I did a small study earlier this week to compare prices across six major US life science distributors (you can read about it here). Because of that, I had occasion to go through those companies’ websites and look for products. All of these companies are, by industry standards, fairly large companies, and all of them sell online. For some of them, online sales is a very significant portion of their revenues. I would bet that for most it’s their fastest growing sales channel. Yet most had glaring problems in their website. One had search results that blinded the user with bright yellow highlighted terms all over the page. Another had a high percentage of products that were not identified by their model number. Yet another had an annoyingly persistent “featured product” box that showed up front and center in the search results but never had anything in it. There was a search that seemingly only used “OR” logic for every word in the term – the more terms you added, the less relevant the results became.
These are glaring errors that hurt user experience, and they could be easily identified if these companies did user testing. This is an important point, as anything that takes away from the experience of using your website decreases your competitiveness by driving users away from your website (and likely to your competitors websites).
For those who may not be familiar with it, user testing involves someone who is within your target demographic and recording their interaction with their website. You usually give them a generic task to perform on your site and they speak their thoughts as they perform the task. The output comprises a series of screencasts with voice recordings which are then analyzed to find problems with the user experience or more generally find things that users like and don’t like (there are other techniques and tools that can enhance the output as well).
User testing is very common in many markets, but seems to be relatively uncommon in the life sciences. That may, in no small part, be due to the inherent difficulty in getting a group of scientists to sit down and do a user test, but we find that to be more of an excuse than a reason. User testing may simply not be in the culture of life science marketing, contrasted to it being fairly prevalent in B2C markets. Whatever the reason that it isn’t used, there is no good reason that it shouldn’t be used.
Anything that adversely affects user experience will have a negative impact on the purpose of the website – be it lead generation, sales, or simply progressing users through the purchasing funnel. User testing, especially in conjunction with website analytics, can be a powerful tool to improve user experience and the overall performance of your life science company’s website.
Amazon Supply has been making some waves in the laboratory products market since they got into what they refer to as “Lab & Scientific Products”. A lot of manufacturers have asked us what we think about their entry into the market and we have generally responded anecdotally that it’s most likely an extension of their current business model: Sell a huge variety of products, inexpensively, with easy ordering and fast shipping. The assumption is that Amazon, with all its efficiencies, would be able to offer lower prices than could its competitors. We said that enough that we started to wonder if it’s actually true.
To settle this once and for all, we did a little mini-study. We compared the stated online cost of 10 products sold by Amazon Supply vs. 5 of the major US distributors: Fisher, VWR, Daigger, Cole-Parmer and Thomas Scientific. We only considered products where the exact same product from the same brand was offered by Amazon Supply and at least four of the other companies. Included was plasticware (3 products), glassware (1 product) and equipment (6 products). Reagents were not included because Amazon Supply is weak in that area and carries mostly commoditized chemicals and buffers which are difficult to brand match across 6 companies. We admit, there is no good way of selecting products in a manner that is both random and practical, so we simply searched for popular items from common brands that we believed most large, general-purpose life science distributors would carry. It actually worked quite well.
A few notes before we get to the findings… The costs analyzed are the US costs. Prices in other countries will vary, and of course every country will have its own unique distributors. If you’re outside North America, you may very well only know 2 of the distributors we used as a comparison. We also tried to remove any influence caused by differences in pricing given to each distributor by specific manufacturers by having as little overlap in manufacturers as possible. In fact, the only manufacturer of more than one product used in our mini-study was Corning, who manufactures two of the products sampled.
We took all the prices for all 10 products, normalized the prices for each product, then took the average of the normalized prices for each distributor. This gave us one number – if our study is accurate (which it very well may not be since the sample size is quite small) this number will represent how much more or less expensive any given distributor is. A value of 1.050 would indicate the distributor is 5% more expensive than the average of these 6 distributors. Likewise, a value of 0.900 would indicate a distributor is 10% cheaper.
So, these are the averages of the normalized prices for our basket of 10 products:
- Amazon Supply: 0.896
- Fisher Scientific: 1.052
- VWR: 1.035
- Daigger: 1.077
- Cole-Parmer: 1.003
- Thomas Scientific: 0.950
Turns out that we very well may be correct – Amazon does seem to be competing on price. Their prices for these 10 products were, on average, over 10% lower than the average competitor. (For all you statistics nerds, the 2-tailed, 2-sample unequal variance t-test score on the difference in Amazon Supply’s prices was 0.033.) What was at least equally as interesting to us is that for every product – 10 out of 10 – Amazon Supply’s prices were lower than the average. In our sample population, the closest they got was a normalized price of 0.984 on an IKA orbital shaker. They also advertise free 2-day shipping on orders of $50 or more, which is just about everything, so taking that into consideration Amazon would be even more price competitive.
Something else that I found noteworthy was that there were only two companies that carried all 10 products (aside from Amazon Supply, which did by definition due to our study design) – VWR and Thomas Scientific. Fisher and Daigger each carried 9 of 10, Cole-Parmer carried 7 of 10. Again, this could very easily be an anomaly due to the limited sample size, and we didn’t bother to do any statistics, but I thought it was interesting nonetheless. If two makes a coincidence and three is a pattern, ten might even be called data, albeit not a whole lot of it.
We figured some people might be interested in the data, so we put it online here. It’s in excel format so you can play with it if you’d like. If you get motivated and add to it or do additional analysis, let us know! E-mail me at carlton.hoyt@[you know the rest].
Many of you reading this may be familiar with BioBM, but for those who are not: the best one or two phrase description of what we do would be “marketing for small life science tools companies“. That being the case, we run into a lot of problems that are more common to smaller companies or start ups. For example, one of the more common issues that we run into is an improper marketing focus. A product is developed, and the manufacturer rushes to pull the advertising trigger before sitting down and thinking about the message or the audience. They focus on the channel rather than content and on their product rather than the users. They confuse an advertising plan for a marketing strategy.
When a product launch is on the horizon, the first question that needs to be asked with regards to marketing is “How?” The answer cannot be some combination of in journal X, website Y, search engine Z, and by emailing a bunch of people who really don’t want you to email them. That’s not “how”, that’s “where”. More specifically, the question that needs to be asked is: “How will we be able to persuade scientists that our product provides a superior value than alternatives?” That is the most basic question that marketing needs to ask. From that perspective, the answer “by advertising in journal X” seems both insufficient and a bit silly.
An advertising plan is not a marketing strategy. Before any life science tools company thinks about channels, it needs to address that most fundamental marketing question and, with consideration of the product or service, its competition, the behavior of the target market, and many other factors, consider the messages and content that will need to be delivered. (Side note: the positioning should have been determined long before this point.) Only then can the company start to think about how their marketing content should me delivered and how to draw people to it.
Something that we do here at BioBM is help clients strategically outsource; to improve and expand their capabilities and / or to help reduce costs. We’re not politicians and outsourcing isn’t a dirty word here. Our clients, small life science tools companies, can’t be expected to have all the capabilities that they might need in-house. Outsourcing is a way to fill that need.
Low-cost outsourcing is an attractive prospect in many cases. You can often source a service for a small fraction of the cost to do it in-house or use a higher-cost, more reputable agency. However, in order for low-cost outsourcing to be successful, you need to have an understanding of what you’re outsourcing.
We sometimes have companies come to us after they have attempted to outsource a project or function to a low-cost provider. For the sake of illustrating the point, we’ll use one of the more common examples: website design and development. Companies looking to save a few thousand dollars often look to companies in low-income areas that offer to build websites for as little as a few hundred USD. While there are certainly times where such companies get lucky, often it ends up being a waste of time and money. Why is that?
Quite simply, these companies did not have a good enough understanding of web design and development to effectively outsource it to a low-cost provider. They may not understand the technical aspects of the projects, the nature of the work involved, or even how to properly define their needs and requirements. This leads to poor communication, poorly defined scopes, and ultimately a poor deliverable. If they had a better understanding of website design and development, they would be more able to effectively manage their contractor and would be unlikely to encounter such problems.
(Just for the record, we do not outsource web design / development. We do outsource some lower-level but time consuming tasks in order to keep down our own costs and therefore the costs to our clients. We can be successful in doing so we not only understand outsourcing, but have a keen understanding of the projects that we outsource.)
If you have a good understanding of the task that you need performed, you can probably make use of low-cost outsourcing. However, if the work contains a degree of ambiguity to you, it is probably best that you choose a reputable, well-established service provider who will work closely with you to fulfill your needs.
Companies resist change for many reasons: corporate culture, inter-departmental differences, vested interests, and many more. Yet one of the most common resistances to change, be it in marketing, product development, operations, or other areas, is one of the least justifiable: sunk costs. The reasoning that one’s company has already spent so many resources pursuing a particular endeavor is no more than an excuse with flawed reasoning and should be dismissed.
Ignoring sunk costs in decision making is a very broadly understood business principle however is often poorly implemented. This is often due to perception that changing direction would amount to the failure of the department, team or individual who is in charge of the current effort. Understandably, no one wants to be viewed as having failed.
So what can life science tools companies do to help ensure that we actually let sunk costs be bygones? First, we must ensure that all quantitative analyses used in decision making are unbiased and have ROI or other metrics calculated from the present day rather than any time in the past. In other words, we can only consider the costs and opportunities from the present day forward when we determine the opportunity costs of any particular option. That’s the simple part, however.
The more complicated part deals with defining failure. We also need to make clear how we define failure on any particular endeavor, as well as be cautious of how we disincentivize failure, to help ensure we create a culture that is appreciative of change rather than wary of it. An overly competitive corporate culture can contribute to such a resistance to change as well. All individuals and departments must work together to ensure that they progress effectively towards their common goals. This is admittedly a simplification, as such issues have been the focus of entire books, but it is still something that business leaders must be aware of.
When there is resistance to change within an organization, leaders need to determine the reason why such resistance exists in order to determine the validity of the resistance from a business standpoint.
Brian Millar of Sense Worldwide wrote an interesting article for Fast Company Design arguing that talking a lot about branding isn’t actually helping companies. It got a lot of criticism, so he then wrote a follow up. One of the key points was that brand value is imaginary – it’s only in the mind of the consumer, will be unique to every consumer, and will be based on a culmination of all of the actions of a company, so why try to manipulate it? Millar argues that we should not focus on branding and shouldn’t discuss our brands but rather take that effort and give it back to all the other efforts of the company.
In short, I disagree.
We discuss this topic on our Life Science Marketing LinkedIn group.
In our Marketing of Life Science Tools and Services group on LinkedIn, we recently discussed an article in the Harvard Business Review on “The End of Solution Sales.” While this is an excellent article and I suggest reading it, we’ll focus on one key finding: that “[…] customers completed, on average, nearly 60% of a typical purchasing decision â researching solutions, ranking options, setting requirements, benchmarking pricing, and so on â before even having a conversation with a supplier.” This is just the beginning, but it does highlight something of key importance for marketing that is not discussed in the article.
If 60% of the purchasing decision is concluded before interaction with sales, marketing needs take responsibility (and claim the opportunity) for satisfying customers’ self-driven quests for information.
As the default behavior of B2B consumers is changing to include more self-fulfilled quests for information, life science marketers must make the necessary information to drive their target audience’s purchasing decisions available. The ability to predict the information that will be necessary, as well as the downstream ability to shape content to the audience’s measured behavior, is of increasingly critical importance. Marketing campaigns need to be able to respond dynamically to collected data on prospect behavior if the appropriate content is to be delivered at the appropriate time. A content roadmap becomes an even more critical component of generating demand. These factors collectively drive the importance of performing market research / marketing research, developing a clear marketing strategy, and planning a content-driven campaign.
If B2B purchasing decisions are 60% made by the time a conversation w/ supplier occurs, this places more of a responsibility on life science marketers to shape opinion before that first conversation. More planning is required, however such planning will have an increasingly positive effect on marketing ROI. Furthermore, we can conclude that marketing campaigns driven primarily by awareness-generation efforts will continue to decrease in effectiveness.
Efficient life science sales operations require that opportunities are handed from marketing to sales at the correct point in the buying cycle. When there is a lack of proper marketing support, leads often get handed over to sales too early, creating situations where sales effort is wasted, leading to operational inefficiencies in sales. The symptoms caused by underdeveloped leads are usually three-fold:
- Sales conversion is low because of poor lead quality which is ultimately due to underdeveloped leads. This situation often leads to sales and marketing pointing fingers at each other.
- The sales cycle is prolonged, requiring more overall effort from sales and, therefore, increased costs
- Leads will go cold at a high rate
The opposite effect, where sales effort is insufficient or too much is left to marketing, is also possible. Recent research suggests that it may actually be common and also cause decreased conversion and wasted sales effort. Regardless, the method for diagnosis is similar.
If you are creating a lot of leads but not closing a lot of opportunities then you may be under-nurturing (or over-nurturing) your leads. Compare your marketing contact points to your content roadmap (you may need to design a content roadmap if you do not already have one). A content roadmap based on strategy and market research should provide a complete picture of the information requirements of your target audience. Like a blueprint for a house, the content roadmap will provide a framework for creating leads and, subsequently, nurturing your leads into qualified opportunities. Overlay that framework onto your current marketing campaign and ask: Are you delivering all of the necessary content? Is sales delivering content that marketing should deliver (or vice versa)? At this stage, the difference between what you are doing and what you should be doing should be clear.