1. How was the Hill Rom sales force organized prior to the reorganization?

Prior to the reorganization, Hill Rom sale force was not segmented. The sales approach
depended on the size of the organization versus other critical factors such as organization
requirements/patient needs or financial strength. The approach was also more product oriented
than customer oriented. This means that Hill Rom had sales specialists for each of its products
such as hospital beds, operating room, parts and services, therapy etc. Each of these specialists
communicated with the relevant decision makers within the customers organization. Thus
there was decentralized communication between Hill Rom and its customers with multiple
channels of communication pending on the number of sales specialists involved.


2. How did Hill Rom segment their customers before the reorganization?
Hill Rom had a simple segmentation based on the size of its customers facility. The size of the
facility decided the number of beds, operating rooms, or devices and instruments that a
customer needs. This measure helped Hill Rom evaluate the spending budget of the customer.
There were pros and cons to this approach.
Pros: (i) This approach had worked over the years for Hill Rom and was tried and tested (ii) The
size of the facility was a good indication of the frequency and size of purchases by the customer.
Cons: (i) This approach did not account for heterogeneous requirements of customers within the
same segment (ii) This approach considered only the spending power, not the willing to spend
of the customer. The willingness to spend of a customer was decided by more complex factors
such as the facility type, insurers connected with the facility, patient needs etc.


3. What disconnect did the project team discover in sales resource allocation?
The project team discovered that sales force allocation was performed based on the facility size
of the customer. However, 2 facilities having the same size could have very different
requirements and willingness to spend. Therefore facilities having a higher willingness to spend
but a smaller facility size were allocated fewer sales specialists compared to a larger facility
which had a lower willingness to spend. In comparison, larger facilities that had a lower
willingness to spend, were invested in with a higher sales effort. Additionally, this disconnect
meant that customers that were smaller in size but had a higher willingness to purchase more
premium products, were not always offered or educated on these premium products.
Another disconnect that was noted was that the sales force was organized with a strong product
focus. Sales specialists handling different products spoke to the same customer in silos. This led
to multiple channels of communication between Hill Rom and a customer thereby adding
complexity and potentially impacting service levels and quality.

4. How did they segment their customers as a result of their study?
Based on the study, other attributes were considered to segment customers beyond just the
customers facility size. These attributes included financial metrics such as the customers capital
spending and profit margins, operating metrics such as occupancy rate and even the selection of
insurance payers. Based on these attributes and doing a regression analysis of the existing
customer information, the hospital segment was divided into 5 sub-segments and the nursing
home segment was divided into 3 sub-segments. These eight segments were then combined
into 2 groups key and prime. Customers were segmented into these groups based more on
their needs and spending power than their facility size. These 2 groups key and prime could be
described as follows:
Key Customers Prime Customers
Decision making
Primary decision maker Nurses Administrators
Purchase drivers Patient satisfaction
Physician requirements
Return on investment
Necessity
Low maintenance
Low risk, low liability
Deciding factors on Brand Performance
Patient outcomes and safety
Caregiver safety
Reliability
Ease of use
Price
Decision making
Product configuration High-end to moderate Moderate to low-end
System or Stand-lone System Stand-alone
Replacement Cycle Shorter Longer
Required response Times
Product service:
Shipment lead time:


Shorter
Longer


Longer
Shorter
Demographics
Facility Occupancy Higher Lower
Patients Medical Needs Higher Lower
Facility Size Larger Smaller


5. What are the advantages of the new approach? What are the risks of the new approach?


Advantages Risks
Internal
Company Will improve top line growth
Differentiates from
competition and set a
platform for the company to
flourish for future generations
Addresses questions around
slowing growth
Improve communication
channels within the company
Overhaul of the sales strategy
can affect the bottom-line of
the company
Major investment into R&D,
talent acquisition, training and
corporate messages - is costly
Improper execution of
strategy can severe hurt the
company

Sales Major investment into
training sales
Less complexity in sales
strategy
Addresses previous issues
about overlapping sales
Expected increase in growth
may increase earnings on
commission for sales
Leaner sales team will present
growth opportunities for right
kind of staff
10% of the staff will be fired
existing employees have
worked independently, new
culture is required
Retraining for new roles.
Account managers required to
be experts on more products
Commissions will be affected
Corporate Leadership Change initiated from the
very top
Expected growth will increase
earnings and share value for
leadership
Existing leadership may not
have the right experience to
lead a major change
Buy-in from all employees at
the top required. Employees
critical for change, may quit
(VP of Sales)
External
Customers Customer centric approach
Better value for customers
Less complexity in dealing
with Hill Rom
Strategic partnership with Hill
Rom will help customers
address problems at their
core
Prime customers will not be
sold products they are not
interested in
Customers may not buy into
the new proposition
Customers may be saddled
with sales proposals for
products they are not
interested in or which are
more costly
Competition Competition does not have
similar approach
First mover advantage will
help cement Hill Rom's place
as a leader and customer
focused company
Risk of being the first to
implement which competition
may see and implement after
watching Hill Rom's mistakes
Competition may steal talent
Socio/Politico/Geo
conditions
- 9/11 attack affected the US
economy and people's psyche.
Reasons to delay the change
management