What would you do if you only had 12 months to replace a medical device product that represented ⅓ of your revenue? Marshall Perez tells us how he did it and what he learned.
Interview Highlights with Marshall Perez
- The importance of understanding the culture of a company.
- Are you making connections with everyone in your customer accounts? How do you know the secretary in the Purchasing Dept. won’t be a Supervisor in a few years?
- What is unique to Chief Outsiders and why would a company want to seek their advice?
- When evaluating product management functions, could you be achieving better margins?
- Do you have a CRM system in place? Is it helping to yield better productivity, efficiency, and results?
- Do your customers know you care about them? What systems do you have in place to be sure of this?
- Why understanding reimbursement should be at the forefront of any strategic decision.
- Data matters! Understand the trends and the long-term implications of your actions. Be cognoscente of the future.
- And much, much more!
Who is Marshall Perez?
Marshall Perez is a Partner and Fractional CMO at Chief Outsiders. Check out their highly informational blog and YouTube customer testimonials. Are you a CEO? Take a look at their interesting CEO survey.
Former Founder and CEO of Medicrea USA, Marshall became a seasoned professional as a limited partner and senior vice president of worldwide sales, marketing and business development for Biomet. He oversaw organic growth, new product and business development, new market growth and acquisition activities during his 21-year career with Biomet that achieved growth from 20+ million to over $500 million.
Marshall also gained valuable experience with Steris Corporation, a leader in the sterile processing industry where he managed the core business in sterilization monitoring and packaging devices.
Read the Interview with Marshall Perez
Scott Nelson: Hello everyone it’s Scott Nelson and welcome to Medsider the home for ambitious medical device upstarts and the place where you can get your personal MBA in medical devices for free. On today’s call we’re going to learn from Marshall Perez. He is a Partner and Fractional CMO at Chief Outsiders so without further ado let me welcome you to the call Marshall thanks for joining us today.
Marshall Perez: Good morning Scott.
Scott Nelson: I really appreciate you coming on and I’d like to start with the story and I really want the audience to kind of put themselves in these Persian shoes because I think this will give everyone a good idea of not only who you are Marshall and your experiences but also the value you bring to the table in your role at Chief Outsiders.
I want everyone to sort of imagine yourself as an executive at a medical device company. You’ve got a fairly well-rounded bag of products. However, one of those products represents about 30% of your revenue so about 1/3 of all your sales comes from this one product and you find out that this product is actually, you know what, you no longer are going to be able to sell this product in 12 months so you’ve got a year.
Again it represents about a 1/3 of your revenue, you’ve only got a year left and you know you’re no longer going to be able to sell this within about 12 months and so what do you do? What are the options? Do you try to find a different manufacturer, do you try to find just a different product to fill in the bag for maybe a different disease state or different application? Do you try to manufacture your own product? There are several different options but I want to start there and I’m going to kind of hand the [card 02:43] to you Marshall. I want you to explain what you did because you experienced a situation similar to that.
Marshall Perez: Thanks Scott. It was a pretty trying time in our existence at a company that I won’t mention but needless to say we did a pretty good job and the company is still in existence today. The challenge was to replace a pipeline used in [order to treat 03:09] trauma. We had been a distributor for about 10 years, did a nice job, actually put them on the map worldwide and created a nice little business for them and we were the exclusive distributors in most of the world and they started peeling back some of the territory in different parts of the world and we had just the inkling, our intuition told us that they were probably going to eventually do the same in the US but needless to say we kept working very closely with them developing new products, developing product champions from all the things that you needed to do to be successful in this market.
The contract usually ran 5 years. We would renegotiate the contracts, start about 2 years from the expiration date and typically they were already signed, sealed and delivered within 18 months or a year of the expiration date so we knew we could continue on as partners. It became apparent to us that they were not negotiating in good faiths so we realized that we needed to have a contingency plan just in case things did not move forward and because they had pulled the product out of other territories we felt like we could… if they did come back to the table, we could still develop our own product and sell it into the geographies around the world that we no longer had exclusive rights to their product. It was a pretty cool plan because even if we did have to move forward in the US market we would have a new product that would get introduced internationally and get back some of the market we had lost when they pulled the plug internationally.
Needless to say to do that and especially with such a short time, a year and a half into the contract is when we really started feeling like we need to do something. We put together a plan to move ahead and figure out a way to have a replacement product and we wanted something that would be better, more use of friendly and a US surgeon initiated and a partnered product development team was put together about 6 US surgeons that we were friends with. We had to do this very very quietly so that we did not spook our sales force. We did not want them to think that, “Oh God what is to happen to all these products that we have been selling,” and we really didn’t want to make a big deal out of it in the community so we did it very quietly.
Part of the challenge is we didn’t have manufacturing, we had the knowhow as far as one of our sister companies but our company specifically did not have the core competency to make the product or design a product because we were in another part of the business that we manufactured and we did no manufacture these products so we had to really enlist the support of engineers from our sister company. They were very quick to jump on, get involved. It was a really exciting project, we would bring the doctors in and our get-together was at doctors in different locations and actually go through product development challenges and what we wanted to do and the engineers had to move very very quickly.
One of the [chants 06:42] that became very commonly used at our development meetings is ‘We’ll do that in the next generation” because we knew we didn’t have time several alterations of a product design. Needless to say no only did we have to design the product, we had to get FDA approval, we had to beta test the product, we had to figure out where to manufacture. We could have manufactured with our sister company and those ideas were kicked around but they were focused on their particular product so we felt it would better if we were able to secure our own manufacturing capability which we eventually did.
The project included design and FDA approval for a Class 2 replacement product and launch in 12 months. We had to secure the manufacturing capability and build launch inventory. We had to work with the key opinion leaders in the design, the clinical evaluation and the [codium 07:40] marketing and training activities and we had the key to sales and marketing and operation teams actively involved and supporting the present product until the new product was launched. It was a pretty challenging time. We had to keep it all under wraps, we didn’t want to make this information known to the world because we didn’t want to lose the product buy-in and sales we had at the time and we didn’t want to spook our sales force.
Scott Nelson: Sure, let me I mean, because that’s a whole [host/hose 08:13] and I can just picture somebody in the audience saying that, “You know Marshall maybe I’ve been there, I’ve experienced something similar definitely not within that short of a timeframe because you were able to accomplish some pretty amazing things that within 12 months and so I guess the question I’d like to pose is when you look at that getting all those things accomplished in that rather short frame, was there a few things that stood out like if we did this and this, we did A and we did B that really allowed us to see some good results in an extremely short timeframe?
Marshall Perez: Yeah I’d say that’s a good question. One of the considerations obviously when you are replacing a complete product line and this was used for appendicular trauma so it was basically SKUs for virtually every appendicular fracture that you can have so what we did is we went in and focused on the highest volume stuff first because we said, “Okay at least we’ll have something to cover that and then we’ll build in behind it as we go,” so we weren’t able to launch a complete product line.
We knew which ones were critical to convert the market to our own product so we focused a lot of energy on those products and upfront and made sure those were right to start with or as close to right as you can make them. We kind of put all our eggs in one basket I guess you can say and made sure that we had the ones covered that would make the difference when we went out and launched so that was one of the reasons we were able to get that done.
The other thing is we were in the business for a long time and we had gone through a lot of the… our marketing team and our surgeons were very much involved and understanding and teaching the current product that we had and they knew what the drawbacks were. We had a pretty good idea what the drawbacks were so we were able to make improvements we were able to secure a pattern that would not make us have us infringed on the current design that actually would be an improvement on what we were dealing with the current product and what the capabilities were.
Not only were we able to redesign and replace the product line, we were able to come up with something that was marketly better and we were very fortunate. Some of it was serendipitous enough, some of it I guess divine inspiration or whatever you want to call it but we stayed focused and we had a dedicated team.
Part of the problems with running a company is that you have so many diversions and so many things that come in and take your time that it’s difficult to focus in the future and this was the future of the company. We dedicated the time, the energy we had weekly and bi-weekly updates on how things were going along, we had people in manufacturing, people in planning, regulatory people we had a really tight team of people that were very motivated and excited to move this technology forward in the new products. It all came together, we did make some risk decisions along the way which you always going to have to do but again we said if we make that design change, is it really that important? Can we wait until we come out with another generation or we fix it on the fly and some of that took place.
In addition when we launched we had a very very active involvement from our engineering staff, from our development people, from our marketing staff so we stayed very close with all the customers as they were starting to get their clinical experience with it. We knew what the issues were once you go with a whole worldwide rollout and we could make those tweaks to make sure that those things weren’t experienced universally.
You always have to make changes in instrumentation sometimes when you launch stuff, sometimes you have to tweak something here there and then you have to make sure it’s all documented from a regulatory standpoint and tested so you have the files to support your design control support what you’re trying to do with the product so you’re doing everything according to the rules and regulations of the game.
We had all those challenges and we were very successful in getting it done. We actually converted 95% of the market and wound up, continued our market domination in the market with our own products so it was a very successful fun challenging sleepless night-type of (chuckles) time.
Scott Nelson: That’s a great story especially when you can say that you in fact converted 95% of the market because that obviously tells the story the end result is ultimately what matters. As a follow-up question as I’m hearing you tell that story, it almost speaks to the idea that you were able to accomplish that in such a short timeframe and I look at the various big companies, big Fortune 100 medical device companies out there at the top the mass device 100 if you would, and it almost seems impossible that for one to be able to accomplish something like that in that short of a timeframe but it speaks to the importance of a management team, a leadership team that is completely on board and makes decisions “Let’s go at this guns blazing” what can really be accomplished.
Marshall Perez: Yeah you know, the other thing that I failed to mention and it is, now if you’re passionate about what you want to do and passionate about a project and that passion becomes felt throughout the organization, the whole organization becomes passionate about it and it becomes, it drives and builds a team, it builds comradary, it builds trust, all the things that are so important to have a good smooth running company and some of these big companies that… we were a Fortune 500 company at the time so we weren’t small but we grew up with the company.
I started off as a Product Director and at this time I was a Senior Vice President running marketing and sales and business development and all the other things that you have to run but we knew the culture of the company, we knew the people, we were integral with that. If you have a new management team or a management team that doesn’t understand the culture of, or came up through the culture or doesn’t even care about the culture, it’s very difficult to make those things happen so part of what I do in a career now is first thing I do is I try to understand the culture of a company when I’m helping them, advising them or helping them with their problems.
The other thing that I failed to mention is that not only did we convert 95% of the market because the product was better, we were able to convert a lot of new users so we actually grew the business and it was really pretty dramatic. There was a positive effect on our other businesses because it got out sales force excited and motivated, they were selling something new, they were converting things so once we got them involved, get out the way I mean, they just went crazy with them. They loved it and they were able to convert 95% of their customers. A lot of it is relationship-driven and trust-driven as you know and many of our sales reps have been with the company a long time and had developed various trusting relationships.
The company that had decided to pull the plug on us did not have those relationships, they assumed they would but when the partnership they developed with another company, those people did not have nearly the same relationships especially within the trauma community that our reps did. We were able to win it in the field which is really where you have to win these battles anyway. Our sales force did just a tremendous job going in and spending the time, the energy and the effort to convert the market and then advance it with other new users so it was a fun time.
Scott Nelson: That’s great I’m glad you mentioned that point that you actually grew the market and not just convert existing business that’s an important point. Let’s use this as a transition time to move on to kind of maybe a brief overview of your bio and what you currently do at Chief Outsiders so can you provide us with a brief overview of your medical device background?
Marshall Perez: I actually started off like a lot of us did as a sales rep and I was a sales rep down in New Orleans and I had a pretty big territory and my idea of selling was to anybody that I saw in an elevator or a stairway was game so I spent a lot of time developing relationships, friendships with everybody that was associated with a hospital not just the chief surgeons but you walked down the hall you say hello to the guy mopping the floor because next year he may be the guy in the purchasing department making the decisions.
I was an award winning sales rep so I just had a lot of fun selling, I thought it was just a tremendously great career because not only are you selling products and making a living, you’re providing technologies that make you feel good because you’re helping people get better. There is a self-actualization occurrence that happens when you’re in medical sales that some people don’t realize and if you’re really passionate about what you sell, you should be experiencing that every day.
I was convinced by a Regional Manager to go into marketing and the sale force needed me so I took an opportunity with a company called American Sterilizer which is now Steris Corporation to move from a sales and sales engineering-type position to actually a marketing position and rose up pretty quickly. I got into marketing I was basically doing, I was a marketing sales and support person and conventions and tradeshows and training programs, did that for a short time and kind of worked my way up to Product Manager to Product Director. One of my friends left the company and he went with his startup company that we were just talking about and he recruited me to go with them.
When I started with that company it was about a $20 million company, it was a niche product, we had about 20 sales reps and I started as a Senior Product Manager and worked my way up in a relatively short time about 6 years to actually become the Vice President of Marketing and then eventually became Senior VP of Marketing and Sales and Business Development in Worldwide Marketing and Sales. I did that for about a little over 20 years which is unusual. Usually marketing people don’t and sale managers don’t stay in positions that long but we grew the company from $20 million to about $500 million. Sales force when I left was 850 and when I started it was 20.
Scott Nelson: Wow! (Chuckles)
Marshall Perez: 12 Regional Vice President plus 45 countries worldwide and we work with stocking distributors both company-owned affiliates as well as independent distributors around the world.
Anyway I left that company in about 6 – 7 years ago and went with a startup company a spine company as the CEO and walked in and they didn’t even have a post it note or a paper clip they were just starting the company, it was a French-owned company. Just a quick story, I called my wife who happened to also work in New York City at the time and I said, “I’ll take you dinner if you bring me some paper clips and some post it notes (Scott chuckles) so she helped stock the office, I had to buy the computers, I had to get all the systems in place, the accounts receivables, the book keeping system, the ordering systems, commission systems, all the websites, all the things that you have to do in a startup and kept the company going.
Within 10 months we were cash-positive, we put burning cash in 10 months which was pretty amazing. I did have to borrow some money from the parent company in order to make that happen and after the first year our run rate was about $7 million and I did that for about 2 years and then I actually curved out a nice little territory for myself in the Mid-West and became an exclusive distributor for them in the Mid-West and got tired of being away from my family so I closed down the distributorship gave it to another first colleague that I respect very much in the Mid-West and came back and hung my shingle up to be an independent business consultant.
Recently we merged our business with Chief Outsiders and the reason why we did that is Chief Outsiders provides economy of scale. We have 22 partners, we all share in the success of the company and we provide resources to each other in the way of peer review and the way of business development and we keep each other trained and motivated so that we can get our customers excited about what we do.
The neat thing about Chief Outsiders is we have a very Senior Level experienced staff that most have worked in Big M Marketer or Big Corporate America and we actually provide our services mostly to companies that don’t have the [rare resort 22:53] to afford to bring in somebody at a very high level plus their typically the sweet spot is the $5 - $100 million company and their marketing team typically is the CEO wearing the marketing hat with some marketing assistants working for him.
As we all know the CEO is responsible for more than just marketing, they have to raise money, they have to talk to Wall Street, they have to talk to the venture capitalists, they have to worry about operations, they have to worry about the legal issues, inventory, cash flow, financial-related issues. They are very quick to bring in outside accounting help, very quick to bring in outside legal help, reimbursement help sometimes they’ll bring in and then they’ll hire somebody to help him in operations like the COO but typically they don’t budget or spend the money for the marketing that needs to be done and especially when they’re trying to build a brand or build an identity and they’ll wear that hat and some of them are very good at it but unfortunately they’re diverted their efforts, their time and energy to push those issues that are so important to the growth of the company, get delayed or postponed or just get neglected.
What we do is we come in and we become their eyes and ears on the marketing side. We help them drive the strategies while they’re driving today’s needs. The issues of the day always become the most important things for everybody especially in a mid-sized company and…
Scott Nelson: So just real quick, while they’re mainly focused on the day to day operations meeting the monthly and quarterly goals, you’re bringing this long-term view this long-term strategy sort of vision to that small or mid-sized company?
Marshall Perez: Yeah the typical encounter, what I’ll do is I’ll interview the CEO and ask him, “What are you trying to do with the company? What is your vision? What is the purpose of the company and what is your vision? Where do you want to take the company? How do you see that happening?” so I’ll understand what is on that CEO, I mean, a good CEO knows where he wants to take the company. They have a vision of where they want to go, the problem is they just don’t have all the assets they need to drive it the way they want to drive it so what we want we do is we become their assistant so to speak, we become their marketing person that takes their vision and develops winning strategies and I’m sorry I used that word ‘winning’ that sounds like somebody else (Scott chuckles).
We develop strategies that will move the company forward and get the growth and maximize the opportunities with their business and then we’ll implement them for them. If he doesn’t have time to implement them or doesn’t have the team to implement we’ll actually stay there and implement them and we’ll ride with the success. Our fees will go into a different type of arrangement. Once we establish what the goals are, the key leading indicators are, our fees drop and we accomplish those goals that becomes our bonus.
Scott Nelson: So at that point you have some skin in the game, right?
Marshall Perez: Yeah you know it’s very important. Many consulting companies will come in and do consulting and then they’ll leave and they have no ownership in the outcome and as a business owner and as a CEO and as someone that had leads from consultants from time to time they used to just drive me crazy because they come in and make these recommendations and then leave. The recommendations you implement them the way they need to be implemented and if they didn’t really pan out they didn’t care. It’s like working with an advertising agency or a company that does marketing brochures or things like that, you give them the input they’re going to produce what they think makes sense and give it to you and if it absolutely doesn’t work or doesn’t hit the mark they don’t… I mean, they want to be your provider of services but they don’t have skin in the game.
What we do differently is we actually put skin in the game. Our fees will be based on achievement of outcome, key allies things like increasing leads, things like increasing inquiries about your product line, increasing RFQs, things that you can actually set up metrics and measure so we do that and we do that in concert with the CEO of the company and the executive management team and we move it forward and we’ll have skin in the game. We’ll have an ownership of the outcome and I think that differentiates us from a lot of different companies that are out there.
Scott Nelson: And are you finding that most medical device companies may like that approach and they actually instead of just accepting your advice and bringing you in only for your advice, they actually want help with the actual execution of some of your strategies?
Marshall Perez: Yeah it depends on the company, I mean I’ve got one client that they have a marketing assistant that’s pretty good at certain things but basically the job that is assigned or the job duties are mostly coordination type activities, trade shows things like that. I was working with vendors with not really strategic and tactical thinking so they don’t have that capability and so they need someone to help them with it so they’ve asked me to help drive that for them and I’m happy to do that.
It’s very important that you develop trust with the owners of the company or the senior management of the company. They feel good that you’re part of their team, they start confiding all the different issues about the company that you really need to know to be successful and you have a seat at the table and you’re meeting in the quorum conference room on a routine basis going over strategies and tactics and implementation and budgeting and all the other things that need to be done.
You become a very good resource for that team and many times especially in the small and medium sized company, you know, the guy that’s running it or the person that’s running it may not have all those skills, you know they were great sales reps or they were great at marketing and now they’re having to be CFOs and legal experts and all the other things so they don’t really have… they have an understanding of what has to be done but they don’t have the time. We develop a very close relationship with them and we drive the process for them so that next year’s growth is going to take care of itself and the future growth. It’s really a good marriage because once we get things going and things are going smoothly, our time commitment becomes a lot less so it becomes much more cost effective to them.
We work on a fractional basis so typical involvement if you think of an executive how much time they spend on strategic planning and implementation if they don’t have a good marketing staff to do it for them, they don’t really have the time. If you think about the amount of time that you spend on thinking about the future and where you’re going to, you spend a lot of sleepless nights thinking about but are you actually doing anything about it when you’re in the office?
The answer to that is mostly no because you’re taking care of today’s issues. The phone call that came in from the irate customer, the rep that decided that they didn’t like the way things were going with the commission program so you’re putting out fires all the time especially in these medium sized and small companies. You don’t have time to do this and you know you don’t, you know you don’t so you’re not doing the things that you really have to do to help the company grow in the future. That’s where we come in, we become that right hand person for that activity and we make sure it takes place.
Scott Nelson: Sure okay well let’s get into some of those strategies right now in terms of that Fractional CMO role that a lot of times you play with these medical device companies. Do you see some trends or some common challenges that medical device companies face that you’re often helping them solve?
Marshall Perez: Yeah I do. I think there is a couple of things especially in the smaller companies they typically don’t have good product management activities, they’re not paying attention to their margins and their mix, they’re just kind of gliding along. They’re successful, they’re growing but they’re not growing the way they could and so one of the first things that I look at is their actual product management function and who’s doing that and how is it being done because you can find, I mean one client within 4 days of the assignment I found a 15% improvement in margin in one of their product lines which actually paid for my fee, my annual fee so that was pretty exciting.
Scott Nelson: Can you give us an example of what that looks like? You help them find additional margin by increasing the price or lowering the manufacturing cost? Help me understand.
Marshall Perez: Well they had a product line with a lot of SKUs and their goal was to have at least a set margin so I went and looked at the margin report and realized that many of the SKUs were not at that margin. I said can we just make the adjustment to put… and these weren’t price-sensitive products, these were replacement products so the customers really they wanted it to fix it especially now when they’re trying to make things less longer because they don’t have the capital budgets to spend that they had at first so I said, “Well let’s just pump these prices up to the minimum margin and we’ll see what happens,” so I told the sales force, I told the internal people, no one had any concern about changing the pricing on those items and it was enough to raise the margin and that product line almost 15 points and also get my fee covered so we implemented. Those are the kind of things you’ll find when you start looking and digging into the company.
Scott Nelson: That’s a perfect example of the Acting CEO that’s so focused on – I’m going to steal your phrase – putting out the fires and looking at things from maybe a day to day and month to month operation, they don’t have the time nor the bandwidth to really dig into some of those small little things like you just mentioned like the product management functions which you did an additional 15%, which I imagine was a significant amount of money.
Marshall Perez: Yes so one of the strategies we put together based on that is to put in a product management function at the company in order to actively manage it so one of the longer-term strategies is let’s do some product management here, let’s budget for it, let’s get some people in place, we’ll get them trained and they actually will be responsible for watching that for you and it will easily pay for itself. That was one of the strategies that we developed.
Another strategy was they weren’t managing their CRM, there really was no CRM function…
Scott Nelson: When you say CRM you’re talking about like the sales CRM, Customer Relationship Management?
Marshall Perez: Yeah the Customer Relationship Management and part of the reason why this company needed that is they got a lot of requests for quotations and there had been no follow-up to the request. Basically they sent the request out and then hoped that the order came in, they didn’t even marry the order to the RFQ, our Request For Quotation so we initiated a strategy to clean that up to set up a CRM system where there is a follow-up and all these things expired in 60 days so we send out automatic reminders to the people requesting this “Thank you for your request. Just want to remind you that 30 days this RFQ expires” and then we send out a series of those and it’s all done by the computer so it’s an awesome thing to do. The idea is that people will take action on it and we’ll also clean up the outstanding RFQ.
The other activity that they weren’t doing is they weren’t really managing the request from hospitals to develop a relationship with these people that were requesting it. It was all done based on a clerical-type activity and I said, “You now have a contact point and a decision maker, we need to start to interact with these people.” We quickly set up a system that acknowledges them in emails, surveys tell us how we’re doing just start a relationship with the customer so that they realize this company cared about them.
Everybody is on board it’s building excitement and it’s building enthusiasm within the company because they feel good about what they’re doing and not that they felt bad before but now they see, “Hey you know, somebody is really taking charge in driving this force.” Sometimes it’s the little things that make a difference just as much as the big things. It’s not brain science, you know, you don’t have to be a brain surgeon to do this, you just have to have an open mind, you have to be intuitive, you have to look at the data and understand what the data is telling you and come up with strategies and tactics to implement it.
Within the first 60 days we had the strategic plan for the next 5 years finished and this particular client and when we presented it to the management team, it wasn’t me presenting alone I had the CEO present his vision and the purpose of the company and where he wants to take the company and so he has ownership in his plan and I had the CFO present the financials, “This is where we’re going to take it,” so it was a team effort so it wasn’t just the outsider coming in and saying, “This is what to do,” it became us together presenting a cohesive plan to make sure that there was buy-in throughout the organization.
Scott Nelson: Okay I know we’re coming close to our time here so before I transition kind of to the next question, is there anything else that you’re finding when working with some of these medical device companies that stands out in terms of common obstacles that they face that you’re helping them with?
Marshall Perez: Yeah, you know one of the things especially with the newer companies that they don’t really spend enough time and energy on is understanding the reimbursement environment. They start making some assumptions, “This is what this is selling for, this is the same thing we can sell it for that,” and then they [file 10K 38:41] to the device off of something else where the reimbursement is half of what they thought it would be or they use a code that’s close to what they’re doing and they eventually, the reimbursement agency, CMS and the insurance companies whatever start to say, “Sorry you can’t use that code,” and then they’ll start using a 999 miscellaneous code and then they won’t get paid. After a year and a half or two years in the business, the doctors aren’t getting paid for putting use in that product and the hospital isn’t getting paid a reimbursement payment for the product so it just becomes a frenzy acted on the part of that company to go and try to fix that and some cases it’s too late.
I think that and if there is any one area that I always focus on first especially with a new product line or a new entry to the marketplace is the reimbursement strategy and it’s just so important in the medical device field that you have a product that is not only efficacious and safe but also you can show that it’s competitive with the cost effective to other technologies that are available. Even if your results are marketly better, it’s hard to get reimbursement beyond whatever your coding is so you have to develop a strategy to get your own code. There are experts out there that can help you with those strategies, I’m not a reimbursement expert but I know several that we could partner with and you need to make sure that is an important funded part of the business because that could kill the business faster than anything else.
Scott Nelson: Sure yeah let’s say as I’m listening to you I’m jotting down notes and my notes read: Why understanding reimbursement should be at the forefront of any strategic decision. The only reason I mention that is, is that not in essence of what you’re saying that before we go this certain track of product development and market development etc. reimbursement should be sort of pulling the, should be the engine of the train there because if reimbursement isn’t there we may have to alter this path that we’re heading towards?
Marshall Perez: Yeah and typically when you first come out your costs are pretty high so you don’t have a lot of room on your margins so you’re making these margin assumptions and you’re presenting things to your investors, whether they’re angel investors or VCs or your own money, based on some assumptions that may not be correct so you need to make sure if you don’t have the expertise you bring the expertise in to help you clearly clearly recognize the strategy and the challenges that you’re going to have to overcome to make a comfortable product line and to launch that product line and you’re going to meet your expectations based on your financial models.
Otherwise, if you’re guessing at that or you’re trying to use intuition there, that’s one area where you can’t use intuition, you have to do the work, you have to budget for it, you have to spend the money and bring in people that know what they’re doing and proven people. Don’t bring in people just because they say, “I’m a reimbursement expert,” make sure you check with the clients they’ve worked with and make sure you understand that they know what they’re talking about because I think it’s one of the most important things you do when you bring a new product or a new technology in the market. Obviously you want to make sure it works because you’ve got to make sure you think it paid for it especially today.
Scott Nelson: Sure okay very good. I’d like to kind of head towards concluding our session here but when you look at your experience and the experiences in the medical device world you know moving up the ranks from a sales rep to a high level executive at a Fortune 500 company to starting being the CEO of a startup really from the ground forward as you mentioned with that spine company and then now what you’re doing at Chief Outsiders, are there a few things that stand out that you know now, that Marshall Perez knows now that you wish you did back when you started as a sales rep and you were kind of moving up the ranks?
Marshall Perez: I wish I would have read a paper from one of my partners it’s called ‘Data Matters’ and you know when you’re a sales rep you basically listen to the customer in front of you and that becomes your data source and you make decisions based on that. When you move up the ranks it can’t be one customer, it’s got to be a sampling of a lot of customers so you need to really understand the trends, you need to understand the long-term implications of your actions. When you sell today you’re worried about today’s commission check okay, and hitting your number this month. When you move up in the ranks you have to be worried about what your actions today are going to impact tomorrow.
You have to be careful on your pricing, you have to be careful on your regulatory strategy, you know, all the parts of the puzzle your manufacturing decisions, the decisions you make today will impact your success tomorrow so you need to always think about the future as you’re making today’s decisions and I think when you start out you really don’t always think that way. It’s a skill that comes with time as you move forward, “I want to make this decision but if I make this decision today, how is that going to impact my business in 2 years or 3 months or whatever.
Now sometimes you’re so excited about the decision because you can drive some volume into your business right now that you go ahead and make it and knowing that it’s going to come back and haunt you later on but you need to be aware of the ramification of the decisions you make today on the long-term success in your company.
Scott Nelson: Okay that’s great advice. I’m completely summarizing this up but basically taking a step back, looking at the big picture and try to stay cogniscent of what this may look like in the future and the actions you’re taking today and you know how they impact the future, is that safe to say?
Marshall Perez: Yeah you know, again the way you phrased the question was what have you learned along the way, what I learned that I need to be worried about as much today as I am concerned about what’s going to happen tomorrow if it’s going to be of help. You know if I’ve got 850 sales reps working for me I’m supporting 850 families so there’s a big responsibility… and plus all the internal employees, you’ve got 2000 employees that’s 2000 families you’re supporting. That’s a big responsibility on your shoulders so you want to make decisions that are going to keep all those people working and they’re going to keep the company healthy and moving as a company along and it can’t just be the decisions for today’s experience to make this month’s numbers, it’s got to take into account how you’re going to make next year’s numbers.
That sums up I think pretty much my feeling about that and quite often the CEOs that we work with they’re making decisions based on today’s needs and you have to go in and help them think about the future as well as today’s needs and that’s what we do to keep the status.
Scott Nelson: I mean we can almost do a separate interview on exact strategies that you use to take that CEO out of that mindset because in today’s world of monthly numbers and reporting quarterly to shareholders that has to be a decision, a conscious decision to kind of step out of that mindset but I don’t want to get into that, you’ve explained it enough how important that is to try to get out of that, that day to day week to week month to month mindset and look at the future.
Anyway for the audience that’s listening to this and they want to find more about what you do Marshall and Chief Outsiders where should we direct them? Where would you like them to go?
Marshall Perez: Well they can just go to our website, it’s www.chiefoutsiders.com All of my partners are in there, we have blogs posted, we have articles posted, we have YouTube testimonials from some of our customers. We don’t just work in healthcare, we work across all companies, all service companies, product companies, business to business, business to consumer. I just happen to be one of the guys in the company that handle the medical device side and the healthcare side. I do handle non-healthcare type of customers.
I think if you have the senior level marketing skills those transfer from industry to industry, the learning curve may be a little steeper but if you have the skillset you can work pretty much with any company and help them. If you go back to core principles and core competencies, on which you’re supposed to do when you do marketing and strategic planning. Everything starts off with a swat and an analysis so please visit our website. I’d love to talk to any of you that have any interest in learning more about what we do.
Scott Nelson: Cool and you do have, I remember looking at your website, you do have some sort of survey, right? A CEO survey that can be filled out?
Marshall Perez: Yeah you know part of (chuckles) we have a bunch of marketing people working for our company we’re all CMOs so we all have ideas, we’re all contributing ideas to how to build our business, [indiscernible 48:29] new business and we all realize that it’s really important that you have inbound or downstream marketing and one of the things we do is we provide information that will be helpful to CEOs. University of Texas and Chief Outsiders collaborated on a study of CEOs, what their major issues are, their concerns, what they’re thinking, what their challenges are and we actually put that on the website if anyone wants to download a copy of it or request a copy of it they just have to go to the website and register and we’ll easily send them a copy of it.
We won’t hassle them as a result. We’ll just send a little acknowledgement and Thank You email to them. It’s important, we provide a little extra service to our customers and we do that in the way of articles, all of us write articles, all of us write case studies, those are all posted on our website. One of the ones I’d urge people to read right now is something called ‘Data Matters’ because I think that 6 reasons why data matters, you’ve got to make decisions based on facts, intuition comes into play but you’ve got to gather the data to make sure you make the right decisions so that would be a good one for anyone that’s listening to go take a look at it.
Scott Nelson: Okay very good, for those of you who are listening, it’s chiefoutsiders.com and that’s where you can go to read that article about “Data Manners’ and to check out that CEO survey that Marshall mentions so chiefoutsiders just as it sounds, chiefoutsiders.com.
Let’s end it there, thanks a ton Marshall for coming on the program and teaching us something or two about your work as a Fractional CMO, what you’ve learned along the years we really appreciate it.
Marshall Perez: Thanks Scott it’s great to talk to you, take care man.
Scott Nelson: Alright thanks everyone for listening, take care.