Differentiate Your Marketing
Carlton Hoyt
Your marketing message is what communicates the benefits of your products and services. It is the tool that life science companies must use to convey value. Just like you must differentiate your products and services to create potential value, you must also differentiate your marketing message in order to communicate and thereby realize that value.
Think about some common claims that are made by life science companies. I’m sure we’re all heard companies claim that their product or service is one or more of the following:
- faster
- better
- an “industry standard”
- high quality
- reliable
- high-value
- more consistent
- “the best _____ available”
You know what all of those claims say? Almost nothing. Those claims are virtually worthless because they’re not differentiated. Are your competitors not going to claim that they’re fast, or high quality, or reliable? In rare situations, maybe not, but otherwise you’re both saying the same thing and you’re gaining no advantage from making similar claims.
So what must you do to differentiate your message? Obviously any life science company has to make claims and convey benefits. What can you say? Well, you can say all of the above things – you just can’t say them in that way.
Let’s take the the first and perhaps the most simple example on that list – “faster”. “Product X is faster” in and of itself means nothing. It gives no indication as to how fast something is. To use it effectively, we need to at least put it into perspective. “X is faster than Y”. Getting better, but we still don’t know how much faster. “X is 50% faster than Y”. 50%? That’s far more impressive. Why didn’t we say that the first time? Let’s keep going… We’ve put things in perspective but I still don’t know how fast X is, at least not in absolute terms. “Product X performs this function in just 1 hour, half the time that it takes using product Y”. Now we’re starting to get fairly compelling. The prospective customer would have a good grasp on how fast the product is and knows how much it outperforms the competition in that regard. Because of this, assuming speed is in fact important to the target market, they’ll be much more likely to take action than if you simply said “Product X is faster”.
Through differentiation of your marketing message, you’ll be able to more clearly and effectively convey the value your products have to offer. The end result will be more leads and more sales.
Trust and Risk
Carlton Hoyt
Trust is extremely important in life science business relationships (and business relationships in general). I don’t have to ask you to take my word for it, though. According to the sentiment of more than 80 life science manufacturers and distributors who took our 2011 life science distribution survey, trust is the most important factor in distribution relationships according to distributors, and the second most important factor according to manufacturers. It’s not difficult to imagine that trust would be attributed similar importance in other types of business partnerships as well. Despite this, so many companies and individuals approach business relationships with distrust.
Companies often lack an appreciation for the fact that in order to build trust you need to give trust, and giving trust involves assuming some business risk. Even some that understand this still approach partnerships with minimization of risk given top priority. Maintaining the example of distribution relationships, many manufacturers will insist that they get paid up-front for the first few orders. Likewise, many distributors worry that the manufacturers are going to take their money and run.
All of this over-sensitivity to risk needs be put aside in order for trust to be built. Companies need to understand that there are unknowns in dealing with companies that they have not dealt with before, and either take steps to mitigate the risk that do not destroy trust (for example, using neutral third parties as references) or at minimum be willing to share the risk and come to reasonable compromises in the interest of developing what are at the time very young business relationships.
Much of the lasting attitude that will permeate the relationship is built in the early formative period when the relationship is still being defined. This attitude can have a definite effect on the success of the relationship, even in the long-term. You don’t want to start in a position of negativity and then have to put in extra effort to establish a good relationship with your business partner (if a company’s culture allows for such distrust initially, they will likely not take the later actions necessary to mend the relationship anyway). Any given person is far more likely to help a friend than an acquaintance. If you start on good terms you can get an early emotional “in” and you’ll already be one step ahead in building a successful business relationship.
One last piece of advice – don’t let your lawyers get in the way.
Your Slogan May Backfire
Carlton Hoyt
An article in the Journal of Consumer Research, recently discussed in the Harvard Business Review, found that while brands have priming effects slogans often have reverse priming effects. In other words, brands often influence consumers as intended but slogans often cause the opposite effect.
Quoting the HBR article…
[pullquote_left]After participants were exposed to brands associated with luxury (such as Tiffany and Neiman Marcus), they decided to spend 26% more, on average, than after they were exposed to neutral brands (such as Publix and Dillardâs). After they were exposed to brands associated with saving money (such as Dollar Store and Kmart), they decided to spend 37% less than after they were exposed to neutral brands. The brands had the intended âprimingâ effect.[/pullquote_left]
[pullquote_right]But when it came to slogans, the same participants exhibited the opposite of the desired behavior. After reading a slogan meant to incite spending (âLuxury, you deserve itâ), they decided to spend 26% less than after reading a neutral slogan (âTime is what you make of itâ). When a slogan invited them to save (âDress for lessâ), they decided to spendâan additional 29%, on average. The slogans had a âreverse primingâ effect.[/pullquote_right]
The research suggests that this is a result of behavioral resistance to perceived attempts at persuasion. While consumers do not view brands as an attempt to persuade, slogans are viewed as an attempt to persuade and therefore exert the opposite effect. This effect, which was measured in general consumers, is most likely heightened amongst a highly rational and critical scientific audience.
Quick note to our readers: do NOT take this result as an indication that you should use reverse psychology in your slogan. Simply be careful in selecting what your slogan will be and don’t be afraid to get creative.
The Sequester & The Life Sciences
Carlton Hoyt
It’s no longer big news – the U.S. congressional “supercommittee” tasked with finding $1.2 trillion in federal spending cuts in the next 10 years has failed. On November 21st, the committee conceded failure and, barring the miraculous passage of any budget legislation over the next year which would meet those deficit objectives, the sequestration plan goes into effect starting Jan 2, 2013, cutting $1.2 trillion across-the-board. As a life science tools company that sells products in the United States, especially if you make a substantial fair amount of your money in the US and have exposure to academic research institutions, this should rightly scare you.
The sequester would cut 7.8% from the National Institutes of Health, the National Science Foundation, and the Centers for Disease Control. That’s a huge cut that equates to over 2,500 less NIH grants and 1,500 less NSF grants in 2013 compared to 2011. While the sequester isn’t a certainty at this point – details could still be revised and a budget agreement could still be reached – President Obama has stated that he would veto any plan that doesn’t meet the deficit reduction goals, making a deal unlikely.
Consider this – the NIH spends over $31.2 billion on life science and medical research annually. To give this some perspective, PhRMA estimates that in 2009 the ENTIRE PHARMACEUTICAL INDUSTRY spent $65.3 billion on R&D (although reported data from CapIQ would suggest that number is at least 50% higher). As one can surmise from these numbers, the pharmaceutical and biotech industries are highly unlikely to make up for the loss of R&D spending. If the sequester goes through as currently planned, my estimate would be that life science tools companies can expect a 3% to 4% decrease in their US sales, presuming that their current market shares between industry, academia, etc. are proportional to the respective current R&D spending. Obviously companies that sell a disproportionately large amount to academia and other organizations highly dependent on NIH funding will see a greater decrease in sales. Likewise, companies that sell products which make work in the lab more convenient will likely feel the pain somewhat more than essentials.
With governments across the globe having major budget problems, leaner times for life science funding are extremely likely to become a reality. The companies that will be able to succeed in spite of it will be those that understand their exposure to potential reductions in funding and plan accordingly.
What Should We Call Ourselves?
Carlton Hoyt
I’ve heard our “sub-industry” called many things. So many, in fact, that it seems quite obvious that there isn’t a consensus. I think it’s time to end all that.
What should the industry that manufactures and sells products for use in life science research be called?
Take the poll on LinkedIn!
Contact Forms Affect Leads
Carlton Hoyt
Contact forms are increasingly being used by life science companies (and web development companies) as a lead collection tool, but despite this very important function companies often don’t think through the design of contact forms well. For example, I was looking at a life science service company’s website today, and they had an extremely long contact form. There were about 12 fields for contact information – all required. While this is an extreme example, it does highlight the point very well. Contact forms are being misused by life science companies.
You may be thinking “Isn’t this focusing on minutiae? Contact forms aren’t that important.” If so, most people think like you. When designing a contact form they ask what information they would like to collect and that’s about it. That thinking, however, is completely backwards. Why? Contact form submissions, which essentially equate to leads, decrease dramatically the more fields you have. Evidence in a minute.
I’ve heard anecdotally that form submissions decrease between 20% and 50% for each field. That seems a bit exaggerated to me (anecdotes often are), so I looked into it. Thankfully, with creative Googling you can find a study on just about anything. A Chicago-based web dev outfit called Imaginary Landscape did our homework for us. They ran a pilot contact form on their website with 11 fields, then the next month decreased it to 4 fields. The results? They saw a 120% increase in their form submission rate. Conversely, this would mean a 62% decrease in submission rate when increasing from 4 fields to 11, or roughly a 12.5% decrease in submissions per additional field if we actually can apply an exponential mathematical model as the anecdotes would tell us we can.
It stands to reason, however, that as we make it easier to fill out the contact form, that we will lower the quality of the leads. There is almost always a trade-off between lead quality and lead quantity in any given situation in which leads are collected. However, scientists aren’t going to fill out a form and give out their contact info for no reason. We’ll simply get more people contacting us who are “on the fence” – and those are exactly the people that you want your salespeople to get in touch with so that they can sell them on your life science products and / or services.
Because of all these factors, life science companies and life science web designers must be minimalistic in their implementation of contact forms. Do not ask yourself what information you want from your customers, but rather what is the minimum amount of information you need to collect. Let your sales staff get on the phone and collect the rest after you have the lead in hand.
What sells lab products?
Carlton Hoyt
Why do scientists buy any given laboratory products? How do they make their purchasing decisions? That’s the magic question that all of us seek to answer. While there is no one answer, and what answers we can attribute are dynamic, there is something that holds true. To sell life science tools and other lab products, there needs to be value, and this value can come from many places, such as:
- Quality – value that comes from the product itself. The product may be more reliable, easier to use, technically superior to other products, etc. Scientists almost always desire reliable products that work on the first try and product consistent results. Building a great product is a big piece of the value equation.
- Service & Support – value that comes from your company. This is an ongoing effort to make sure your customers have everything they need to successfully use your product. For best results, your support to the customer should not only be reactive, but should include proactive support as well, especially to customers who are using a particular product or product line for the first time. While perhaps not as important as the quality of the product itself, this is another highly important piece of the value equation for laboratory tools. In a study performed by BioBM, over 60% of scientists reported having refused to order a laboratory product because of a previous experience with the manufacturer or distributor selling it.
- Marketing – perceived value created in the minds of scientists. The thing about value is that it either has to be experienced or communicated in order to be effective. Marketing is the communicator of that value, and how well you communicate that value will directly effect the perceived value of your products, especially for customers that have never used your products or dealt with your company before. If you haven’t communicated your product’s value, or if someone else hasn’t communicated it for you, scientists won’t recognize the value and therefore won’t buy your product.
If you fall short in one area of value creation, you can sometimes make up for it in another. For example, an imperfect product may be perfectly acceptable to a scientist so long as it is well-supported. Even if your product and support aren’t top-notch, but you make a compelling value proposition in your marketing and communicate it to a wide audience, your value will be understood and you’ll still get sales. (Note that the previous statements referring to lower value products be interpreted as lower value relative to similar products and not in absolute terms. Truly negative impressions of quality or support are difficult to overcome and you cannot be successful long-term if a high percentage of your customers are not satisfied.) The total perceived value is then weighed against the price and the customer’s price sensitivity when making the final purchasing decision.
Value comes from many places, and overall value is ultimately the driver of purchasing decisions made by life scientists. Understanding how to create and communicate value will make your laboratory research products, and your company, more successful.
Search for Distributors
Carlton Hoyt
I was having a conversation about web design and search engine optimization with a life science tools distributor recently, and he asked me how to target a website to a particular region? This got me thinking about search engine optimization (SEO) and search engine marketing (SEM) for distributors.
One of the limitations of search is that it is difficult to organically target a website to a region, at least in the life sciences. Search engines recognize some searches as inherently local. Search for “pizza” in Google for example and it will read your IP to determine your location and return local results. Search for electrophoresis gel boxes or Ras1 antibodies, however, and that location-specific context isn’t there. Therefore the simple answer to his question: “How do you target a website for a particular region [using SEO]?” – is that you don’t.
The next logical question: is SEO important to distributors? Often, but not always. If you can do a better job of optimizing for relevant terms than your life science supplier(s), then yes, you should optimize for those terms. It would be far better for a potential customer to find you than find a competing manufacturer or distributor. Likewise, if your country or region’s language(s) are different the language that your suppliers’ websites are written in, then SEO may be important as well since your customers may search in your local language (although newer technical and scientific terms are often the same across languages). If you do not have exclusive distribution rights and are effectively competing with other distributors in overlapping regions, then SEO may be very important. However, if your suppliers are well SEO-optimized, if you have exclusive distribution rights, and if your region speaks the same language as your suppliers’ websites are written in, then SEO is not of particularly great importance. In this scenario, which is actually quite common, you should be able to rely on your suppliers to pass along leads to you and in most situations they should have a listing of distributors directly on their website.
Unlike search engine optimization, search engine marketing can very easily be targeted to a particular region. SEM also allows companies to buy a top spot in the search results even if they are not doing so organically. Distributors often ignore SEM, leaving it to their suppliers, but there is no practical reason to do so. Even if you and your supplier are effectively advertising for the same product, having two listings in the paid advertisements only increases the odds that a searching scientist will click on one of them. If your suppliers are not performing SEM, and especially if their search engine rankings are not very high, you should be using SEM to target scientists in your region and get a placement near the top of the search results. So long as SEM campaigns are well-managed, they should be creating a good ROI and be well worth it for distributors.
With about half of life scientists stating that they look for product information on Google before anything else, a strong search presence is not only important to the sales of any life science tools company, but can deliver a great ROI. When deciding on how much resources to devote to search, distributors have different factors to consider than do suppliers. A strong SEO / SEM presence by suppliers can reduce the importance of SEO / SEM for distributors when compared to other marketing channels, but too many scientists use search to find products for it not to be at least a strong consideration in any distributor’s marketing strategy.
Serving the Underserved
Carlton Hoyt
As in most markets, players in the life science tools industry are always looking to get a squeeze a little more revenue out of their product lines. While price increases may erode demand and ultimately prove ineffective in helping the company’s bottom line, there are markets that are often under-served or overlooked by small life science companies. Efforts to expand into these markets often allow opportunities to grow revenues without much additional effort, and so long as your products would be a fit for the needs of the markets it could prove quite lucrative.
Small life science research tools companies often focus on their largest potential markets: pharma / biotech and academia. This focused approach leaves out a large swathe of potential customers as there are many other ancillary markets for life science tools. Forensic labs, food testing labs, environmental labs, and medical labs (at least for unregulated products / procedures) are all markets that may require little effort to expand into and are effectively less crowded due to many companies overlooking them.
Taking advantage of these often under-served markets may be as simple as creating new marketing communications directed at these markets and advertising through avenues that are higher-visibility within those markets. Product positioning can also be a major help. For example, developing protocols that are specific to the needs of those markets may differentiate your product from others who focus on more “mainstream” life science applications. You may be able to find distributors who specialize in certain markets and leverage their unique reach. Any of these things can be relatively low-cost, low-effort ways to expand your potential market size, and there are certainly other efficient ways to do so as well.
Chances are, there may be potential markets for your life science products that your company is not currently exploiting. Through marketing, distribution, and other means, you can take advantage of under-served markets and get more revenues out of your product lines.
Attorneys vs. Business
Carlton Hoyt
Last week my father, who is a real estate broker and an attorney, was telling me about a real estate deal that he was working on. The buyer and seller had initially been in relatively good agreement but the seller’s attorney continuously advised his client to take an increasingly risk-averse position, thereby making the deal more one-sided and threatening it entirely. This reminded me of another conversation that some of us on the Life Science Distributors group on LinkedIn were discussing: how many large manufacturers (and this applies to large distributors as well) often have heavily one-sided distribution agreements that minimize their risk but fail to consider their partners. It was mentioned that such agreements are often drafted by attorneys.
My father made a very astute statement: “Attorneys seem to have forgotten the realities of business in favor of minimizing risk for their clients”. While there are exceptions, and there are also certain situations in which extreme caution may be justified, the idea of the statement is too-often true. When attorneys get involved they often do not have a complete understanding of the business environment and / or the situation relevant to a particular business deal. This applies across almost all industries and markets, and life science research tools are no exception.
Whether the issue at hand is distribution agreements, licencing deals, partnerships, service agreements, or just about any other contractual and / or negotiated agreement, remember to take your lawyers advice seriously, but don’t let them overrule the basic rules of business. Almost any deal requires a little bit of give and take, and focusing too strictly on risk reduction can ultimately scuttle what would otherwise be a highly lucrative deal. When your life science company deals with its attorneys, value their advice, but don’t forget the rules of business in doing so.