Business Resources

Cultivating key relationships jump-starts growth

Pittsburgh Business Times - Monday June 5, 2006 - Kris B. Mamula

Photo by: Joe Wojcik

Key relationships: Early focus on trade groups helped win customers.

MedSage Technologies LLC was little more than a PowerPoint presentation and William Kaigler's dream when it was founded in 2002.

Not the least among the hurdles facing the company was convincing people the idea would work because it was so new, said Kaigler, MedSage's founder and COO.

But the idea wasn't all that complicated. MedSage's customers are home health equipment suppliers, and its software boosts operating efficiency and sales for these companies by tracking usage of such things as patient sleep apnea supplies, medications and compression stockings, all of which periodically must be replaced.

Monitoring usage through telephone inquiries to patients enables home health companies to refill supplies and medications faster than otherwise would be possible. Patients win because they have the supplies they need when they need them, and medSage clients reap bigger sales. But landing sales was a big challenge for a fledgling company, especially one without much of a marketing budget and only two salespeople, said Jerry Connelly, CEO and president.

So, medSage decided early on that networking and building strategic alliances among big trade groups and the health care industry's movers and shakers would be its road to growth. In essence, they would help carry word about medSage's products to key customers.

MedSage first courted Lubbock, Texas-based The Med Group, a bulk purchasing and home health business services agency, in 2003, and then VGM Group, a home medical equipment member service organization based in Waterloo, Iowa.

MedSage got its foot in the door with both by offering to provide their members with discounts on medSage products.

"We grow by word of mouth," Connelly said. "Those are sales people I don't have to hire."

MedSage also focused on landing big suppliers, such as Ford City-based Klingensmith's Home Healthcare Inc., which is among the region's largest independent equipment providers. Its products increased Klingensmith's sales by $1 million annually, said Kim Wiles, vice president, respiratory services. In addition, medSage consulted with equipment manufacturers, including Murrysville-based Respironics Inc.

Networking has borne fruit. MedSage's revenue spiked 50 percent since January and is expected to top $2 million this year. And the company has managed to grow without turning to venture capital.

Word-of-mouth marketing has "worked well for a lot of companies," said Ajay Kalra, associate professor of marketing at Carnegie Mellon University's Tepper School of Business, citing a highly successful Burger King promotion last year that was featured on the Web. "If it is done well, nothing is more powerful than word-of-mouth marketing," because the message is coming from people we trust, Kalra said.

It's impossible to say how many salespeople would've been needed to jump-start sales the way industry affiliations have for medSage, Connelly said. "I don't know if 20 people would've done it."


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