How amazing are the accomplishments of Life Sciences and Analytical Instruments industry players over the last three years? The industry’s response to the pandemic was nothing short of remarkable. With those accomplishments in the (seemingly distant) past, the industry is turning to a period of sustained growth. Funding is pouring in from public and private sectors. Established companies are sitting on hordes of cash, activating growth investments and executing their M&A roadmaps.
Alexander Group took an opportunity to step back and see how this fast-growing sector is planning for the future. We conducted more than 30 interviews with marketing, sales and service leaders across 15+ companies. In addition, we refreshed our database of commercial productivity metrics ranging from total sales expense to revenue ratios (E/R) to job types, spans of control, pay levels and much more. Here is what we found on the latest industry trends and benchmarks.
Industry players are riding a wave of funding and demand. Commercial teams (marketing, sales, service) are more productive, but less efficient. Why?
Whether commercial leaders know it or not, they are in a market share battle. If leaders are not talking about differentiated growth (above market growth), they should be. The life sciences industry features some of the best run businesses in the world that operate highly productive commercial organizations and make disciplined investments. They know when and where to do more with less, and when to pour gas on the commercial engine to accelerate growth and take share.
Whether you bring instruments, consumables or services to market, customer value drivers and journeys have changed. Customers across all segments – academia, government, pharma and biopharma, and other industrial and applied sectors – must make the most of their budgets. Sure, absolute budget values are up, but so are labor and raw material costs. Those increases in budgets also come with more projects. Buyers want vendors and partners that understand these real challenges and come with solutions. A delay in key raw materials has rippling downstream effects.
Scientific (and economic) buyers consistently report spending 2-3 days per week in the lab with the remainder of their time spent remotely. They want to see vendors and partners, but on their own terms. A “pop-in” visit is no longer preferred. An in-person meeting (planned or unplanned) without an express purpose does more harm than good. Scientists’ lab time is at a premium. They want vendors and partners to bring segment, workflow, application, product and technical expertise. Commercial teams must actively demonstrate how they help solve scientific problems, and customers will reward their partners well for advancing their project objectives.
In response, Marketing must tune messaging and campaigns to speak to contemporary issues including access to supply and technical expertise. Promotions should be geared to helping customers get the most out of their budgets. Customers want to hear how vendors and partners can help them improve lab operations and workflows. Winning mindshare requires marketing teams to nurture a continuum of needs and relationship-based interactions, whenever and wherever lab customers want to engage.
Sales and support teams need to shift to fully hybrid (digital and in-person) engagement models. Team members need to be adept at executing digital motions to engage customers outside of critical lab time. When coveted in-person time is granted, engagements must be impactful and well-received. Live interactions should feature technical resources that add real-time value. Customers have little patience for commercial resources who do not bring the needed expertise and insights at the point of interaction. Simply being able to navigate the organization on behalf of the customer is not enough.
Commercial teams are challenged to keep up with the breadth and depth of customer needs. All the while, the commercial organization is charged with delivering more and more productivity each year.
To this end, study participants report commercial operations as a top area of investment. Industry players are charging operations teams with delivering the support the commercial organization needs to respond to customer demands. Commercial operations teams are prioritizing:
Initiatives that drive insights and propel proactive customer engagement. Efforts include rationalizing the tool stack, improving data quality and reporting, and driving CRM enhancements.
Honing commercial skills via expanded training offerings in areas such as segment dynamics, workflows, applications and products.
While distributors and agents have an important role to play (as part of omnichannel strategy or for market basic market access), life sciences companies are no longer relinquishing the customer relationship to third parties. Study participants report efforts aimed at establishing direct engagement with customers. Direct relationships are being established through inbound efforts (manifesting on the company’s website), outbound marketing campaigns, direct customer demand stimulation (lead generation teams), or post-sales experiences (e.g., populating and curating CRM data as customers call a contact center). Additionally, manufacturers are demanding sight lines to end-customers and using marketing funds, access to specialists, incentives, and other levers to motivate channel partners.
Recent years shined a planet-sized light on Life Sciences. Technology took a leap forward and the world took notice. Life Sciences suppliers forged partnerships with governments, pharma and biopharma companies, and others in the global supply chain. A new baseline for customer intimacy and partnership has been set and it starts with science.
Customers want to know how current (and future) products and services advance their science. They expect transparency into product pipelines. They demand commercial teams demonstrate an understanding of their unique needs. It’s not enough to feature product details and competitive comparisons.
Early in the customer journey, marketing must highlight the use case (workflow or application) and the impact the offering will have on the desired scientific results. As a customer moves closer to a purchasing decision, sales is expected to provide access to resources that can provide product and technical depth needed to make an informed decision. Post-sales, customers expect sustained access to technical expertise to quickly answer questions and solve problems. In addition, customers do not want to be responsible for “re-training” new resources that may be deployed in the post-sales environment. The concept of customer success is paramount to lab customers, and that means a continuity of customer knowledge regardless of stage in the customer journey.
To bring science to the forefront, study participants report investing in specialization. Specialist investments aim to differentiate based on quality and depth of coverage versus breadth delivered by legacy plays such as inside or digital sales. These specialists may be segment, workflow or product-oriented and they may report to marketing (to support content development and campaign execution) or sales (as an overlay to core account management models).
The ratio of specialists to sellers has increased from 0.17:1 (product specialists per organic quota carrying seller) to 0.19:1 (a 10% increase). This number is more pronounced among instrument-oriented companies (a 21% increase). A key aspect of this increase in specialists per seller is the investment in various types of specialists (workflow, application, end market) with a broader mandate than just deep, single technology product expertise which has defined most life sciences specialist models until recently.
Marketing plays a critical role in nurturing a science-based relationship with customers. Alexander Group’s research shows that 55% of companies in this space plan to increase marketing investment in 2023, with 70% of spend going to programs. Marketing leaders report top areas of focus as brand, content and product marketing. Marketing is wrapping the scientific story around customers through an array of channels including digital advertising, mobile applications, the company website, public relations, associations, print and more.
Research, data, tools and processes that enable active monitoring of customer journeys
New channels to drive awareness and stimulate inbound demand
Marketing technology stack rationalization
Improving central and BU marketing team collaboration
Commercial turnover increased 8.7% (from 11.5% to 12.5%) since 2019 and this number is even more pronounced when you look at consumable-oriented companies (including distributors). Those experiencing above average turnover are losing talent to start-ups, instrument manufacturers, CROs and CDMOs, and pharma and biopharma companies.
Rising turnover has a material impact on growth. A recent Alexander Group study showed that an uncovered consumable (run-rate) territory may decline as much as 30% in the months after a seller vacates the territory. Longer lead times to backfill and ramp a new hire further compound the problem.
Companies experiencing these dynamics cannot compete with inflated pay levels being offered by others. Instead, they are developing scalable, long-term solutions. They are investing in inside and digital sales teams, as well as apprenticeship models (junior sellers) to serve as an internal talent pool. Participants in these programs benefit from scientific and product training combined with real-life experience.
Life Sciences and Analytical Instruments commercial leaders need to be talking about differentiated, above-market growth. Leaders need to make thoughtful investments that nurture a customer-centric culture and lead with science. It is time to feed the commercial engine and win a greater share of a growing market.
Contact us to learn more or schedule a study readout.
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