A new product Dollarization story...
Developing a detailed protocol for freeze-drying a pharmaceutical compound (a common preservation step) is traditionally a months-long process, involving hundreds of manhours of manual trial and error experiments by biochemical PhDs (not cheap). The trial and error nature of the process typically yields a protocol that is “safe” for the drug compound, but is by no means optimized for productivity.
Working together with top academics in the field, FTS Systems, a leading maker of freeze-drying equipment, developed a software/ hardware product that automated this process and could deliver a truly optimized protocol in days or weeks. FTS expected the industry would quickly embrace the new “SMART Freeze-Dryer” but the initial market reception was mixed. Customers were intrigued by the technical cleverness of the concept, but struggled to justify the 5-figure pricetag, especially when there existed no line item in their regular budgets for such a product.
This barrier became painfully clear to FTS when they pitched the system to one of the original inventors – an academic who had since returned to a commercial pharmaceutical company. Despite his involvement in the development of the system, he reasoned that he and his team could accomplish what the product would accomplish, without having to spend tens of thousands of dollars.
In response, FTS set out to detail the financial benefits the SMART system would deliver to clients. These included manpower savings, materials savings (each manual experiment would consume valuable compounds), and the opportunity cost of lost time.
I worked with FTS to identify these costs and to craft them into an interactive tool their sales team could use to walk through the evaluation with customers. The tool listed every variable in question form (see image below-click to enlarge), enabling the sales person to gently alert the customer to the numerous costs involved… costs that would otherwise be overlooked by customers accustomed to doing things the way they had always done them.
The sales team was trained to encourage customers to specify the input values, so the ultimate analysis would be highly tailored to the customer situation. Importantly, this engagement would also create a heightened ownership of the analysis by the customer. Gradually, the customer would see the tool as his or her own analysis, not a sales ploy.
The tool used these inputs to activate a series of calculations, which were then summarized in an executive summary report (see image below-click to enlarge). This report highlighted the customer’s savings, return on investment and several other metrics. The results were also provided in a printable report format that the customer could share with colleagues when reviewing the potential investment.
Some of the impacts of the SMART system were too speculative to accurately quantify, but were nonetheless of interest (for example, the value of getting to market with a drug months faster). These items were included in the report to trigger discussion with the client so that some value would be inferred.
Within the first few months of implementation, the tool enabled FTS to shift the conversation from technical novelty to compelling economics. They quickly earned success with key leadership customers, and the rest of the market began to follow.
As FTS built a record of successful customer implementations, they began to integrate the ROI message into their marketing communications. Advertisements would tout the savings achieved by others, and pointed interested prospects to a website that included a simplified version of the calculator. If the online tool produced attractive results, the prospect could then contact FTS directly to begin further discussions.
No comments:
Post a Comment