Fire Your Customers!
By Bob Marshall, Chief Editor, Med Device Online
Well – not all of them, but evaluating your customer base is exactly what John A. Larson, a strategic business consultant who has worked with numerous medical device companies, advises us to consider. Talking with Larson — co-author of Capturing Loyalty — initially made me think of my very first job as a newspaper carrier. I inherited my older brother’s paper route when I was in junior high school and delivered about 50 newspapers each day from my bicycle.
As I listened to Larson talk about different types of customers — highly-satisfied, satisfied, indifferent, and dissatisfied — I was transported back to delivering my papers. I remembered customer names and I saw their faces in my mind. A large group of customers certainly seemed to be highly-satisfied. They often wanted to chat about their day, or would ask about my family, and they were very generous tippers when I collected their bi-weekly payments. Other customers were pleasant, and seemed to appreciate having their paper delivered, but just seemed less satisfied than the first group.
Then, there were the customers who rarely spoke to me. To them, our relationship was transactional: I delivered a newspaper each day and they paid me every other Friday. The most difficult group of customers were those who seemed dissatisfied. They would complain if the newspaper was delivered a few minutes late. They would complain if the newspaper was damp, even when I had to deliver it in the pouring rain. They would complain the newspaper was too expensive. They would even blame me that the newspaper was full of nothing but bad news!
So, what does this have to do with medical devices? Medical devices cannot cure, mitigate, treat, or prevent disease unless they are ultimately in the hands of medical professionals or other end users. Thus, medical device companies need customers, but is every customer a good customer? Not according to Larson.
“In our experience, most well-meaning companies spend inordinately too much time trying to appease their dissatisfied customers — and to what end? If you work all day to calm a dissatisfied customer so they are now indifferent, this outcome provides little value to your business,” he explained. “On the other hand, if we can move a satisfied customer up to being highly satisfied, their value increases significantly. So, how are we as marketing leaders going to shift satisfied customers over to highly satisfied? The answer is simple: We’re going to fire all of our dissatisfied customers and shift all of the time and attention they take up to converting our satisfied customers over to highly satisfied.”
This explanation resonated with me. In the medical device industry, we are hypersensitive to complaints. Most of my regulatory colleagues have probably memorized the FDA definition of a complaint: “any written, electronic, or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety, effectiveness, or performance of a device after it is released for distribution.” But, the FDA definition does not describe the type of complaint we are talking about from a business satisfaction perspective.
Customers may complain because they are dissatisfied with the price of our devices; they may find our new devices difficult to use; or, they may be dissatisfied because our new device changes their procedures or impacts their standard of care.
Larson described a situation where a medical device company developed new technology to deliver therapy in a safer manner, adding interlocks and required sequencing to make use errors essentially impossible. But the medical professionals who administered the therapy found this change very disruptive; it essentially required them to develop a different workflow. In response, some medical professionals figured out how to disable or work around the safety features.
To overcome this challenge, the manufacturer established a customer advocacy group and, rather than sell the device to 10 hospitals, they opted to sell the device to one hospital. The customer advocacy group was tasked with staying at the hospital for a few months until people understood how to use the device properly. Rather than flood the market, the manufacturer went deep, because they realized flooding the market would only create dissatisfied customers. The manufacturer focused on one customer at a time to ensure users were comfortable — meaning they could only introduce the device into six or seven locations a year.
But, at hospitals where this approach was applied, medical professionals who learned how to use the device realized how much safer it was for their patients. These users were convinced of the device’s efficacy and became committed to the new technology, and the hospitals became highly-satisfied customers.
“Human beings believe there is safety in numbers. They would much rather have 10 customers than three. Human beings just want those sales, without realizing the amount of time they are spending on one dissatisfied client could be devoted to transforming satisfied customers to highly-satisfied customers, Larson said. “To use a commercial example, one highly-respected national retailer fires 10 percent of their customers every year. ‘Mr. Larson, we’ve been dealing with you for a number of years and we’ve come to the conclusion that we can’t meet your need to the level that we’ve set for a typical customer. So, we have taken the liberty of cancelling your charge card and we recommend that you patronize some of our competitors that might be able to do a better job.’ What the retailer has realized is they have scarce resources and, at some point, they have to face up to the fact there are better opportunities elsewhere.”
Larson’s research with numerous medical device companies has shown 30 to 40 percent more sales come from highly-satisfied customers, and satisfied customers can be turned into highly-satisfied customers. However, any less-than-satisfied customer is a detriment to a medical device manufacturer’s bottom line.
“In fact, this approach can lead to more revenue with fewer customers — a typical company can fire all of its dissatisfied customers and still boost sales by 13 percent.” Too bad I wasn’t able to use the aforementioned retailer’s line on a few of my dissatisfied newspaper customers back in the day. Then again, as modern media has been shifting toward electronic delivery, my customers may have had the last laugh in the long run.
For those of you who deal with the business end of the medical device business, does this make sense? Do you find your organization spending too much time dealing with a small group of dissatisfied customers to the detriment of growing your highly-satisfied customers? Share your comments below.