During the last few years, many providers have attempted to become more focused in the products and services their companies offer. Some have simply dropped the less desirable product lines and the revenue that comes with them. Some have paid higher commissions for the most desirable products. Others have just told their sales team to go get the most desirable products. However they went about it, nearly all have had challenges.
Six common challenges of shifting a company's product mix include: 1) continuing to call on the same referral sources with the same frequency; 2) continuing to tell the same story to referral sources; 3) using the same commission structure; 4) a marketplace with a long memory; 5) having policies and procedures that are not matched to the desirable products; 6) and not understanding why rivals hold the position they do.
Referral sources are one of the influences on a provider's product-payer mix. Referral sources can be associated with certain diseases, disease states, and payers. So can the products and services of home care companies.
Your billing system should have some good information about your referral sources. From billing data, you can learn which products, diseases and payers are associated with a particular referral source. This does not indicate that it is the only type of referrals that could come from this source, but it is positively the type of referrals that are in your census. With this information, a sales manager can begin to determine the ability to get the best referrals from any source.
In many companies, a marketing rep is told what he or she should say to referral sources within their first few days at work. After the rep has repeated the message on a few hundred calls, it becomes natural. So, if you want to change your product mix, you must also be sure to change the message that goes to your referral sources — and all the rest of the marketplace.
A single directive to the marketing staff is rarely sufficient to change what has become natural to your sales and marketing reps. Management must be repetitious in this communication. This is one of those details that is-sometimes overlooked.
Commission structures are not always static, but they don't always change for the purpose of driving a different product or payer mix. The desirable product-payer mix should never be left out of your commission considerations. When developing a commission structure, consider the desirability of the product (often a factor of its profitability) and, equally important, the difficulty of getting referrals for each product.
When two products have the same commission and one is more difficult to find referrals for, the easy sale will always win. Management must either give a higher commission for the more difficult sale or find ways to make it easier to sell.
The “memory” of a marketplace is easy to underestimate; it can be both long and difficult to change. One way to get a new idea to stick is to disrupt the routine. Think of what has become routine in your relationships with referral sources, then figure out an appropriate way to break it and tie that to your new message. (Read the book Made to Stick by Chip Heath and Dan Heath.)
Most of us have heard a business say it wants our business but then acts like it doesn't. Often that occurs when the company's policies and procedures don't match its products or services. When you define a new product-payer mix, find out what the best practices are for that mix. Then compare your practices (defined in policy and procedure manuals) to the best. Once the differences are known, a reasonable plan for change can be made.
Once your commissions, practices, referral sources and so on have been examined and adjusted, there are still rivals that may stand in the way of changing your product-payer mix. Get to the root cause of your rivals' position in the market. It may be as simple as a first-mover advantage, but there is a good chance it hinges on personal relationships. Understand the causes, and plan to mitigate or eliminate their advantage.
Keep all six of the challenge areas in mind as you develop and execute your plan to shift product-payer mix. They do go together.
Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. He can be reached at 321/752-4514 or by e-mail at wweeks@weeksgroup.com.
