An Open Letter to Orthopedic Distributors
An Open Letter to Orthopedic Distributors (by Josh Sandberg posted on LinkedIn)
I wanted to write a letter to all of the distributors that carry products in the orthopedic and spine implant industry in an effort to help eliminate some of the frustrations that are often cast upon you. Orthopedic manufacturers have expectations when they sign you up and I’m not convinced they are always clearly communicated but be assured they are there. Everyone knows you are in the trenches dealing with unprecedented challenges such as longer hospital approval processes, declining pricing, reduction of surgeon choice by limiting vendors and a multitude of other challenges you deal with on a day-to-day basis. I think these challenges are understood in the macro, but the expectations companies put on you in the micro don’t always convey that they fully grasp these challenges. Based on the vast amount of sales leaders I speak with, I think there are a few things you can do that will have a dramatic impact on your business and the quality of relationship you can experience with the companies you represent.
With the disclaimer that I have not done a well constructed study on this, I would say that the most complained about issue I hear from manufacturers regarding independent distributors is that they don’t really know where they stand with you. Old school distributors want to just let their numbers (or reputation) do the talking, but in our instant gratification world where you are always a keystroke away, you need to communicate better than you do. If you go dark for weeks at a time, or only return a call when you need something, you have to realize that you are not properly focused on building a relationship based on trust.
If you treat the manufacturer in a transactional way then you can’t be surprised when they move you out because another distributor promises more. Always be aware of the fact that you need them as much as they need you. The discipline in always following through will forever separate you. Also remember that you are all in this together even though certain circumstances may not feel that way.
Are you a distributor principal or a rep principal?
There has been an evolution in the type of person that becomes a distributor. The industry has moved almost entirely away from stocking distributors that required a large capital investment and successful management track record to build a business. We often try to identify the difference by calling them a distributor principal or a rep principal. The incentive to be a distributor principal is found in ones desire to build a real and sustainable company that is diversified with many sales representatives. Many independent representatives that are around today are former corporate sales reps that realized they can make in the neighborhood of 35-40% commissions rather than the 8-10% a direct rep typically makes. With that large of a difference, a rep can make the same amount of money by doing half the work (after factoring in higher liabilities).
Companies typically don’t care which you are as long as you have real relationships. However, if I were to give a newbie some advice, I would encourage them to develop the ability to manage the reps they bring on to limit turnover in your territory. It may be smart in the short term to be less generous with your rep, but it certainly is not wise for the long run as you are challenging their loyalty and likely just training your future competition. Manufacturers grow increasingly frustrated when you can’t manage your reps and they have to bear the burden of training the new rep as well as explaining to surgeon customers why they have new representation every 6-12 months. If you are performing, you will be granted a couple of mulligans, but remember that the first time is chance, the second is coincidence and the third is a trend.
Make at least a little effort to market your business
When it comes to marketing your business, there have never been more options at a lower cost; however, many distributors are reluctant to do the basics. You should definitely have a well-developed and transparent profile on OrthoSpineDistributors.com and Linked-In. You can develop a website by only investing $50 dollars and a couple of hours of your time. I would also recommend establishing an email address with your personalized domain. Continuing to use an AOL or Yahoo email address makes you seem rink-a-dink.
The “numbers cure everything” mentality may still be there, but by spending even a minor amount of time and money you can differentiate yourself dramatically not only for the manufacturers you represent but for the customers you service.
Just put yourself in their shoes and realize that the company you represent has already invested millions of dollars in research and development, clinical and regulatory, operations, logistics and inventory even before they invest a single dollar into sales and marketing. The barrier to begin a distributorship is the desire and a relationship. When the manufacturer gets to the point of commercialization, they still have to pay 35-40 points just to get your attention. That’s nearly half of the sales price to you without having shared in the cost to get to this stage of selling.
I don’t want to sound like I undervalue what a distributor does. I totally get it! I just want to challenge you to think about the investment that has been put into the widget before you touch it. When thinking about it that way, I would suggest that investing a little into your own brand and increasing your level of professionalism makes a lot of sense. If you do it, you will also stand out above the rest that stopped reading this article a few paragraphs ago.
The last thing I will talk about in this letter is really the most obvious. EXECUTE! Don’t promise things you can’t deliver. If you are transparent with the corporate sales manager, you are consistently communicating and have invested even a modest amount of time and resources into developing your business, I think you will see a tremendous difference in the relationship you have with the manufacturers you represent. The only thing that can detract you now is if you don’t execute on the opportunity you have been given. Communicate the challenges but also share the wins, no matter how minor they may be. Initiate communication and don’t be vague when answering specific questions. If you treat the manufacturer as a member of the team rather than an adversary, it is my firm belief that you will all celebrate 2015 as your most successful and rewarding year thus far!