Building and refreshing a technical sales team – three big things to know
In this post we share the lessons we’ve learned about building and managing successful sales organizations
It’s October 2018 and I’m reading a headline entitled “Novartis has scrapped a fifth of its programs in pursuit of ‘truly impactful’ drugs”. I instantly recall an episode 20 years ago when Novartis cancelled large late-stage development programs. What I didn’t know then was that the impact of those, and other, cancellations would be short-lived and those of us engaged in outsourced pharmaceutical R&D (let’s call it outsourced R&D) were entering a period of unprecedented growth that would change the nature of drug development and propel our careers forward. In this article I want to share the big lessons I learned about building and managing successful sales organizations.
“...in complex business-to-business sales, highly knowledgeable, instinctive, and problem-solving traits account for 78% of success whilst relationship-building accounts for only 7%. It is important, therefore, to avoid the common mistake of hiring a large sales force too quickly.”
Why the need to refresh sales now?
In the late 90s into the 00s, growth in outsourced R&D was driven mostly by large pharmaceutical companies shedding capacity and large and small innovators embracing combinatorial chemistry and high-throughput screening (HTS) platforms. Biologics development was growing fast but testing volume was still low by comparison. The highest demand for outsourced R&D services, therefore, was for more small-molecule development capacity. Life Science service companies responded by setting up professional sales teams and using them instead of word of mouth and large annual trade shows to capture market share.
Today’s new opportunities are as large as they were 20 years ago but they are different technically in nature. Volume is driven by a strong flow of venture funds and accompanying IPO flows now enable smaller pharmaceutical companies to participate in the large secondary market for assets. Technologies for biologics manufacturing and genotype and phenotype analysis (for example) fuel our drive towards more efficiently produced and personalized medicines.
Our challenge twenty-odd years ago was to build and scale customer relationships. Today technical knowledge, intuition and problem-solving are more important for sales success. Research* into the subject has shown that in complex business-to-business sales, highly knowledgeable, instinctive, and problem-solving traits account for 78% of success whilst relationship-building accounts for only 7%. It is important, therefore, to avoid the common mistake of hiring a large sales force too quickly.
“...technology startups, large companies acquiring technology innovators, companies trying to promote new synergies or enter new territories will need to sell themselves to the market”
1 Sales is required when change is afoot
There is a difference between whether an outsourced service is bought or sold. Very well-known companies with strong brand recognition providing a long-established service are more likely to be approached by companies seeking help. In those instances, it’s more likely that their service is being bought and that the buying process is aided by strong marketing and some type of customer service group. Conversely technology startups, large companies acquiring technology innovators, companies trying to promote new synergies or enter new territories will need to sell themselves to the market. For the latter, there are guiding principles worth remembering. Sales is an iterative process, much like operations, and the more a process is repeated, the more efficient and cheaper it becomes. The entire organization can learn how customers react to a new product and hiring a full sales team too fast leads to a high burn rate and unmet revenue expectations. For this limited commentary we will greatly simplify things to describe the sales process: understand the market, manage the sales team and manage the sales learning curve.
“Mapping the go-to-market approach can be done carefully to avoid customer confusion and sales rep frustration”
2 Connect with the right customers
With any change, there comes a need to reach new customers. Whether those customers exist in new countries, companies, or parts of legacy customer organizations, we must consider the best way to reach them. Can we do it with direct sales, through an existing sales rep or through a channel partner? Is there value in cross-selling to an existing large customer, especially an international one? If there is a need to launch more than one new service, as may be the case in a company that is rapidly acquiring and rolling up, it is important to be very clear about what needs to be done when and where. Mapping the go-to-market approach can be done carefully to avoid customer confusion and sales rep frustration.
“A well-scrubbed pipeline and a rolling forecast represent the two most important sales team outputs”
3 Managing the sales team is critical for financial success
Sales team management begins with hiring and retaining the right sales reps and those choices are influenced by the maturity of the service and the go-to-market process. On the most basic level, a sales rep introducing a new service or opening a new geographic territory will differ from one selling a legacy service in an established territory. The new service/territory rep may be more technically literate and enjoy working alone. A rep selling an established service, on the other hand, will be more comfortable with a structured environment.
Irrespective of its shape or size, a sales team should be guided by well defined lead and lag performance indicators, akin to operational KPIs. It is, after all, management of the sales team and its pipeline of future projects that allows executives to control operational scheduling, revenue forecasting, cash management, capital expenditure and investor relations. If the sales team delivers on a well-scrubbed plan, everything falls into place. Conversely, if the sales team can’t deliver predictably, blood pressures rise. The big things to remember are the overall target, sales force yield, converted sales composition, rep compensation, rep quotas, opportunity pipeline and forecasting. A well-scrubbed pipeline and a rolling forecast represent the two most important sales team outputs. They provide business-critical predictive information that informs the direction of the sales force and the rest of the company.
This article is far from comprehensive; there is a lot to be said about the important internal interactions between operations and marketing, for example. Hopefully the reader takes away a sense of how sales can be managed as quantitatively as operations and how doing so leads to positive business outcomes. Conversely, it is important to avoid the common mistake of ramping up a large sales force too quickly. There is great potential for today’s outsourced R&D company leaders and getting the basics right the first time goes a long way to enjoying the ride.
* Dickson and Adamson (2011) The Challenger Sale: Taking Control of the Customer Conversation
I’ve also written more broadly on the concept of effective Life Science commercialization here, on how Life Science companies can benchmark successful technology organizations here, and how personal values can help company growth here
Mike Butler, Ph.D.
Founder and CEO, Unit Life Sciences.