FinancialTop Stories

Orthopedic Co. Double-Digit Growth- How to Recapture the Glory Days

By Thomas G Ferro

Accountability begins with senior leadership.  Leaders must first determine the growth objective for the organization.  For purposes of this post, let’s assume they set a 10% growth rate target.  Now let’s do the math, and in doing so, we will also address various functional area strategies that will help achieve targeted growth.  If a company in unable to achieve the goals in any one of the 3 Focus areas below, then these areas require improvements.

Focus 1:  Price (1-2% Growth Contribution).  We can assume a 1-2% realized price increase for this exercise.  Now let’s discuss strategies to achieve that.  First, sales must be aggressive in contract negotiations, especially in how agreements are structured.  One strategy is to negotiate multi-year agreements with annual increases.  Another strategy lies in product development that may release a slightly better mouse trap that may realize a higher ASP.  Still another strategy may lie in sales compensation that emphasizes and rewards for premium priced product sales.  Lastly, many contracts are structured on a percentage discount off list price. This creates an opportunity for the annual increase to flow through to the P & L top and bottom line.

Focus 2:  Existing Product Portfolio (4-6% Growth Contribution). If leveraged properly at the sales management and product portfolio management levels, there are many opportunities to leverage.  Let’s look at sales targeting and objectives.  Every account in each territory should identify what is the existing business base in each account and what pull-through product opportunities exist. Many times it just comes down to asking for the business. These opportunities should be captured in the MBO process.  It is also critical that these sales opportunities in the MBO’s are placed in the 1st and 2nd quarters so at least half to three-quarters of the year will realize these sales gains. Other functional areas can also contribute to growth in this category.  Marketing and Product Development teams can identify gaps in the portfolio to determine if opportunities exit to license or develop products that can easily be pulled-through by sales in accounts.

READ MORE HERE

Print Friendly, PDF & Email
Tags

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close