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Relating to Medtech Customers

Medtech firms are reexamining the benefits of customer relationship management systems and finding implementation easier this time around.

Debra Kurtz

Customer relationship management (CRM) was the much-heralded topic of the last decade, especially for companies seeking greater customer focus in their organizations. Yet now, amid reports that the postimplementation scorecard for CRM is, at best, mixed, many medical technology executives are left wondering what to expect from CRM and whether such initiatives can truly benefit their organizations.

This article explores why organizations pursue CRM initiatives and what can be expected from these efforts. Various technology approaches and software options are reviewed, and tips are provided from medtech executives who have implemented CRM initiatives.

What Is CRM?

Customer relationship management is a disciplined business strategy to create and sustain long-term, profitable customer relationships. Many companies pursue CRM in order to streamline or automate customer-facing business processes. It's about being quicker, better, and more responsive to their customers' needs. In short, most companies pursue CRM to elevate their positions in the marketplace by better serving customers, lowering their transaction costs, or both.

CRM usually involves application software that is used by employees in customer-facing functions, such as sales, service, and marketing. "CRM helps to generate leads, turn prospects into customers, and track the ongoing relationships as customers become repeat customers," says John Borden, CEO of Lightyear Direct (Roswell, GA), a company that makes digital imaging equipment and software for the dental industry.

Technology enables the CRM process, but successful companies are quick to point out that the technology itself is simply a means to an end. "CRM is the tool that helps you track customer relationships," says Sandy Schneider, marketing manager at Lake Region Manufacturing Inc. (Chaska, MN), a contract manufacturer of minimally invasive medical devices. "When it comes to building relationships, it's still a personal interface. CRM makes you more efficient and helps the communication process."

History of CRM

During the 1980s and 1990s, much of the automation effort in companies focused on manufacturing and financial processes. During that time, many companies became more interested in tracking customer transactions and automating sales and service costs. Some of the early CRM efforts were pursued by companies that offered financial software packages or customer contact software.

In the 1990s, CRM was largely known as sales force automation (SFA), as most efforts focused on keeping track of customers and sales efforts. By the mid-1990s, however, marketing efforts, e-commerce, and Internet self-service became hot topics. The need to automate these processes effectively broadened SFA into today's umbrella of customer relationship management.

CRM is big business. AMR Research (Boston) estimates that total market revenues for CRM reached $10.9 billion in 2004, up 10% over 2003.1 Today there are hundreds of vendors providing CRM software solutions, as well as CRM consultants who help companies choose and implement those software packages. There's a monthly publication called Customer Relationship Management devoted entirely to this arena, and some of the biggest enterprise resource planning (ERP) companies, such as Oracle Corp. (Redwood Shores, CA) and SAP (Walldorf, Germany), are now integrating CRM offerings into their software.

So if CRM is such big business, why aren't more medtech firms pursuing these programs? Dale Hagemeyer, research director for the manufacturing sector of industry advisory services at research and advisory firm Gartner Inc. (Stamford, CT), says the medtech market's fragmentation, characterized by many small, fast-growing companies, has a lot to do with the industry's overall absence from the CRM bandwagon. "The companies grow at an incredible clip and don't have time to stop and standardize procedures in order to automate them," he says. "CRM is inherently better suited for more-mature industries that have time to stop and look at themselves."

Another reason, according to Hagemeyer, is the lack of CRM packages focused on the medtech industry. "The trusted ERP packages for medical devices don't have a specific CRM footprint," he says. He adds that larger CRM companies don't chase the medtech market because there are greater concentrations of customers in other industries, such as the pharmaceutical and financial services industries. With the exception of the vertical CRM applications for the medical devices industry released by Pivotal (Vancouver), Syspro (Costa Mesa, CA), and Siebel Systems (San Mateo, CA), CRM vendors don't seem particularly interested in courting medical technology companies.

Another reason for slow CRM adoption by medtech companies is the industry's checkered past with implementing the programs. Gartner estimates that as recently as several years ago, more than 50% of CRM projects were viewed as failures.

But times are changing. Gartner's research indicates that companies today are learning from their past experiences. They are identifying why CRM projects sometimes fail and avoiding such pitfalls. As a result, failure rates are declining.2 Gartner's Hagemeyer estimates that medtech CRM success rates now exceed 80%. One factor driving this increased success could be medtech companies' initial reluctance to embrace CRM. Now when they implement programs, they do so with the knowledge gained from early adopters.

Hagemeyer says that the risk of failure declines every year as CRM software improves and companies become more savvy in its implementation. Gartner reports that enterprises are achieving real economic benefits from CRM. "Payback periods of less than a year are not unusual, and, in many cases, returns on investment (ROIs) are higher than any other IT-based initiatives that enterprises are pursuing," the company reports. "Several enterprises have indicated that if they had known about the benefits, they would have started CRM even sooner."1

Contact Management

Urology endoscopy equipment manufacturer American Cystoscope Makers Inc. (ACMI; Southborough, MA) implemented Salesforce.com CRM software as a way to gain a centralized view of customers and customer data. According to Brian Freeland, director of finance for sales and marketing, the company's back-office computer systems previously couldn't handle customer data. "We couldn't develop a Christmas card list for our top customers because the computer would generate a list of receiving docks and not our actual customer contacts."

Freeland says another significant problem with the company's old system was that data for ACMI's customers resided in the hands of the company's sales team, and turnover in sales representatives meant ACMI couldn't accurately track customer data. "If a rep would leave, all the quotes, pricing, and contracts were gone with the rep," says Freeland. "The new reps would have to knock on doors to figure out what's going on with the customers." Freeland estimates that, prior to adopting its CRM program, it would take 18 months for the company to get a new sales representative up to speed. With its CRM program, which stores all customer information in a central database, Freeland estimates that the ramp-up time for a new sales representative has been shortened by several months. Not only can the sales representatives see customer data, but everyone at ACMI, including the customer service, accounting, and marketing departments, can also tap into a single view of each customer.

Conceptus Inc. (San Carlos, CA), which develops and markets non-incisional products as an alternative for tubal ligation, implemented Microsoft's CRM package. According to Jeff Letasse, the company's senior director of information technologies (IT), Conceptus' CRM system allows anyone at the company to know who last touched a customer and what campaigns or telephone calls the customer has received. Because the Microsoft CRM system is based on the familiar Microsoft Outlook e-mail/calendar program, training and user adoption is relatively simple. "The CRM system enables the sales reps to do call planning without needing anything other than the CRM system," Letasse says. Although Conceptus has a complicated sales compensation process, the CRM system can support this process by tracking sales information and compiling reports.

Automating Sales Processes

With their roots in sales-function automation, most CRM packages have strong functionality in tracking leads; tracking each rep's sales pipeline; outlining sales calls; facilitating sales forecasts; and even supporting standardized selling methodologies, such as SPIN Selling and Miller Heiman's Strategic Selling.

Lake Region Manufacturing uses Pivotal CRM software to automate its quote-to-contract process. The process used to take one day; now it takes five minutes.

Dental digital x-ray company Lightyear Direct needed a CRM solution that could handle its metric-oriented sales process. At any given time, Lightyear's NetSuite CRM system provides a management dashboard report that tracks leads, prospects, customer orders, and customer training status. CEO Borden and his management team use these metrics to manage the business.

Forecasting, a cumbersome process for most medtech organizations, can be made easier with a CRM system, which can automate the process of rolling up data. Endoscopy manufacturer ACMI has 85 sales reps. "Rolling up the forecast used to take forever," says ACMI's Freeland. "No reps prepared their spreadsheets alike, and the sales management team had to compile 85 different versions. With Salesforce.com, it's just a push of a button."

Managing serialized capital equipment is common for medtech manufacturers, and many CRM packages track serialized equipment within the manufacturer's facility and after it leaves the building. ACMI uses its CRM system to track serial equipment at customer sites. According to Freeland, the company has also added a tab within its system that helps the reps track the location of demonstration equipment. Such tracking has greatly reduced lost equipment, he says.

Marketing Process Automation

Many medtech firms launch their CRM initiatives in the sales and service functions and later deploy CRM capabilities to their marketing processes. Diagnostic Ultrasound (Bothell, WA) implemented Onyx CRM software in 1999, and enhanced the marketing functionality of the CRM system in a later release. The Onyx system serves as a repository for company information and competitive intelligence maintained on a regular basis by the marketing team.

ACMI takes its competitive intelligence a step further and uses its CRM system to track market share for the company on the whole, as well as within each sales territory. According to ACMI's Freeland, a table that lists hospital accounts in a given territory is built for each sales rep. The reps then identify which brands of endoscopes are used at each location. The result is a competitive target list for each rep. When rolled together, the tables provide an instant market-share calculation for the company.

CRM applications within the marketing arena include many other functions as well. For example, Karyn Mullins, vice president of marketing at Lightyear Direct, uses her company's CRM package to automate campaigns, track leads, and calculate ROI for marketing programs.

Improving Customer Service

CRM systems typically allow companies to view complete histories of their customers. At any given time, a company should be able to view a snapshot of a customer's past product purchases, configurations, and service level agreements, as well as to schedule service for clients and track customer complaints.

Crutch manufacturer Calley & Currier (Bristol, NH) uses NetSuite CRM to enhance its customer service. NetSuite maintains the company's customer data and also functions as its financial and manufacturing systems by integrating sales reports, product cost reports, and financial reports. After installing NetSuite, Kate Williams, vice president of sales and marketing for Calley & Currier, launched new customer service initiatives, including e-mail confirmation of orders and outbound customer telephone calling. Inbound callers likewise began receiving enhanced service because the representatives fielding their calls could see their purchase histories. Williams estimates that the company's customer service has improved tenfold since launching the CRM system.

Tubal ligation manufacturer Conceptus also found that customers received faster service after the launch of its CRM system. Conceptus' Letasse attributes the quicker processing to elimination of redundant data entry among the customer service, accounting, and shipping departments. Work that used to take days now takes hours at Conceptus, plus Letasse points out that order errors have decreased due to less keying of data.

Reimbursement, a unique re-quirement of medtech companies, is also supported by CRM systems. Cyberonics Inc. (Houston), a maker of implantable devices for controlling epileptic seizures and depression, uses its Sage SalesLogix CRM package to track the entire reimbursement process, from working with doctors and their patients all the way to getting reimbursement approval from insurance companies.

Supporting Corrective and Preventive Actions

The regulatory environment for medtech companies heightens the importance of appropriate corrective and preventive actions. Many companies use their CRM systems in the call center to handle the complaint tracking process to ensure compliance with the requirements of FDA's quality system regulation. Arlen Duncan, global director of IT for Diagnostic Ultrasound, says the company's CRM system plays an integral role in tracking customer complaints and providing data to the company's quality system. "The users flag items for review by the quality assurance department as part of the company's root cause analysis," he says.

According to Gartner's Hagemeyer, most CRM packages are capable of handling complaints. The points of differentiation are the visibility of complaints throughout the enterprise and the ability to report directly to regulatory agencies, support multiple points of entry into the complaints system, and assess risk.

Advice from the Experts

Implementing a CRM system can be a daunting task for a company that is just getting started. Heeding the advice of individuals with expertise in CRM systems can help medtech manufacturers make informed decisions and avoid potential snags.

Adopt Best Practices in Business Processes. Some organizations embark upon CRM with the expectation that it will remove all the pain from servicing their customers. Experts agree that CRM won't fix business processes. "If you start with broken processes, after CRM you will have automated broken processes," says Patricia Callahan, president of consulting firm Business Technology Partners (Chicago). Gartner's Hagemeyer says companies should truly understand their work flow before embarking on CRM. "It's worth $20,000$30,000 to have an expert come in, evaluate your processes, adopt best practices wherever possible, choose the CRM vendor that best meets the work flow needs, and pilot the solution before rolling out," he says.

But the complexities of the medical technology industry don't guarantee that every company can have simple processes or that the CRM vendors will be able to support each company's work flow. "It's not reasonable to expect the CRM industry to support 17,000 different work flows for 17,000 medtech companies across the globe," Hagemeyer says. Companies with unusual work flows or complex processes might not be able to find an exact match in CRM vendor capabilities. For this reason, CRM seems inherently better suited to the needs of the pharmaceutical, automotive, and financial service industries, in which a few companies comprise the majority of the industry revenue.

Medtech executives should not assume that a CRM vendor's pharmaceutical vertical package might fit the medtech business any better than a general package. "Medtech work flow is different from that in pharma," Hagemeyer says. "It is different from just detailing a physician and dropping off samples. Medtech requires an integrated solution to handle the sales process and all the service and support that goes on after the product reaches the customer."

Involve Stakeholders. A common reason CRM implementations fail is the lack of user involvement. "Often the CRM project is driven by management or by the IT department, so it's not about the business processes or sales or customer needs," says Callahan. Getting feedback from the users up front can help ensure they'll use the system after it's installed.

Ensure User Compliance. Not all employees embrace CRM systems, especially if they perceive the new system will add to their work load. This tends to be especially true for field sales divisions, as sales reps have reputations for disliking procedures, computers, and data entry. Salesforce.com vice president Dan Del Degan jokes that "the term SFA doesn't really stand for 'sales force automation' but 'sales forced automation.'"

Many sales reps have their own way of doing things, which ranges from keeping notes on paper to using their own handheld organizers or low-end CRM/contact management packages commonly available at office supply stores. They often resist changing their work habits when that change involves lugging a laptop everywhere. Some reps report that CRM adds another one to two hours to their working day because they have to enter call notes into their laptops at the hotel when they would rather be unwinding at the end of the day.

CRM vendors have responded to this valid complaint by making their software compatible with wireless personal digital assistants (PDAs), such as Blackberries or other pocket personal computers (PCs). As a result of this enhanced compatibility, most medtech companies interviewed for this article have plans to integrate CRM to their reps' handheld devices. According to Callahan, "PDAs make CRM easier for field sales. They can do online ordering for their clients. They can enter call notes and check e-mails between sales calls. They can get alerts when there's a problem or an at-risk client or an out-of-stock situation."

Conceptus currently uses mobile Microsoft CRM for its field sales organization, and the company's Letasse notes that there are still some kinks in wireless CRM, particularly in the process called synchronization, which includes the exchange of information between the handheld PDA and the client server. "The current PDA synchronization is lengthy and cumbersome," says Letasse. He adds that rep compliance with CRM will increase as the synchronization process becomes quicker and more like the e-mail synchronization that Microsoft currently provides with its Pocket PC 2003 software.

Most experts agree that the best way to get employees to use CRM is to ensure that CRM benefits the employees by making their jobs easier or, in the case of sales reps, earning them more money. This is easier said than done, but companies can increase their chances of success by involving end-users in the system design, ensuring acceptance each step along the way, simplifying and standardizing processes, and focusing on training.

Phase the Implementation. Many companies that have walked down the path of CRM emphasize the importance of phasing the system's implementation instead of launching with a big bang. For example, many companies pilot the system with a small group and then launch with just the sales and service functions. Other functions often are added later. "Do CRM in bite sizes," Callahan says. "Schedule a release that creates a win for the employees every three months." Enhancements and additional functionality, such as wireless PDAs, are also often added later.

Train Continually. Continual training is a vital component for successful CRM management. The U.S. subsidiary of Switzerland-based hearing aid manufacturer Phonak International, Phonak Hearing Systems (Warrenville, IL) installed SalesLogix CRM and piloted the system with a small group. As a result of the pilot test, the company concluded that it needed to simplify the system's functionality in order to train a larger group. According to Jim Sherry, Phonak's IT manager, the pilot group's users were wearing deer-in-the-headlight expressions by the time they were finished learning six different ways to add a contact to the system. "We learned from the pilot that we needed to simplify the system and choose the best way," Sherry says. During the CRM system rollout, Phonak focused its training efforts on best practices to keep the system simple and usable.

Configure, Don't Customize. Most IT experts prefer configuring rather than customizing software. Configurations provide greater ease in upgrading to future software releases. Under a customization, every time the organization installs a software upgrade, the customization must be readdressed. Many software companies release upgraded versions on an annual basis, and oftentimes cease supporting older versions of their software.

Consider Integration. Getting a CRM package to communicate correctly with the back-office computer system is often challenging. Many companies enlist consultants to help them determine whether to integrate their packages together or exchange certain data between systems. Diagnostic Ultrasound originally integrated its Onyx CRM package into its ERP system, but Duncan, the company's global director of IT, says the company's management "found the tight integration created brittleness, making it extremely difficult to upgrade either the financial system or the Onyx system." As a result, Duncan created a portal where key information can reside, and be updated and accessed by either the back-office or the CRM system.

With the high cost and pain of integration, some companies decide not to pass data back and forth between their CRM and ERP systems. Phonak Hearing Systems decided not to provide two-way integration for its CRM system with its back-office system. IT manager Sherry says Phonak does a one-way synchronization in which changes are pushed from the back-office ERP system to the CRM system.

Many medtech companies enter orders through their ERP systems, bypassing the CRM system. In order for the sales department to view customers' order histories, the information must then be pulled from the mainframe. Kim Mumby, senior director of IT at Cyberonics, gathers and loads sales information through the company's CRM system to provide the sales reps with a one-stop shop for planning calls. Other companies have not found this to be as easy and instead opt to integrate sales data during the second or third round of the CRM implementation.

Consider On-Demand Software. On-demand or hosted CRM packages have become very popular. On-demand or software-as-a-service CRM is similar to the application service provider (ASP) model of software, in which a company licenses Web-based software. This frees the organization from buying servers and loading software onto the computers of end-users. Proponents of on-demand software say that start-up costs and start-up time are both lower, and the organization isn't bound to the system forever. It can simply cancel the subscription at any time (see Table I). Smaller organizations or early-stage companies can benefit from on-demand packages because CRM is essentially outsourced and requires very little IT support.


CRM package
Licensing cost/year
Maintenance fee/year
ACT! $400 per user $199$599
Goldmine $595 per user
   (manufacturer's suggested retail price)
20% of MSRP
NetSuite $948 per user None
Onyx $1000 (approximate) per user
   (varies depending on number of
   modules acquired)
$160 (approximate)
Pivotal $9900 (flat fee) for Pivotal business server
$16,500 (flat fee) for medical device
   manufacturing application
$1200 per user
18% of list price
Sage CRM $595 per user
$828 per user for hosted SageCRM.com
10% of user licensing list price
SalesLogix $895 per user 10% of user licensing list price
SAP Multiple licensing options available Multiple licensing options available
Salesforce.com $780 per user (professional edition)
$1500 per user (enterprise edition)
Siebel Upon request Upon request
Table I. Licensing costs and maintenance fees of leading customer relationship management (CRM) software packages. Licensing costs are expressed per seat, assuming 100 users. Maintenance fee estimates also assume 100 users. Source: software providers

Proponents of traditional, client-server based CRM say that their long-term total cost of ownership is lower and that the organization benefits by always having control of its data. According to Gartner's Hagemeyer, "On-demand is a great concept until you require deep industry functionality. You end up with a multitenant environment where all the users get to vote on how the system works. So you never capture the complex or unique work flows. With an ASP, you get vanilla."

On the other hand, says ACMI's Freeland, "The most important aspect of CRM software is how well it fits your business, not whether it's an ASP or not." Freeland says ACMI uses Salesforce.com, an on-demand CRM package, because it is the best fit for the company's needs.

Future Trends in CRM

As the CRM industry grows, Hagemeyer says he expects to see a greater focus on the medical technology industry. "There are some work flow and business process issues with CRM and medical devices because the work flow differs from that in pharmaceutical, where CRM cut its teeth," Hagemeyer says. However, Siebel, Syspro, and Pivotal have released medical device vertical offerings, and other CRM vendors may follow. This is good news for medtech companies whose work flows cannot be supported by the traditional CRM packages.

Many medtech companies have set their sights on increasing their wireless capabilities in the future, a plan of action that Hagemeyer says currently isn't as easy as it sounds. However, he says that he expects synchronization will be steadily improved in CRM vendors' future releases.

As the CRM industry matures, the emphasis will be less on automating transactions and more on optimizing the results in real time. Hagemeyer expects increased focus on analytics, through which CRM assists a company in finding and predicting customers with the greatest sales potential. He says such data benefit not only the sales management team, but also the individual sales reps, who can assess the lifetime value of certain practitioners and better target their messages and sales efforts.

Hagemeyer expects to see further consolidation in the CRM vendor space as more companies merge or are acquired. ERP giant Oracle recently purchased Siebel, the leading CRM provider. For many medtech companies, it's important to select a CRM vendor that will be in business in the future, and in an environment of rapid consolidation, it's difficult to predict which CRM companies will survive. "In the long term, the CRM industry will be a clash of the titans between ERP giants SAP and Oracle," Hagemeyer predicts.


CRM enables seamless customer support by leveraging company data across the sales, marketing, and service functions. It uses technology to enhance a company's opportunities, improve productivity, and add value to the customer business relationship. CRM is a way to better manage the complexities of the go-to-customer model and is a non-price-related way to engender greater customer loyalty. Lack of homogeneity within the medical technology industry has slowed CRM adoption, but as CRM has become more mature and the software industry has supplied more-flexible work flow solutions, medtech is increasingly pursuing CRM initiatives. The tangible benefits from CRM in medical products are substantial and can come from several areas, including greater sales and marketing effectiveness, and more consistent and timely customer support.

Making CRM work is an executive-level responsibility and requires ongoing management support, according to Callahan. "It's about leadership," she says. "It's about understanding your business and leveraging technology to better compete. It's about involving the right people in the organization. It's about starting slow and providing continual wins to your customers and your employees. It's about enhancing customer relationships."



1. Robert Bois, et al., The Customer Management Applications Report, 20042009 (Boston: AMR Research, 2005).
2. Scott D Nelson, "Ten Secrets of Successful CRM Practitioners" (Stamford, CT: Gartner Inc., 2004).

Debra Kurtz (Vernon Hills, IL) is a consultant specializing in sales and marketing solutions for medical companies selling in healthcare-provider and retail channels.

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