

I am a strong proponent of co-creation. My consulting firm ResearchWorks does a lot of co-creation projects focused on product innovation and marketing in the health space. Done right, co-creation can be a very powerful, customer-centric way of growing a business.
However, co-creation can also lead to a harmful abdication of responsibility.  This happens when companies expect customers to essentially design products or invent solutions, or to create marketing messages. Not their expertise, not their job.
Identifying solutions and designing products and services is the responsibility of the product manager or program manager. Creating effective messaging is the job of marketing and communication professionals. However, customers can play a major co-creative role and inspire tremendous change when they’re engaged in the right ways and at the right time.
We advise clients to keep customers as co-creators in the space of their experience and what they can validly do – identifying meaningful problems and unmet needs, envisioning what a better situation would look and feel like, and reacting to and improving upon products and messaging we present to them.
Those are ways customers can meaningfully co-create in order to inspire better products and services that benefit all stakeholders.

How to Position Your Brand as the “Safe Choice” in Healthcare When You’re Up Against the “Big Boys”

“No one ever got fired for hiring IBM.” That was a classic business cliche in the 1970s, and a true one, as a colleague reminded me recently.  Now for many Health IT companies (and some platform-based medical device companies) selling into hospitals, it’s the big EMR companies like Epic and Cerner with lots of APIs, apps, and extensions, that beat them out because customers feel the “big boys” are the safer choice.

Let’s say you are a small to mid size company. You can apply key principles of persuasion to increase your chances of winning business in this ultra-competitive space. Here’s a 3-step process you can use:

1. Emotional Alignment:  First establish empathy by emotionally aligning with the healthcare customer: a) Acknowledge that when making purchasing decisions like this, some people choose one of the big-name brands because they assume it’s a safer bet.  b) Acknowledge that for some hospitals that’s a reasonable way to go. c) Acknowledge – carefully – that for some people it’s a “CYA” decision and that may trump looking at what will be best for the hospital in some circumstances. d) Acknowledge that it can be hard to know when it may be a better choice to go with a smaller, more specialized brand.

Now the customer will feel understood and more open to considering other options. You have disarmed several points of resistance. You rightly have not pitched your brand yet.

2. Initial Decision Guidelines: Second, help the customer know when they should and should not evaluate different brands. a) Give them a few specific guidelines to inform this first decision – whether they should broaden their assessment beyond the big-name brands or not (have this as a tool you provide to them too). b) Explicitly explain the conditions under which it does NOT make sense to broaden their assessment beyond the big-name brands. This step is critical for you to be credible. c) Explicitly explain the conditions under which it DOES make sense to broaden their assessment beyond the big-name brands.  4) Walk the customer through the use of the initial decision guidelines for their setting.

You have now provided them with a reasonable way to decide if they should explore further and they should have arrived at an appropriate decision. Note you still have not pitched your brand yet – good job being patient!

3. Guided Influence: Third, if and when the initial decision guidelines suggest the customer should evaluate other brands, provide a set of criteria for comparing brands. a) Be sure the customer agrees the criteria make sense, and if needed explain the relevance of each. Be willing to add or subtract a criterion to better fit the customer’s situation. b) Now it is time to talk about your brand. Show how you compare on the criteria.  Admit when competitors are better on certain points. Reinforce that in this circumstance, your brand is actually the safer choice. c) Provide specific reasons to believe and an emotionally compelling story to support each of your claim of superiority.

Now do your thing as a professional sale rep to respectfully get an initial commitment, close the sale, or something in-between.

Recognize that once in a while your initial decision guidelines (Step 2 above) will lead customers to stay with the big-name brands, which means you’re done for the moment. That’s OK. You will have established yourself as a trustworthy partner concerned about what’s best for them – even if you did not get the sale. This is customer intimacy in practice, and it will pay off big – if not immediately, then certainly in the long-term.

The Biggest Mistake with Most Med Device and Life Science Customer Research

I put on a workshop last week at the WLSA Convergence Summit on how to determine which new ideas to invest in — and which to avoid.

One key idea was the right way and wrong way to get and leverage customer input for new medical devices.

Wrong:  Ask customers what features they want in your products or services.

Right:  Ask customers what outcomes they want from using your product or service.

Most of the time, when we ask customers about solutions, we are abdicating our responsibilities and setting ourselves up for failure.  It is not the responsibility of customers to figure out what features will provide the experience they desire or achieve the result the want. What customers can meaningfully talk about is what experience and outcomes they want. Once we know that, then we can back into why those outcomes are important. Then we translate that understanding into a product requirement and validate its accuracy and importance.

For example, we might hear respiratory therapists tell us in focus groups that they want the mask to be a certain shape. That’s a solution. If we took that solution at face value and passed it on to the engineers and designers as a recommendation, we would likely be misleading them because we don’t yet know the desired outcome. Instead we dig deeper to reveal why RTs want the mask to be a certain shape and what outcome it will achieve. We learn that the outcome is about maximizing patient comfort in older patients, not about minimizing air leakage. We can then propose and validate a measurable requirement designed to achieve that outcome, such as “Maximize comfort for older patients wearing a mask for more than one week.”  Now the engineers and designers take over to bring the requirement to fruition.

Bottom line, asking the right questions gets customer input that leads to better products that solve meaningful customer problems.

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Resource for more info:  HBR article about designing useful outcomes-focused customer research.

 

Med Device Companies and DMEs: Is Hate Required?

“We hate our customers! We do, we hate them,” a longtime client confided in me. This client is a smart, honest, and increasingly frustrated senior product manager at a large med device company. The company sells through a “middle man” – in this case durable medical equipment suppliers (DMEs).

The dynamics between this med device manufacturer and the distributors of its life-saving products are beyond bad. Driven by unexpressed fear and resentment, the relationship is filled with dislike, disdain, and disrespect. Who wants to do business in that kind of environment??

What’s the alternative? It’s simple, so simple it may sound naive.

TELL THE TRUTH.

Both sides need to tell the truth about their fears and frustrations. DMEs need to acknowledge the business reality they face. Many are going to become irrelevant as robust, med device-friendly, Amazon-like distribution systems are established that have built-in many of the services DMEs now provide. Can DMEs pivot and stay relevant and viable? A few, yes, if they change fast.

Med device manufacturers need to express their frustration and that they feel manipulated. They also need to recognize that many DMEs are fighting for their lives and will do anything to survive.

DMEs need to stop the high-pressure tactics that desperation breeds. Manufacturers need to show the DMEs compassion – even if they end the business relationship.

With open minds and hearts, both sides can come together and brainstorm new kinds of partnerships and alliances that can help both sides achieve their aims. Or at least reduce unnecessary suffering.

My humble recommendation? End the enmity. It hurts patients, and it’s no good for business. Embrace the alternative. It’s time.

Introducing Compassionate Nonviolent Marketing: A New Paradigm for Healthcare

How do we hunt down our target customers?
What market niches can we seriously exploit with our solutions?
What’s our plan of attack to capture these business partners?

Several med device clients asked me these kinds of questions over the last couple weeks as we were strategizing their business development plans and marketing efforts.

Exploiting, attacking, hunting down… I’ve been feeling disturbed for awhile at the predatory nature of the metaphors commonly used in business development. Not just because our clients posing these questions are in the humanitarian business of serving the healthcare industry and improving care. It’s mostly because this language promotes an adversarial relationship dynamic in which the business aims to overpower, dominate, and subdue its customers. The business “wins” when the customer submits.

I don’t mean to discount the value or need for warlike thinking – it has its place.  I appreciate the wisdom in Sun Tzu’s classic treatise The Art of War and have applied it in our work. However, even in in war it is not all about aggression or attacking, as evidenced by this seminal Sun Tzu quote: “The greatest victory is that which requires no battle.”

Bottom line for business development, a violence-based paradigm is self-defeating. It perpetuates a negative mindset and wears people down. And mostly, it doesn’t genuinely meet customer needs or sustain customer relationships. I believe it also greatly reduces profitability over the long haul.

The alternative is what I am hereby dubbing “Compassionate Nonviolent Marketing” – greatly inspired by Marshall Rosenberg’s Nonviolent Communication process (more below).  It starts with righting our language, because our words reflect our thoughts and shape our actions.

Let’s try it by reframing the business development questions above into the Compassionate Nonviolent Marketing paradigm.

This: How do we hunt down our target customers?
Becomes: How do we find and make welcome our target customers?

This: What market niches can we seriously exploit with our solutions?
Becomes: What market niches can we seriously benefit with our solutions?

This: What’s our plan of attack to capture these business partners?
Becomes: What’s our plan of action to meet the needs of these business partners?

Do you feel different when you read the new versions — more optimistic, connected, energized? I do. Might the new way you feel change the decisions you make, actions you take and the way you interact with customers? Might you get better results? I hope so!
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This is just the very beginning. Much work is needed to expand and apply this thinking. The good news we stand on tall shoulders – Marshall, MLK, Ghandi, to name a few – and we have a rich history of nonviolence to draw upon and apply to business, especially to marketing. We also can apply the work of leading business minds who promote infusing love (yes, love!) into business as the way to be more successful and profitable. I’m thinking of the practice of my friend and banking executive Neville Billimoria whose email signature is simply “Love Neville” as well as leadership guru Steve Farber’s Radical Leap books (FYI, the “L” in Leap is for Love). If you know of other work in this space, please let me know. This will be an ongoing collaborative effort.

May Nonviolent Marketing become an influential and positive paradigm shift in business. May it serve you, your company, and your customers well.

Note: Marshall Rosenberg created the Nonviolent Communication (NVC) process in the 1960s. It’s also referred to as Compassionate Communication because the core premise is about understanding, valuing, and meeting people’s basic human needs. NVC is far from a touchy-feely philosophy divorced from reality. Check out this video (showcased here on Upworthy) where Marshall is demonstrating how to apply NVC to very hostile situations including terrorism. I first learned about and applied NVC when dealing with communication and respect within my own family. I try to apply it at home and in my consulting work everyday.