A few things to know about Mike Racioppi, senior vice president and chief merchandising officer for Henry Schein:
- He was the first on his block to own a PalmPilot. (Attention younger Repertoire readers: Introduced in 1996, the PalmPilot was the first personal digital assistant, or PDA. And it came with a stylus!)
- When he sees a path forward, he goes for it. Hence his success – as president of the Medical Group from 1999 to 2008 – in pulling together legacy teams and businesses to form a three-brand strategy for Henry Schein Medical.
- He worked all the angles to guide the sales force and their customers into the world of e-commerce.
- His greatest all-time business book is “Only the Paranoid Survive” by Andrew Grove, the late co-founder, CEO and chairman of Intel.
Racioppi was born in New Jersey and lived there until his sophomore year of high school, when his father, Aretino – a field engineer for Sun Oil Company – was transferred to Massachusetts. His mother, Josephine, worked as a waitress part-time.
He made a career decision while working part-time in a pharmacy as a junior in high school. “I decided to major in pharmacy in college,” he says. “I did so at the urging of the pharmacist so that I could at least, as he said, have ‘guaranteed employment when I graduated’ – which was true at that time.” He graduated from the University of Rhode Island’s school of pharmacy in 1977.
For three years he worked as a pharmacist at a CVS store in Woonsocket, Rhode Island, then took a position as a pharmacy manager for QuickChek food stores in New Jersey. At QuickChek he crossed paths with someone whom he still considers a mentor: Robert Page, now-retired president of QuickChek. “I learned from Bob to always be prepared, show up early, dress for success and try and be wildly enthusiastic,” says Racioppi.
Furthermore, Page was an innovator. “Until then, no one had combined a convenience food store with a pharmacy,” says Racioppi. “His concept was to offer one place where you could get health and beauty aids, cosmetics, traditional convenience items – and prescriptions filled. “It was one-stop shopping for the consumer before the idea became prevalent.” Racioppi opened pharmacies in six QuickChek stores.
In 1988, he joined regional drug wholesaler Ketchum Distributors, which was Henry Schein’s largest customer by virtue of Ketchum’s purchases of generic pharmaceuticals from Henry Schein. (At the time, Henry Schein was both a dental distributor, and a generic pharmaceutical manufacturer and distributor, he points out.) In 1992, he joined Henry Schein as senior director of corporate merchandising, then moved into the Medical Group, first as vice president of marketing and merchandising, then as vice president and general manager of the Medical Telesales Division, whose sales in 1999 were $60 million. He was appointed president of the Medical Group in late 1999.
“When I was given the incredible opportunity to lead Henry Schein’s entire medical business, total annual sales were $700 million,” he recalls. “Taking the leap from managing a business [i.e., Telesales] with $60 million to one that was more than 10 times the size was daunting, to say the least.”
Three-brand strategy
His first mission was to understand the multiple businesses and teams in place at the time. Each had its own P&L and most had different operating systems. They were:
- Bedsole
- Bond Wholesale Inc.
- Caligor
- Columbia Medical
- Delta Scientific
- Emjay Medical
- General Injectables and Vaccines (GIV), the company’s specialty pharmaceutical injectable and vaccine business, which Henry Schein acquired in 1999.
- Henry Schein Telesales
- PRN Medical
- Roane-Barker
- Scientific Supply
- Southern Surgical
- Stone Podiatry
- Universal Foot Care
His second mission was to build and execute on a plan to build a three-brand strategy. Telesales, field sales and GIV would be brought onto one operating system. Throughout the transformation, the Medical Group would be expected to retain and attract customers and sales consultants, he says.
The three-brand strategy turned out to be a significant area of strength and differentiation for Henry Schein, says Racioppi. “When we began to leverage our telesales consultants’ pharmaceutical expertise with our field sales consultants’ equipment expertise, our sales accelerated rapidly.”
The company’s physician business grew rapidly, stretching west of the Mississippi, all the way to the West Coast. In 2002, Racioppi brought on 50 additional sales consultants to the Caligor business, bringing the Medical Group’s total to 270 field consultants in 34 states.
“My greatest fear during those years was to become so involved and consumed with being successful at work that it would negatively impact my personal life,” he says. “I am very thankful that I got through that period of time with my personal life in a good place.”
E-commerce
Simultaneously, Racioppi sought to shift the field sales reps and their customers away from manually placing and taking orders, to e-commerce, so that both could focus their energies on operating more efficient medical practices.
In 1999, less than 10% of the Medical Group’s sales were initiated by the customer without the sales consultant’s involvement. “It was tough in the beginning to convince customers to do something reps had been doing for them for free,” he says. But younger customers welcomed e-commerce, and Henry Schein provided them tools – such as the Aruba system – to help them do so.
Racioppi strongly encouraged Henry Schein reps to use Education OnLine, or EOL, an early online product-training program. He did so primarily to demonstrate the company’s commitment to its manufacturer partners. But it also stimulated e-commerce.
“We felt the more often the sales reps went online for EOL, the more likely they would be to help customers transition to placing their orders online. It was not an easy transition for some field reps. But most eventually got there.”
Today, 65% of sales are generated by customers, which has given the field sales consultants more time to help their customers run better businesses, he says. But e-commerce has presented its own set of challenges.
“There are many reasons why customers leave a company, but a couple of things have changed since 1999. It is now so easy for a customer to comparison-shop on the web. If in some cases they see lower prices elsewhere and don’t see enough other value to justify paying more, they are more likely to ask for lower prices or leave than [they might have] in 1999, when price transparency wasn’t in place to the degree that it is today,” he says. Henry Schein and its reps have responded by acting as business consultants to their customers.
Worldwide perspective
For the past 13 years, as senior vice president and chief merchandising officer, Racioppi has traveled around the world spending time with the company’s businesses and discovering best practices to share in such areas as freight management, minimum orders, credit card usage and sales. He has learned a few things along the way:
- Listen twice as much as you talk. That is why we were born with two ears and one mouth.
- Meet with people in their office, not in yours, if you can. They are more comfortable there.
- Look for pennies not dollars. They are easier to find and add up quickly.
He considers Henry Schein Chairman and CEO Stanley Bergman to be a mentor, having learned from him “to embrace change, be inclusive, act boldly, and treat others as you would like to be treated.”
And he is “grateful beyond words” for his wife, Carol, to whom he has been married for 30-plus years, “for her love and support during our journey together.” The two are blessed with two “incredible kids,” he adds – Jessica and Nicholas.