Ariel Surgical

Sales & Marketing Strategy

ZS Case Competition 09
November 18, 2009
Case Challenge 09
 Goals & Strategic Imperatives
4 key imperatives will position Ariel Surgical better to achieve growth targets, addressing the
opportunities and challenges

Sales Projection
(in $M)
$285
OPPORTUNITIES $245 CHALLENGES
$219
• $20 M Wound Care $193 • Under-penetration
Market of existing accounts

• New Innovative • Sales Force

Product (Clot Sys) Effectiveness

• Diverse Product • Competitive

Portfolio Pressure (PurSang)

2009 2010 2011 2012

Key Imperatives
Optimize Sales
Enhance Account Identify Surgeon Increase Sales
Process &
Penetration Targeting Strategy Force Effectiveness
Organization

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Case Challenge 09
1. Adopt Value Assessment Framework to Assess Account
Potential and Penetration Levels

An Iterative Value Assessment 1 Determine targets and sales

breakdown by procedure type
Framework from product sales breakdown

3 Compare the potential

sales to actual sales

2 Determine account potential by using

decile breakdown

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Case Challenge 09
Using the Framework: Cardio & Valve Surgery Categories are
Performing Below Decile Average

Difference between potential & actual sales

Key Observations:
• 70% of accounts are below the decile average potential
• BANDSeal and the Cardio/ Valve category shows the $1,400,000

most negative deviation from decile mean $1,200,000

$1,000,000 Above Decile
$800,000 Average
$600,000
Potential Causes $400,000
• Sales force prioritizing certain product types/ surgeons/ $200,000

accounts to achieve targets within their territory $0

• Misalignment of sales force efforts and company goals -$200,000

-$400,000
• Lack of sufficient training – differences in skill sets LEKStop BANDSeal GRAFTSeal

required for different products/ accounts

$500,000
Benefits of the Framework $400,000
• Segment customers by potential to determine resource $300,000
Below Decile
Average
allocation/ service levels $200,000
• Establish detailed sales targets by account/ $100,000
$0
surgeon/product
-$100,000
• Prioritize – under-penetrated accounts with high -$200,000
potential vs. other existing/ new accounts -$300,000
-$400,000 Brain Hip/ Knee Valve Cardio Burn Procedures

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Case Challenge 09
2. Ariel Should Target Cardiovascular, Thoracic & Neuro
Surgeons

Actual Sales per Surgeon (‘000)

• Cardio, Thoracic and Neuro 391.57

Surgeons generate the highest

sales per surgeon.
241.39

• Based on product
relevance, Neurological, Thoracic
and Cardiovascular generate 71% 79.49
45.70
of Ariel’s Revenues 3.78 2.96

Plastic Orthopaedic CV/ Thoracic Neurological Vascular Other

• Return on sales effort is highest Surgeon

for this segment

Neurological Thoracic Cardiovascular

LEKStop 20% 20% 25%
BANDSeal 30% 70%
GRAFTSeal
ClotSys 10% 60%

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Case Challenge 09
3. Sales Force Effectiveness: Deploy Additional Salespeople to
Cover ClotSys

Sales Force Deployment Plan for 2010 & Beyond

+32
-16 • Moving forward, we
calculated the sales
force required as:
• Centralizing • Focus on medium o2011 = 100 people
administrative sized accounts 106
functions (6th, 5th, 4th Deciles) o2012 = 116 people
90 maximize sales to
• Reducing travel time
effort ratio.
due to above
• This also helps to
• Customer
achieve $13.9M
Segmentation
target in 2010
• Synergies with
LEKStop Accounts

Current Sales Optimization Deployment 2010 Sales

Force for ClotSys Force

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Case Challenge 09
3. Sales Force Effectiveness: Aligning Compensation Structure
With Company Goals

In ensuring sales force compensation is closely aligned with Ariel Surgical’s overall
company goals, we must ensure the following factors are taken into account.

How well are sales people How well are sales people
growing Ariel’s market achieving the average
share of existing products account targets for each
Account &
by successfully growing Portfolio decile – by product type
existing/ new accounts? Performance and surgeon type

Growing NPI
Accounts Performance

How well are sales people Customer How well are sales people
Service performing on targets for
performing on customer
satisfaction and service new products such as
levels – both for clinical ClotSys – over the first 1-2
and economic selling? years?
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Case Challenge 09
4. Re-engineer Sales Process & Organization

Involvement of central Standardize contracting and pricing

group of product procedures to be performed by a
specialists to support central administration group. Minimal
clinical selling involvement by sales force.

Clinical
Targeting & Selling
Account Needs Case After Sales Support
Contracting
Potential Assessment Coverage & Reinforcement
Assessment Economic
Selling

Use Value Assessment Economic selling to occur Product specialists to handle

Framework to assess
account potential and
target based on
segmentation
concurrently with needs
assessment and clinical
selling for better
relationship building
technical support and in-
house call center to provide
customer service, while sales
reps focus on more
penetration and new sales.

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Case Challenge 09
4. Re-engineer Sales Process & Organization (contd.)

High Level Organizational Model (Preliminary)

Regional Regional Regional Regional Regional

Sales Team Sales Team Sales Team Sales Team Sales Team

Regional Regional Regional Regional Regional

Sales Director Sales Director Sales Director Sales Director Sales Director Primary
responsibility:
Key Account Key Account Key Account Key Account Key Account Customer
Managers Managers Managers Managers Managers Relationship and
Growing Accounts
Sales Sales Sales Sales Sales
Executives Executives Executives Executives Executives

Sales Reps Sales Reps Sales Reps Sales Reps Sales Reps

Product Specialist Group

Primary
responsibility:
Administration & Customer Service Group Central specialized
support activities
Finance Group – Pricing, Contract Mgmt, & After-sales Accounts

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Case Challenge 09
 Prioritization & Implementation Plan

UNDERTAKE PRIORITIZE Quick Wins

• Optimization of existing sales
Organization &
force workload – by Q4 2009
Customer Process Changes
HIGH

Value Assessment Segmentation

Framework
Sales Force Within 6 Months
BUSINESS IMPACT

Deployment for
Sales Force • Value Assessment Framework –
ClotSys by Jan 2010
Compensation
• Sales force deployment for
QUICK WINS REJECT ClotSys – by Feb 2010
• Customer Segmentation – Feb
2010
LOW

Optimization of
Existing Sales Force Within 1 Year
Workload • Sales Force Compensation – Q3
2010
• Organization & Process Changes
LOW HIGH – by Q4 2010

COMPLEXITY OF IMPLEMENTATION

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Case Challenge 09
Next Steps

• Form detailed project plan and project teams for short

to medium term projects

• Analysis on compensation structure – led by HR and

Sales Director

• Revisit marketing and promotion plans to ensure

alignment with new targeting strategy – led by
Marketing Director

• Detailed assessment of the organizational structure

and sales processes – led by cross-functional team

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Case Challenge 09