Lee Salz is a Featured Columnist for The Business Journals.
In the late 1990s, I was recruited to build a sales force in the employment screening industry, which was comprised of workplace drug testing and background screening. To describe the industry as fragmented would be an understatement.
For drug testing, companies were working with multiple laboratories, specimen collection sites, and medical review officers (MROs) to manage their programs. (MROs are doctors who perform case management on positive drug tests.) For background screening, it was not uncommon for a Fortune 500 company to be using more than 20 different providers for those services.
The firm that I joined provided MRO services for drug testing. The typical MRO sales strategy was to argue that your doctors were better than the competitors’ doctors. Given that these were licensed physicians who also possessed MRO certification, that was a tough pill to swallow for prospects…and they didn’t. The result was price erosion for this service.
Lowering price was not palatable to our company so we needed a differentiation strategy to protect price points. Conversations with clients revealed frustration because they worked with so many different drug testing providers. Large companies received over a thousand invoices each month for drug testing services. Several of these companies needed additional services (like managing random drug testing pools, onsite collections, etc.) and struggled to find them.