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2020: Competitive Advantage Opportunity

New customer needs provide the potential for market share gains.

The COVID-19 crisis has stressed the human and financial capital of our healthcare system. A quick return to business as usual is unlikely. Many of the effects of the pandemic will persist and healthcare customer needs will have changed. Suppliers in tune with the current/new needs of healthcare providers can outperform competitors. The time to act is now.

Necessary Services/Service Levels

For every business segment, there are requirements to serve, which are the essential services/service levels competitors must provide to meet customer expectations. For example, a minimum order fill rate is often mandated. The minimum requirements to serve vary by product category: examples include software requiring integration, devices on consignment, parts/service for equipment, training for robotics. Customers’ requirements to serve evolve due to factors such as changing economics, regulatory requirements, technical innovation, use of new venues, and/or episodic events such as COVID-19.

In normal times, protecting/enhancing market share requires regularly reviewing customer needs in the context of existing services/service levels. When abnormal events drive changes in customer needs, even maintaining market shares requires reevaluation of a company’s Customer Service Strategy.

Discretionary Services/Service Levels

Customer Service Strategies must meet the necessary levels of customers’ requirements to serve. Some competitors attain market share gains, and often improved pricing, through the provision of discretionary services/service levels, i.e., additional services and/or higher service levels that are valued by the customer and exceed competitive service offerings. Examples of discretionary services include faster delivery time, higher levels of technical assistance, increased administrative support, etc. Discretionary services/service levels cost more to provide but can provide a positive return based on price realization, customer loyalty, and/or market share gains. Market leaders can more easily benefit from providing discretionary services given their scale and infrastructure, yet we observe lower market share companies achieving significant benefits from innovating higher levels of service.

Development of competitively advantaged discretionary services is based on in-depth analyses of the following:

  • Customer needs and their relative importance

  • Innovation of service-based solutions to some/all of those needs

  • Assessing the customer’s internal benefit of the new services/service levels

  • Competitive analysis to ensure the discretionary service strategy will be differentiating and, ideally, not easily replicable in the short term.

Service Strategy Advantage 2020

Long term success as a healthcare product supplier depends on product innovation. Companies with successful products can achieve further advantage through an effective Service Strategy. Customers require competitors to provide necessary services/service levels, i.e., meet the requirements to compete. Customers reward competitors who successfully differentiate themselves with discretionary services /service levels, which exceed competitive offerings in ways that further meet customers’ needs.

Healthcare customers’ needs have changed significantly since Q1, 2020. Some of those changes will prove temporary and revert to how things were done previously. We should anticipate that some of the changes made recently will become permanent and others will evolve toward new ways of working post the immediate crisis. In the context of significant change among healthcare customers, this is an opportune time to review and revise your company’s Service Strategy to ensure it adequately meets the necessary service level and to determine whether an advantage can be gained through the implementation of a differentiated, discretionary service level.

Service Strategy changes made now provide the potential to gain market share by better assisting healthcare providers with their 2020 challenges.

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