Case Studies

Supplier of Clinical Diagnostics Solutions

Healthcare & Life Sciences

A significant profitability boost, an upskilled the sales force and a clear plan for pricing sustainability

Challenges

As a client with major supply relationships with their customers, we saw the customers getting better terms each year at the expense of the client 

  • The desire to please creates a barrier to agreeing price changes which are fair for both parties 
  • Clauses that are favourable to the customer are present, for example price increase caps, price locks, notice periods​ and volume rebates 
  • Most teams lack the focus and time to make fully informed decisions and combat their biases 
  • Industry experts have a great understanding of their products, but are generally weaker in negotiation skills and confidence 

Outcomes

The PHG Value Capture Maximisation process was deployed on 12 accounts: 

  • Development of quality insights on each account to understand situation 
  • Collaborative account by account strategy definition 
  • Negotiation strategy and materials produced enabling account team to confidently lead negotiations 
  • Definition of new commercial terms recommended and implemented with limited churn observed 

In addition, we provided a holistic assessment of why and where value leakage occurs and resultantly what the client could do to overcome this. 

 

What We Did

Situation Analysis

On each situation, we developed quality insights to gain a complete understanding of customer situation and relationship. Understanding why value is leaking and why the relationship dynamics have developed to the position they are today is crucial to making a good commercial decision.  

Assessing the level of pricing power was a key analysis, which was done using an unbiased Pricing Power calculator. The calculator was facilitated by a survey given to each account team, taking around 30 minutes to fill. Criteria include: 

  • Competitive landscape 
  • Supply situation 
  • Discounting 
  • Cost to serve 
  • Use case 
Optimal Strategy Definition

We collaboratively worked with each team of relationship owners to thoroughly explore opportunities to maximize value capture, and align on the optimal decision. We ensured the strategy was a collectively built solution which the team were confident in executing. We pushed the teams to go further than they would have done naturally, done through a full understanding of the situation and validating positions they had with independent perspectives.  

Strategy often focussed on securing a sustainable relationship alongside improved commercial terms for consistency of financials into the future.  

Compelling Messaging & Delivery Skills

You gain additional power in a negotiation by being able to deliver your side well. In each case we crafted optimal messaging for the relationship owners to deliver the new commercial terms. Each presentation painted a picture as to why the proposal was fair and in the interest of both parties. 

We worked through potential push back from the customer and how to handle this. Negotiations are a process, and we ensured strategies accounted for what to do after the first play.  

Holistic Assessment of Drivers of Value Leakage

Working on the ground allowed a thorough understanding of how the organisation operated. We regularly updated senior stakeholders on what we saw, uncovering business practices and the current stage of pricing maturity. We used PHG frameworks around pricing maturity to do this. 

Sustainability Recommendations

Successful Value Capture Maximisation projects go beyond identification or opportunities. Here, we focused on improving the internal capabilities of sales teams, helping to realising power and developing plans for sustainability of value capture. This included: 

  1. Continuation of the practices directly taught during the project 
  2. Uncovering gaps in the organisation which are limiting value capture at the current time and providing a plan of action to make achievable improvement in a short period of time 

I believe that this exercise has been as good as any sales training course or account development program that I have seen

Client Testimonial

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