Lab testing is not a commodity

July 20, 2014

Why do healthcare providers so commonly think of the testing provided by clinical laboratories as a commodity—rather than as a service?

Part of the reason lies in the fact that—for the millions of tests ordered each day—practicing physicians generally receive their reports without a hitch. Thus it’s only natural for them to think: a lab…is a lab…is a lab. And that test results are a commodity, a product that is manufactured, rather than a service that is consumed each time it is provided.

The view of labs as providers of commodities rather than as providers of a service has dangerous implications for reimbursement policies—though that is not my subject here. My subject is this: If your job is to promote a lab service, the belief that labs are commodities complicates your job. It can make the task of differentiating the lab you represent from competitors an even more daunting one than it already is. 

The customary method of approaching prospective clients is to employ a consultative approach: ask them some questions to uncover problems and/or deficiencies in the lab they are currently using. The vast majority respond with, “There are no issues. The doctor and the office are very happy with the laboratories we use. See you later.”

Readers who work within a commercial or hospital laboratory (especially supervisors and upper management) know only too well that the service they provide the medical community is very intricate. There are specimen transportation logistics, complex IT ordering and reporting components, specialized reports (graphs, diagrams, interpretations, pictures), billing, specimen processing and storage, transport supplies, add-on test policies, critical result policies, phlebotomy coverage, compliance issues, sending patients their test results—the list is a long one. 

Some factors that fuel the misperception

I think that some people involved in lab outreach are themselves guilty of spreading the misapprehension of labs as commodities. Some salespeople unwillingly commoditize the laboratories they represent. That is because not all commercial and hospital outreach labs properly train their field staff to effectively differentiate their lab in order to compete in their market. 

Too often, the training a marketer receives consists primarily of a broad overview of the lab’s services (IT, couriers, billing, client services, testing departments, patient drawing center locations, etc.). Following this cursory overview, the lab throws its representatives to the proverbial wolves with the expectation that they will eventually “catch” a customer that is frustrated with some aspect of its incumbent lab’s service. Outreach, or selling, seems to correlate with waiting for dissatisfied prospects. I submit that this is not a good strategy, not a differentiator. In these cases, upper management usually has not provided account executives with enough knowledge of how the laboratory operates differently than local competitors.

For example?  Some of the differences often mentioned in training are items such as fast turnaround time, ease of getting through to a technical person, convenient pick-up times, interfacing with an EMR, and so on. But these are features that are expected by prospective clients. If a representative stresses generic categories like those, it is no wonder clients draw the inference that labs are commodities. 

And, heaven help the field marketer if there is client-billing involved! The customer’s primary interest often translates to reducing the buying decision to the lowest common denominator: test prices. When no perceived disparity exists among laboratories, incremental value does not exist. Price is king. In fact, the selling roles may be reversed: customers attempt to convince lab reps that their offerings are essentially the same as the incumbent lab—subsequently exerting downward pressure on fees.

Another aspect that drives commoditization resides in the emotional issue of control. The old adage is true: people love to buy, but they hate to be sold. Unfortunately, negative stereotypes of a professional salesperson endure. Some clients are fearful that, by acknowledging complexity and admitting their own ignorance of certain aspects of the lab they use, they will lose control of the situation and open themselves to manipulative sales techniques. Unless a client specifically requests a field rep’s visit, people have a penchant to dodge (what they consider) time-wasting or uncomfortable conversations. Customers sometimes may maintain their sense of control of the situation and “protect” themselves from what they see as an aggressive sales rep by falling back on the idea of labs as commodities.   

Finally, the copy on the lab’s website may also enable and perpetuate that idea. Most commercial laboratories explain how they place the utmost importance on providing excellent turnaround time, rigorous quality standards, connectivity options, and excellent communication between the laboratory and its clients. Obviously, these are familiar and necessary components. But, from website to website, such descriptions often read pretty much the same to prospective clients. 

With that in mind, may I suggest an instructive assignment: copy the About Us section of several local competitors, scrub logos and names, and paste them on a blank document. Give the page to members of your lab’s staff, and ask them to indicate which one describes their employer. The results may surprise you…and if an employee struggles to see the differentiators, a customer probably will too. 

No lab director would invest thousands of dollars in salary and benefits to hire an individual to basically tell prospective customers, “We can provide all the same services you’re getting now from your current lab.” But that is the message that often comes across, and the perception that labs are commodities gets reinforced along the way.

Another option? An alternative approach

What is the solution? Well, one solution, another option, is for laboratories to support a high-value strategy that fuels growth. Laboratories can achieve this if they are aligned to deliver their promised value and their salesperson can clarify, connect, and quantify that value for customers. When this is done successfully, the high-value strategy becomes a sustainable competitive advantage and customers begin to think of the lab in terms of the unique services it provides.

To adopt this more penetrating approach, labs and their larger institutions need to recruit, develop, and equip sales and marketing professionals to effectively differentiate their lab and create demonstrable value for their customers. The very fact that we are talking about a sophisticated and complicated business provides opportunities to uncover subtle, yet important, differences. Successful salespeople know their competition thoroughly, and they subsequently “dig” into their own employer’s complex operation, carefully isolating discrepancies. Precisely because of conventional commodity perceptions, astute marketers can uncover evidence of the incumbent lab’s absence of value, as well as unrecognized problems. Clients find it difficult, if not impossible, to recognize a proposing lab’s value solutions without the help of a well-trained representative, but they can be legitimately led to do so by a skilled communicator.

Let me close with a thought that might sound a bit controversial: I think healthcare organizations sometimes do not themselves fully appreciate the complexity of their testing lab’s services—or take it for granted, or lose sight of it. They themselves may start to think of their lab as a commodity! To me, this stresses the importance of those who market a lab having ongoing training about their company’s high-worth differences. Those differences should be the focus of sales reps’ training. Every seller must provide customers a way to understand the value of the unique services the lab provides.

Peter Francis is president of Clinical Laboratory Sales Training, LLC, a training and development company dedicated to helping laboratories increase their revenues and reputation through prepared, professional, and productive representatives. He has written more than forty articles on the subject of laboratory sales.