MedTech Case Study

Diagnostics Commercial Model Evolution


Structuring the Commercial Organization for Success

The diagnostics industry has evolved rapidly because of COVID. Some areas such as molecular and point-of-care diagnostics have seen a surge in demand as new standards are established for infectious disease testing while other areas such as clinical chemistry have experienced declines as a result of lower patient volumes. A major healthcare diagnostics company, whose accounts spanned acute facilities, physician offices and references labs, saw these changing dynamics and understood the need to adapt their commercial organization to capitalize on the opportunity. As sales leadership considered how to structure the future commercial organization, they saw an opportunity to sell additional products within their portfolio, which had grown recently due to an acquisition, to their current customers as well as the ability to target new customers with a more robust offering.

Success lay in transforming the future commercial organization, and company leadership identified the need for subject matter expertise and project management support for the multiple work efforts that they were set to undertake. They contacted Alexander Group to leverage our experience designing and deploying commercial models within the diagnostics industry. Commercial leadership had previous success working with Alexander Group to assess and create go-to-market (GTM) strategies that accelerated growth rates from low single digits to over 10%. Alexander Group also provided proprietary diagnostics industry benchmarks to guide the blueprint for execution. 


Structured Methodology for Transformation

Alexander Group structured the engagement into four distinct phases to transform the commercial organization:

Assess the current state

Alexander Group first completed a current state assessment of the commercial operating model. This approach included interviews with more than 50 executives and individual contributors while conducting account concentration analysis for the organization.

Validate the operating model

Alexander Group validated the preferred commercial operating model based on effectiveness and disruption to the current model. In addition, Alexander Group relied on comprehensive GTM benchmarks to inform the productivity and bandwidth expectations of each sales role.

Design the future state

Alexander Group worked closely with the company’s leadership team to design and build out the future state model details, including customer coverage, organizational structure, sales compensation and change management requirements.

Roll out the program

Alexander Group supported the program rollout by managing key milestones, assessing implementation risks and creating communication content.

Key Findings

Unlocking Cross-selling Opportunities

Alexander Group’s analysis revealed critical insights into the company’s current operating model that included:

Cross-sell opportunities

Complimentary product offerings in multiple account segments indicated a substantial opportunity to cross-sell where the company had a significant footprint in one product set. The expanded product bag changed the prioritization of accounts to reflect the total opportunity available.

Low account share-of-wallet

Comprehensive analysis indicated that fully saturated accounts only accounted for 18% of total revenue. The organization had an opportunity to sell additional assays that ran on current instruments to grow revenue with established accounts.

New national account strategy

There was a distinct opportunity to clearly define the national account strategy and reassess headcount needs due to a significant misalignment in the current state operating model’s approach to IDN coverage.

Recommendations & Outcomes

Revenue Growth with Limited Headcount Displacement

Based on these insights and analysis of sales operations capabilities, Alexander Group developed recommendations to achieve revenue growth expectations by realigning sales roles while balancing cost impact.

Customer-centric sales role design

Alexander Group recommended bifurcating sales roles by account segment because of the difference in product opportunity set and the role of distribution in sales influence. Additionally, Alexander Group moved technical overlay roles to a distinct management structure under the same sales vice president for more effective coaching and career development.

Sales territory optimization

The team designed sales territories that ensured sufficient productivity for each organic seller and support from product specialists. The current team was assessed on their capabilities and assigned to territories to maximize output and minimize disruption to current customer relationships.

Sales compensation alignment

Alexander Group designed a distinct sales compensation plan for each unique sales role that reflected revenue mix and strategic priorities. Special consideration was given to the predictability of future demand as market fluctuations made quota setting exceptionally challenging.

Originally, the company had a headcount retention and cost synergy target associated with commercial optimization, targeting a retention goal of 88% of their headcount, including both displaced roles and voluntary attrition.

However, Alexander Group recommendations limited displaced headcount to only 4%, resulting in total retention of over 90%. The cost synergy forecast from the commercial optimization was 11% of the variable cost in year one, meeting the target set by leadership.

The client also realized the following benefits:

Cost savings ahead of schedule, leading to an increase in projected EBITDA.

A forecast of 6% – 9% above market growth.

Early success cross-selling the full product bag as the segment-specific sales expertise uncovered additional opportunities.

Capitalization on multiple growth drivers, which diversified revenue and de-risked the turbulent market revenue impact.

Additionally, Alexander Group provided recommendations for commercial enablement and regional marketing functional responsibilities, organizational alignment and improvements to their Canadian operating model. Overall, the client achieved its goals of enhanced growth by leveraging its market strengths and setting a path for future success.

Uncovering Hidden Growth Potential

Commercial planning and M&A present multiple challenges for every sales organization. Uncovering the potential for revenue growth and market expansion is necessary, but it takes industry expertise. Alexander Group supports industry leaders in identifying hidden opportunities and setting the stage for future growth.

Alexander Group designs compensation strategies for leading healthcare companies that provide value, reduce cost and incentivize behaviors that drive growth. Join us for one of our future virtual roundtables that provides a platform for industry leaders to discuss and share insights on current challenges and opportunities.

For more information on how to optimize your current coverage model, increase customer retention and reduce customer acquisition costs, please contact an Alexander Group MedTech practice lead.

About Alexander Group

Alexander Group understands your revenue growth challenges. Since 1985, we’ve served more than 3,000 companies across the globe. This experience gives us not only a highly sophisticated set of best practices to grow revenue—we also have a rich repository of unique industry data that informs all our recommendations. Aligning product, marketing, operations and finance efforts behind a successful sales organization takes insight and hard work. We help the world’s leading organizations build the right revenue vision, transform their organizations and deliver results.

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