Medical Device Marketing – Segmentation With Procedure Data

Portrait of Jan de Doot and the kidney stone h...

Ask most medical device marketers about market segmentation, and you’ll get an earful about physician specialty (and subspecialty), hospital/facility size or type (academic, ASC, for profit, large system, etc), or adopter type (early adopters, followers, and skeptics). Unfortunately, these approaches rarely help companies identify customer groups that are differentially addressable – i.e. best served by different products or services, different price points, and/or different marketing channels and sales techniques.

Contrast the typical medical device approach to the sophisticated techniques of consumer product firms. Are you a Barry, Jill, Buzz, Ray, or Mr. Storefront? Best Buy’s in-store staff segments you with a few questions before steering you to the products you’re most likely to want. Amazon suggests possible purchases for you, based on your clicks plus the buying history of other customers who bought the same products you did. Target buys your demographic data to combine with your Target purchase history to create custom coupons for you.

Medical device firms can do much, much more to understand and better serve their markets. Even back in the 1980’s much more could be done. Let me explain how I approached market segmentation twenty-something years ago.

When I joined Candela fresh out of business school, our lead product was a transurethral laser lithotripter (to treat kidney stones in the ureter). We had just completed our first year of sales, and the VP of US sales asked me for some good, fresh sales leads. He’d already exhausted the trade-show attendees.  It would have been easy for me to hand him a list of large US hospitals. Or, because it is well known that there is a “stone belt” across the southern US, I could have handed him a list of large hospitals in the US stone belt. Neither list would have been particularly useful.

Instead, I analyzed our first year’s customer list against some hospital medicare procedure data that we already owned. I identified two hospital-specific variables of importance – the number of medicare stone patients that were treated, and the presence/absence of an ESWL device.

Unsurprisingly, our customers were typically high-volume stone treatment centers. High stone volumes were not always correlated with hospital size, so hard data identified many small hospitals that turned out to be real prospects.

It also turned out the relatively few hospitals with an ESWL were significantly more likely to buy our lithotripter than those hospitals without. Each of those hospitals was building a “stone center” business and each needed to offer the latest procedure for ureteral stones.

I created two lists – high volume ESWL centers that needed to “complete” their stone center offerings, and high volume non-ESWL centers that needed our laser to maintain a high-volume stone business in the face of nearby “stone centers.” Sales grew.

For Candela, it turned out that there were two distinct segments of interest, each with its own set of needs, that required different marketing and sales approaches. We duly ignored another segment – the low-volume, non-ESWL-owning physicians who stopped by our AUA booth and chatted up our sales reps about the cool new technology we were showing. They were never going to buy.

Though it’s hardly done in medical devices, it’s not rocket science to segment customers using actual procedure data. In fact, procedure data is so yesterday. In an upcoming post, I’ll write about big data and the future of medical device marketing.


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