How Teleflex Grew its Market Value 4x in 6 Years
CEO Benson Smith details the Teleflex success story
By the end of 2010, Teleflex was near the end of transitioning from an industrial conglomerate to a pure play medical device company. Its stock closed in 2010 at $53.81 a share, not much better than the anemic performance it had shown for the previous five years. To facilitate the transition, Teleflex’s board of directors asked Benson Smith (at the time a director himself) to take the helm and become CEO.
Today, its stock is north of $190, about 4x the 2010 number. What happened in the interim? Although he credits his team for much of the progress, the leadership medal goes to Smith. Let’s take a look at his journey and how he brought Teleflex to its current status. In the 1970s Benson was in med device sales at Davol, which was later acquired by CR Bard. Early evidence of his talent was proven by his quick rise to president and COO of the company. Although Bard had bought Davol only for the foley catheter and intended to divest the sales force, they changed their minds after viewing Benson’s process for re-structuring the sales force.
When he came to Davol, Benson saw that the sales people fit the profile of the era: IBM-style men in tailored blue suits, with winning personalities. But obviously there was a more complex equation to being a top-notch rep. The proof was that turnover was high, and overall performance wasn’t impressive.
That all changed after Benson became intrigued by the work of psychologist Don Clifton at SRI1 , who had developed a different kind of interview process, based on certain personality traits. Ultimately, it was so successful at attracting better personnel that Bard used it throughout the organization. Benson later went to Teleflex as a director, and ultimately became chairman, president and CEO, using the successful process he had developed earlier.
He says “In 2011 we had a very poor reputation for our service levels. It became one of our top priorities to improve those. We even put the goal on our 2011 coffee cup. Consequently, everyone knew we had to get better at this. Under normal circumstances, it might have taken years. We managed to move much more quickly. As a coffee cup priority, everyone at all levels of the company chipped in. We made investments in inventory, and followed up routinely with our progress. By the end of the year we were named as the best supplier for the largest GPO in the US.”
We asked Benson what contributed most to their commercial success. He indicated that there are four key strategies:
One interesting side effect of these interviews was that they changed not only the quality of sales personnel, but balanced the gender mix as well2 . Apparently, once you identify the right talents, you get a more diverse staff overall.
1. THE SALES PERSONALITY
One key area of focus was the sales team. Benson observes that “Only 3% of the population has the right personality for sales. Most companies not only don’t hire for the right traits, but they hang onto low-performing people even when they negatively impact the company’s progress. There’s too much focus on keeping these people from failing completely.
The process that SRG (Sales Research Group) developed to identify the best sales people has two main stages, each designed to address the unique needs of a particular company. (Every company has its own profile for the right people, depending on what kinds of products and customers it has and what sales techniques contribute to success.) The first stage finds the top 25% of the sales force for the last 2-3 years, and the bottom 25%, and administers a TalentProfilerTM survey for all of them. This looks at 124 known traits, which are ultimately condensed into five categories key to performance. The five categories are Motivation, Trust, Asking, Organization, and Understanding. “It’s often a surprise to management when they find out what traits really make a difference,” Benson says.
This leads to the development of an interview process for future hires, usually 60-75 questions that result in a score of A, B+, B or C. It starts with general questions (like “Are you reliable?”) and then probes further to reveal the accuracy of the interviewee’s personal assessment. Then, over time, the people hired (typically the A or B+ candidates) are re-assessed to evaluate their performance. This gives the company even more detailed insight into which are the prime traits they’re looking for. Prior to using this approach Teleflex tended to rely heavily on the candidate’s past experience and almost exclusively hired people with previous medical device backgrounds.
Unfortunately, past experience is not a very good predictor of future success. By shifting its focus to hiring people with the right matching personality characteristics, Teleflex expanded the window of candidates it is willing to hire.
2. CREATING CUSTOMER ADVOCACY
We often take comfort in customer satisfaction scores. But that isn’t the measure we should be looking at: it’s customer engagement that counts, because it leads to customer advocacy, and hence to sustainable growth.
In an article he wrote even before joining Teleflex, Benson explained it this way. The real goal of a publicly traded company is to achieve sustainable growth, the most reliable driver of shareholder value. High customer satisfaction scores do not necessarily link to this sustainable growth. Gallup Organization researchers William J. McEwen, PhD, and John Fleming, PhD, found that there was a difference in financial outcomes when they isolated customers who were both extremely satisfied with the company and emotionally connected to the company. They say that “Satisfying customers without creating an emotional connection with them has no real value. None at all.” But customer engagement scores have a very strong relationship with sustainable growth.
“We found that the top 25% of the sales force was responsible for more than 90% of the customer advocacy that was being created,” says Benson. “The bottom ten percent were actually destroying consistent customer advocates.”
Emotional connections are hard to create on the basis of a product or service alone. The sales force can make a significant difference in creating customer engagement—one that is exceedingly difficult for competitors to mimic.
And engaged customers are much more willing to act as advocates by referring others to your company’s product or service. Simply put, engaged customers help companies get other customers. Engagement derives from the relationship that develops between customers and the people who take care of them. But sales managers often look at how much a particular rep is selling; few know or understand whether their reps are actually increasing customer engagement each year.
While product, service and people are all important, people make the biggest difference in advocacy. There are big differences from sales territory to sales territory where the product and the company are the same, but the salesperson is different. They’ve also noticed great sales people were more likely to ask customers to be advocates. “Doctor, would you mind writing a letter to the purchasing department asking for the product?” To provide a key example, Benson pointed to Vidacare, a unique Teleflex product. “When patients need an immediate, high-volume fluid line—say, after a heart attack or auto accident—you often can’t use a standard IV line, because the veins are collapsed. Vidacare builds a small hole in the shoulder that allows blood to be administered, even in a moving ambulance. It’s a one-of-a-kind product, which of course gives us a marketplace advantage. We’ve doubled market share in the three years since we’ve acquired it,” he says. “But, even with that kind of product superiority, that level of growth wouldn’t have been possible without the kind of sales personnel who inspire customer advocacy.” Those customer advocates in many ways acted like an extension of the sales force and often will interest their colleagues in using the product as well.
3. BUILDING ON STRENGTHS
The next segue is to how the best sales people make these connections. “We found that they create advocates by building on their own strengths—the qualities that make them better and different.”
Most companies spend a lot of time trying to identify weaknesses and correct them. “It turns out that this is exactly the wrong way around,” Benson explains. “The key to enhancing talent is to drive strengths. As the person’s strengths grow, their weaknesses become irrelevant.” Not surprisingly, weaknesses are easy to spot but focusing on improving weaknesses rarely yields positive results. An astute manager, on the other hand, who takes the time to understand what inherent strengths an employee has, will generate far better outcomes.
This is related to what best-selling author Malcolm Gladwell explains as the “10,000 hour success rule”: “An extraordinarily consistent answer in an incredible number of fields… you need to have practiced, to have apprenticed, for 10,000 hours before you get good.” Where does that logic lead? No one is going to devote 10,000 hours to something they don’t like or are failing at.
Benson remembered an incident from early in his career. “One high-performing sales person at Davol wanted to up his game. So he invited a regional sales manager to accompany him on calls and make suggestions. The sales manager was actually surprised to find that the rep’s presentation was, to him, rather bland, despite the extraordinary numbers. It turned out that, especially in his West Texas territory, a slick IBMstyle approach was not needed. What made the difference was how much customers believed him—and believed in him. That’s what led to customer advocacy. Two years later, that guy was named Salesperson of the Year.” As mentioned above, every company has a particular selling style that works best for them.
4. A UNIQUE MANAGEMENT CONCEPT
Managers often feel they have laid out clear expectations—but studies show that employees don’t always agree. When they know what’s expected of them in explicit terms, they typically perform better. This is what Benson calls the Work Planning and Review System (WPRS). It’s best described in another article Benson co-wrote in which are outlined five key areas of focus that result in salesperson results, and subsequent customer loyalty:
• Frequency: Great managers talk about expectations constantly, almost in every conversation. “Expectations are not static,” Bill G., one of the interviewed managers, told them. “They are dynamic. The less you talk about something, the less important people think it is.”
• Clarity: Average managers tended to be vague, “Do the best you can.” The best managers discussed tangible, measurable outcomes. “Sell $1 million in new business this month.” Outstanding managers also ranked their expectations by defining excellent, good, average, and unacceptable performance in readily understandable terms.
• Priority: Sales goals sometimes seem to conflict. Is growing the sales line more important than protecting gross margins? Is adding new business more important than preserving existing customers from a competitive threat? Great sales managers give unambiguous direction, and are also careful to set expectations about only the most important outcomes.
• Consequences: Expectations without consequences quickly become meaningless goals. The best managers tend to focus more on the positive consequences that result from meeting or exceeding expectations, but they are also clear about what will happen if employees fail to meet those expectations.
• Individualizers: People learn and respond differently. The best managers set expectations depending on the employee involved. Some sales reps want to be actively involved in setting goals; others would rather leave this to managers. Some are more productive if managers frequently follow up on their progress. Some want help or advice. Pay attention to what best helps each individual salesperson succeed, and set expectations accordingly.
As an example of the above, Benson explains that at Teleflex, annual performance reviews have been substantially eliminated. No one particularly liked them anyway. In place of that, managers have regular six-week meetings (frequency) with employees, and set an agenda for what needs to be accomplished in next six weeks (priority, clarity, consequences). Then they examine what resources or support are needed to achieve that agenda (individualizers). At the end of the year their annual review is basically the sum total of those six-week meetings identifying the employees’ accomplishments. In very dynamic business environments, where priorities can shift considerably during the year, this approach helps make sure that employees’ priorities are re-focused throughout the year on accomplishing the most important tasks.
The proof of Benson’s strategies for choosing the right employees and managing properly is in the hard numbers: Teleflex revenue grew from $1.4B in sales in 2011 to a projected $2.1B this year. This also makes a difference in their image as a company: T. Rowe Price, Fidelity and other Wall Street firms rate them highly.
In the book Discover Your Sales Strengths, which Benson coauthored with Tony Rutigliano, talent is described as “a pattern of thought, feeling, or behavior that can be productively applied,” and they describe 34 theme names that describe different traits salespeople can embody (Achiever, Command, Empathy, Fairness, Self-Assurance, Strategic, etc.), including a salesperson’s top five dominant, or Signature Themes. By defining a clear vocabulary of sales strengths, leaders, managers and salespeople can talk knowingly about their strengths.
Benson has an analogy that sums up his approach to the best management style. “The next time you’re in your seat waiting for a plane to take off, consider how many things have to come together to ensure that the time is right. The pilot and crew have to be in place; the mechanics have to sign off on the craft’s readiness; the passengers have to be properly seated; the weather has to cooperate; the runway has to be clear. It’s incredibly complex,” he says. “Well, a business isn’t much different. Product, service, management, sales and other elements all have to be tuned up and working at their optimum to ensure success. It’s that confluence of competence that predicts where your company is going.” •
To learn more about how SRG’s behavioral assessments can drive breakthrough results for your sales organization, visit salesresearchgroup.com and request a demo.
1 SRI was Don Clifton’s company at the time. It eventually bought Gallup. SRG is a spin- off company founded by ex-Gallup employees
2 This is similar to the effect major symphony orchestras experienced when they started auditioning musicians behind a screen. The inherent prejudice that women couldn’t play certain instruments as well as men disappeared, and the gender balance changed significantly.
Mr. Smith was named chairman, president and chief executive officer of Teleflex Incorporated in January 2011, after serving on the Teleflex Board since 2005. Prior to 2011, he was the founding partner of Sales Research Group Inc. (SRG), a talent assessment and behavioral science research and consulting firm where he originally developed TalentProfiler™. From January 2000 to December 2005, Mr. Smith was a speaker and an author at The Gallup Organization. He also served as the leader of Gallup’s Global Sales Force Effectiveness Practice. Prior to that, Mr. Smith worked for C.R. Bard, Inc., a company specializing in medical devices, for approximately 25 years. At C.R. Bard, he held various executive and senior level positions culminating as president and chief operating officer until 1998. He also served as a member of its board of directors. He was previously on the board of Rochester Medical Corporation and chairman of the board of Zoll Medical Corporation until its sale to Asahi Kasei Group in April 2012. Today, he serves on a variety of academic and health-related organizations.
Teleflex is a global provider of medical technologies designed to improve the health and quality of people’s lives. They apply purpose driven innovation—a relentless pursuit of identifying unmet clinical needs—to benefit patients and healthcare providers. Their portfolio is diverse, with solutions in the fields of vascular and interventional access, surgical, anesthesia, cardiac care, urology, emergency medicine and respiratory care. Teleflex employees worldwide are united in the understanding that what we do every day makes a difference.