Wiining presentation at the ZS Consulting Case Challenge at Kellogg

1. Ariel Surgical
Sales & Marketing Strategy
ZS Case Competition 09
November 18, 2009
Case Challenge 09

2. Goals & Strategic Imperatives
4 key imperatives will position Ariel Surgical better to achieve growth targets, addressing the
opportunities and challenges
Sales Projection
(in $M)
$285
OPPORTUNITIES $245 CHALLENGES
$219
• $20 M Wound Care $193 • Under-penetration
Market of existing accounts
• New Innovative • Sales Force
Product (Clot Sys) Effectiveness
• Diverse Product • Competitive
Portfolio Pressure (PurSang)
2009 2010 2011 2012
Key Imperatives
Optimize Sales
Enhance Account Identify Surgeon Increase Sales
Process &
Penetration Targeting Strategy Force Effectiveness
Organization
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Case Challenge 09

3. 1. Adopt Value Assessment Framework to Assess Account
Potential and Penetration Levels
An Iterative Value Assessment 1 Determine targets and sales
breakdown by procedure type
Framework from product sales breakdown
3 Compare the potential
sales to actual sales
2 Determine account potential by using
decile breakdown
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Case Challenge 09

4. Using the Framework: Cardio & Valve Surgery Categories are
Performing Below Decile Average
Difference between potential & actual sales
Key Observations:
• 70% of accounts are below the decile average potential
• BANDSeal and the Cardio/ Valve category shows the $1,400,000
most negative deviation from decile mean $1,200,000
$1,000,000 Above Decile
$800,000 Average
$600,000
Potential Causes $400,000
• Sales force prioritizing certain product types/ surgeons/ $200,000
accounts to achieve targets within their territory $0
• Misalignment of sales force efforts and company goals -$200,000
-$400,000
• Lack of sufficient training – differences in skill sets LEKStop BANDSeal GRAFTSeal
required for different products/ accounts
$500,000
Benefits of the Framework $400,000
• Segment customers by potential to determine resource $300,000
Below Decile
Average
allocation/ service levels $200,000
• Establish detailed sales targets by account/ $100,000
$0
surgeon/product
-$100,000
• Prioritize – under-penetrated accounts with high -$200,000
potential vs. other existing/ new accounts -$300,000
-$400,000 Brain Hip/ Knee Valve Cardio Burn Procedures
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Case Challenge 09

5. 2. Ariel Should Target Cardiovascular, Thoracic & Neuro
Surgeons
Actual Sales per Surgeon (‘000)
• Cardio, Thoracic and Neuro 391.57
Surgeons generate the highest
sales per surgeon.
241.39
• Based on product
relevance, Neurological, Thoracic
and Cardiovascular generate 71% 79.49
45.70
of Ariel’s Revenues 3.78 2.96
Plastic Orthopaedic CV/ Thoracic Neurological Vascular Other
• Return on sales effort is highest Surgeon
for this segment
Neurological Thoracic Cardiovascular
LEKStop 20% 20% 25%
BANDSeal 30% 70%
GRAFTSeal
ClotSys 10% 60%
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Case Challenge 09

6. 3. Sales Force Effectiveness: Deploy Additional Salespeople to
Cover ClotSys
Sales Force Deployment Plan for 2010 & Beyond
+32
-16 • Moving forward, we
calculated the sales
force required as:
• Centralizing • Focus on medium o2011 = 100 people
administrative sized accounts 106
functions (6th, 5th, 4th Deciles) o2012 = 116 people
90 maximize sales to
• Reducing travel time
effort ratio.
due to above
• This also helps to
• Customer
achieve $13.9M
Segmentation
target in 2010
• Synergies with
LEKStop Accounts
Current Sales Optimization Deployment 2010 Sales
Force for ClotSys Force
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Case Challenge 09

7. 3. Sales Force Effectiveness: Aligning Compensation Structure
With Company Goals
In ensuring sales force compensation is closely aligned with Ariel Surgical’s overall
company goals, we must ensure the following factors are taken into account.
How well are sales people How well are sales people
growing Ariel’s market achieving the average
share of existing products account targets for each
Account &
by successfully growing Portfolio decile – by product type
existing/ new accounts? Performance and surgeon type
Growing NPI
Accounts Performance
How well are sales people Customer How well are sales people
Service performing on targets for
performing on customer
satisfaction and service new products such as
levels – both for clinical ClotSys – over the first 1-2
and economic selling? years?
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Case Challenge 09

8. 4. Re-engineer Sales Process & Organization
Involvement of central Standardize contracting and pricing
group of product procedures to be performed by a
specialists to support central administration group. Minimal
clinical selling involvement by sales force.
Clinical
Targeting & Selling
Account Needs Case After Sales Support
Contracting
Potential Assessment Coverage & Reinforcement
Assessment Economic
Selling
Use Value Assessment Economic selling to occur Product specialists to handle
Framework to assess concurrently with needs technical support and in-
account potential and assessment and clinical house call center to provide
target based on selling for better customer service, while sales
segmentation relationship building reps focus on more
penetration and new sales.
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Case Challenge 09

9. 4. Re-engineer Sales Process & Organization (contd.)
High Level Organizational Model (Preliminary)
Regional Regional Regional Regional Regional
Sales Team Sales Team Sales Team Sales Team Sales Team
Regional Regional Regional Regional Regional
Sales Director Sales Director Sales Director Sales Director Sales Director Primary
responsibility:
Key Account Key Account Key Account Key Account Key Account Customer
Managers Managers Managers Managers Managers Relationship and
Growing Accounts
Sales Sales Sales Sales Sales
Executives Executives Executives Executives Executives
Sales Reps Sales Reps Sales Reps Sales Reps Sales Reps
Product Specialist Group
Primary
responsibility:
Administration & Customer Service Group Central specialized
support activities
Finance Group – Pricing, Contract Mgmt, & After-sales Accounts
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Case Challenge 09

10. Prioritization & Implementation Plan
UNDERTAKE PRIORITIZE Quick Wins
• Optimization of existing sales
Organization &
force workload – by Q4 2009
Customer Process Changes
HIGH
Value Assessment Segmentation
Framework
Sales Force Within 6 Months
BUSINESS IMPACT
Deployment for
Sales Force • Value Assessment Framework –
ClotSys by Jan 2010
Compensation
• Sales force deployment for
QUICK WINS REJECT ClotSys – by Feb 2010
• Customer Segmentation – Feb
2010
LOW
Optimization of
Existing Sales Force Within 1 Year
Workload • Sales Force Compensation – Q3
2010
• Organization & Process Changes
LOW HIGH – by Q4 2010
COMPLEXITY OF IMPLEMENTATION
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Case Challenge 09

11. Next Steps
• Form detailed project plan and project teams for short
to medium term projects
• Analysis on compensation structure – led by HR and
Sales Director
• Revisit marketing and promotion plans to ensure
alignment with new targeting strategy – led by
Marketing Director
• Detailed assessment of the organizational structure
and sales processes – led by cross-functional team
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Case Challenge 09