Transforming through Portfolio and Offer Reconstruction

Client Profile

Radiology Equipment OEM

The client is a $22 Billion Radiology Equipment OEM that manufactures and distributes technology to hospitals around the globe. The client’s parent company’s customer base in the United States includes 50% of all health systems, 20% of all physician practices, 25% of home care agencies, and 77% of health systems with more than 200 beds.

McMann & Ransford assisted a large radiology company in refining its segmentation strategy. By constructing a portfolio to drive customer intimacy, pull through of current products, and new offers, M&R was able to optimize the client’s business model and sales process, ultimately growing revenue, margin, and accounts within each segment.

Embrace globalization in strategy to tap into diverse markets and enhance competitive advantage

Seedlings growing on a stack of Coins with Concept of business growth, profit and development for success

The Challenge

The Radiology Equipment OEM teamed with M&R to differentiate their products in order to hit growth and margin targets set by the company’s controlling conglomerate. The client had been struggling with commoditization as its breakthrough technology that had been traditionally relied upon for producing high-margin sales, had become customary in the market. These products included CT Scanners & MRI machines. Recently, new products the client had taken to market had a much lesser impact, such as digital mammography devices. They were finding it more difficult to create a technologically differentiated product that the market desired. As they continued to innovate their products in the hope of creating a distinct, high-margin offering, they unintentionally out-innovated the lion’s share of the market; they poured resources into creating niche R&D products that attracted a narrow customer base, such as a 516 slice CT Scanner. For their mainstay products, they also had limited time of differential in the marketplace – they were only three to four months ahead of their competition who entered the market priced 16-22% below them. Increased pressure of competition and the continued struggle to introduce new, necessary products to market began to deplete the client’s bottom line. Hitting these targets was necessary to continue to receive funding and remain in the corporation.

The Solution

A Multi-Stage Approach

Stage 1: M&R embarked on the initial stage by conducting an in-depth segment analysis. The evaluation entailed an intensive review of the company’s sales and margin history. M&R identified profitability by product (regardless if the transaction occurred in current house accounts or competitor accounts).

In the first stage, some key issues that emerged included the client’s failure to aggressively pursue opportunities in one lucrative segment, and its struggle to maintain house accounts and inability to take accounts from competitors in three other high-value segments.

Stage 2: Following the initial analysis, M&R and the client collaborated to construct a portfolio. This portfolio addressed three primary considerations. First, the portfolio was to enable intimacy with key executives, which was higher in the organization than the client had traditionally operated.

The client’s portfolio also needed to incorporate aspects that would directly pull through its current products where appropriate. Finally, the success of the portfolio relied on its ability to resolve a slew of customer problems, therefore forming a halo effect that could lead to additional sales opportunities.

Stage 3: In the third phase of implementation, M&R created key offers to populate the portfolio. One of the intimate offers included solving the operating room problem, a key issue in hospitals due to the threat of lawsuit liability.

In addition, M&R concluded that though operating rooms also struggle with a lack of profitability, the phenomenon was not caused by the equipment. The client had previously been attempting to address the challenge with additional products, but the ill-focused initiative had cost the client time and money and failed to provide a meaningful offer to its customers.

Rather, M&R shifted focus to the execution of a direct offer that pulled through digital mammography machines and other indirect offers that worked at the C-Level suites of key segments. In the case where the client identified a critical segment where it couldn’t yet play, M&R built an entirely new offer such as Stand-Alone Radiology Centers.

Stage 4: The final stage revolved around salesforce transformation. M&R trained the sales team who was not accustomed to the working in the executive suite and taught them Idea Selling, equipping them with the offers which were built through Service Chains. This approach enabled the team to initiate comprehensive buyer journeys.

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The critical path revolved around establishing segments, refining the offer portfolio, and empowering the team to effectively manage the accounts. Once the client was able to decipher who it was selling to, the team was able to define what they were selling and, ultimately, how they would make a lasting impact.

Our Impact

Portfolio Strategy Implementation

Following the implementation of the portfolio strategy, revenue, margins, and the number of accounts increased in every segment. In the Stand-Alone Radiology segment, the client’s market share grew from .05% of the market to 38% of the market in 18 months. Additionally, the client was able to recover a relationship with a major hospital group that had previously left the client due to an incident where the buyer had felt misled. With M&R’s support, the client was able to engage that hospital group and took them on a long-term journey to fix their 65 operating rooms. The journey was presented as the Idea to drive risk out of operating rooms and increase profitability by applying a set of best practices.

The client gained the opportunity to pilot the principles in a single operating room, which eventually expanded to a full-scale operating room overhaul. The Service Chain enabled the client to sell $1 Billion of equipment to the hospital group. By integrating the segmentation analysis, portfolio construction, and sales insights delivered by M&R, the client was able to significantly boost revenue and exceed its conglomerate’s stringent revenue and margin targets.

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