Anyone who’s been involved with ideating, defining, creating, selling or implementing software products and services for any length of time knows that selling to health plans, health systems and other healthcare enterprises is a ‘tough game across the board.” The sales cycle is long, you have to deal with the oft times quasi-governmental structure of a large, corporate enterprise and you have to be able to think on your feet and pivot quickly.Digital Health Entrepreneurs and Healthcare Enterprise Executives
Early last week, Rock Health – an organization that exists to fund and support entrepreneurs working at the intersection of healthcare and technology – released a summary of results from a survey they conducted titled Streamlining Enterprise Sales in Digital Health. 80+ digital health founders and enterprise healthcare leaders responded to the survey, providing their perspective on three key questions aimed at better understanding successful B2B business practices in digital health:
What type of relationship do enterprise customers want with startups—and how should startups approach potential customers?
What are pilots for—and are they being used correctly?
Healthcare sales cycles are long. How can startups get their pitches to the right enterprise buyers quickly?
This blog post is the first part of a two-part curated summary of responses to the three questions posed by the survey.
Much of the content in this post is taken from this post on the Rock Health website. I’m merely presenting it in a format and order in which I believe may help many readers absorb the material.
Relationship Between Enterprise Customers and Entrepreneurs
Enterprise buyers noted that startups who pitch them often fail to realize that digital health startups exist in a potentially crowded space.
Enterprise buyers want—and expect—startups to demonstrate differentiated offerings from the customer’s perspective; to craft their pitch and “tune out the noise of what’s not relevant [to their unique value proposition] and align [the enterprise customer to] what your priorities are.”
Experience with Pilots
The survey reports that almost 70% of enterprise pilots converted to paying customers. Key considerations noted include:
69% of pilots had an active user within six months of the “handshake.” i.e. the time period from closing the deal to their first active user in the pilot.Another 20% of pilots took between seven months and one year to engage their first user after the deal was made.After a first, essential pilot that’s often needed to get an offering off the ground, startups must be sure to strategically time-box the pilot pitch process for subsequent pilots; or risk wasting a lot of time and lost opportunity.
Pilots Can Be Distracting
The pursuit of pilots can dilute a startups efforts. If you’re going to do pilots, don’t do more than one or two and make sure they convert into cash. Otherwise, pitching a pilot versus a sale is just diluting your efforts.Startups should consider pricing pilots higher than the cost of a standard customer license. This can help to create aligned incentives.Better to focus on deeper engagements with potential partners than spreading yourself thin. It Won’t Go as Fast as You Think
It takes at least 18 months to contract with a health plan:
6 months generating interest or a pilot
couple months to find an executive sponsor/business owner to push it through
6 to 8 months for a technical security assessment
4 to 6 months for contracting.
Even when a startup launches and has a contract with an enterprise customer, it doesn’t mean their enterprise pilot customer will be ready to implement—it could just mean the startup is a queue.
Build it Before They Come?
Avoid being tempted to oversell your product before it’s fully ready to go. Or maybe not?39% of CEOs in the Rock Health survey approached customers for a pilot before their minimum viable product (MVP) was ready.Enterprise customers want something that solves their pain points and scales fast. A lot of startups aren’t ready for rapid growth even if the pilot goes well.
How Startups Can Pitch to the Right Enterprise Buyers Quickly
Know that sales cycles are long, requiring patience and a knack for relationship building. Finding the right buyer in a big organization can be disorienting.Crafting the pitch is tricky when talking to a complex, multi-faceted enterprise customer.Knowing your competition is important but knowing “who your competitors are targeting” is not generally a factor in closing deals. Startups should assume enterprise customers know the competitive landscape (even if they don’t let on!).Know your customer is more important: Several enterprise buyers felt that startups approach them with insufficient knowledge about their priorities, challenges, or knowledge of their organization’s role.
Make It Personal and All About the Enterprise
Every customer wants to feel unique; no one wants a “one size fits all” pitch. Differentiating your offering among competitors will strengthen the credibility of your product and sales pitch.Entrepreneurs need to make their customer feel special by personalizing their pitch. The key to personalizing an approach is learning about the customer. An easy way to understand the basics of your customer include:
Prioritize well-researched quality interactions over quantity.
Read the most recent SEC filings – annual reports – and familiarize themselves with the customer’s product portfolio.
Carefully review the LinkedIn profile for every customer on the sales call.
Consider involving the enterprise customer as a co-developer so long as they have the right approach—and are the right partner.
More Coming Soon
The 2nd blog post will summarize the remaining information resulted from the Rock Health survey. Again, you can read the entire survey here. I’m merely presenting the results of the Rock Health survey in an alternate format that may or may not help you appreciate its value.
For more information on developing a relationship with healthcare enterprises, see this post I wrote “Developing Relationships with Corporate Enterprises: Questions, Considerations & Approaches for Entrepreneurs”For more on digital healthcare, check out my blog at www.shimcode.com and consider following me on Twitter where I share as @ShimCode.