Navigating the Pipeline: A Digital Health Entrepreneur's Guide to Customer Acquisition
Navigating the Pipeline: A Digital Health Entrepreneur's Guide to Customer Acquisition
As we enter a new year, pipeline construction and management seem like a crucial element to discuss as it is too often mismanaged. We see too many companies that could have been in a much better position if only they would have mastered their pipeline. It's not just another strategy exercise; it’s the lifeline for a business
In this post, we will explore the importance of this process, delve into practical examples, and outline crucial do's and don'ts for digital health entrepreneurs.
1. Why is a pipeline so important?
2. How can you start managing a pipeline when you don’t have any data?
3. The importance of setting realistic probabilities
4. Measuring pipeline conversion, what you should measure and you shouldn’t
5. Learning from failures
6. Tech tools for pipeline management
1. Understanding the Importance of a Customer Pipeline
A well-managed customer pipeline is akin to a roadmap. It helps you anticipate future business opportunities and challenges, making sure you're not just reacting to the market but actively shaping your business's trajectory. Whether it be hospitals, health plans, pharma or any other potential customers, tracking what’s coming and assessing its potential to materialize (i.e. assigning probabilities) is crucial. Big contracts also mean you need to be ready for heavy lifting around deployment and onboarding which can require significant resources (Hi Epic IT team!)
If you aren’t ready, these contracts will remain only a mere booking (as you won’t be able to recognize any revenues). This means both product work in advance (integration with the specific EHR you customer is using for example) and customer support (services…) in onboarding new users.
2. How can you set probabilities without having data?
One of the hardest parts when starting to nurture a customer pipeline is actually setting (realistic) probabilities that contracts will be signed. Being able to predict pipeline conversion is maybe one of the most important factors that can help companies build their budget and team the right way (as hopefully illustrated above). At the get go, doing it is really hard, as it is difficult to predict without having any data to base your assumptions on. The easy and bad solution is waiting until you have data. In the meantime you burn a lot of money.
So what can you do? Use proxies. The closer these are to your core business the better. Try to gather as much information as possible about your peers (i.e. similar companies selling to the same buyer persona) and establish a ballpark. For example, selling to large health plans usually takes ~18-24 months. This is a very general number that could vary based on the specific product and buyer in the plan. Either way, predicting you will do it in 6 months is problematic, unless you know for a fact that other companies were able to do so and your specific buyer persona (CXO, VP of X, …) can move fast(er). Otherwise, if you haven’t already done it more than a few times, it is better to stick with the proxies you have. The more experience (and data) you have managing your pipeline the easier this exercise.
3. Being Realistic in Pipeline Management
We often see companies overestimate the probability a contract will be signed (or how big it will be). It is one thing to show this prediction while fundraising (and just remember most investors tend to keep these pitch decks and will hold you accountable against the numbers you set) but it is another thing to build your budget based on these, and reaching year end without the X amount of money that was supposed to balance your expenditures. Knowing who your specific budget owner is and what the ballpark of contracts they can execute are is a good sanity check (selling to department chief vs. selling to a hospital CFO or CEO). Make sure you set realistic expectations for your pipeline to avoid resource misallocation or facing budget constraints. Regularly review and adjust your pipeline projections based on market feedback and internal capabilities.
Do: Make sure you understand exactly which KPIs you are supposed to meet. This could be hitting a certain % of engaged members, showing ROI of x within y months, reducing spend by your customer on a specific item by Z and so on. See these great posts by Morgan Cheatham at Bessemer, and this one from the Greycroft team for additional color on this point (payers focused). Additionally, look for similar business interactions in the industry to understand if a particular customer is usually a “one and done / death by pilot” customer or actually interested in a broader scope.
Don't: Avoid becoming overly optimistic without concrete data to back up your projections. It is very easy to get false signals, especially around the difference between TCV (Total Contract Value, which in healthcare is usually only a theoretical number) and real revenues.
4. Measuring Pipeline Progression
Measure. Measure. Measure. The more data you have, the more realistic and accurate you can be. Combine quantitative measures (like conversion rates and sales cycle lengths) with qualitative feedback to get a more complete picture of your pipeline's health. Avoid vanity metrics that can be easily done in healthcare (how many people attended a meeting from a hospital team…)
Example: If your product has a high initial interest but low conversion rate, qualitative feedback might reveal issues in user experience or pricing and thus guide your next steps. Healthcare B2B is usually very sticky, so if after a full-blown deployment nobody is using your product that should warrant very quick and decisive action.
5. What Can and Cannot Be Measured
While many aspects of your pipeline can be quantified, such as lead generation rates and customer acquisition costs, some elements remain intangible. Customer satisfaction and brand reputation, for instance, are harder to measure but equally important.
Do: Implement customer surveys to gauge these intangible aspects. Getting into the clinical workflow is contingent on having a great NPS. Try to determine the 2-3 top parameters you need to know about your customers (ease of integration? Time for a new user to start using your product? Rule of thumb is physician will give a new product no more than a minute or two). Finally, make sure you put enough attention to building a clear onboarding and customer success process and constantly refine it based on these qualitive and qualitative inputs.
6. Learning from Pipeline Failures
Not every lead will convert into a customer, and that's okay. Selling in healthcare is hard! Nevertheless, failures provide valuable lessons. Use them. Analyze why certain leads didn't convert and use these insights to refine your approach. Signing too many contracts as pilots that are not converting to full blown deployments as anticipated is one common pitfall. Another is assuming you figured out your ICP (Ideal Customer Profile) just to have too many demos end with “we will be in touch”.
Do: keep tracking the same parameters and assigning probabilities to make sure you are comparing apples to apples. Too frequently we see companies that each quarter build a new way to track their pipeline.
7. The Role of Technology in Pipeline Management
There are many readily available tools that can be helpful in managing a pipeline. Use CRM software to effectively manage and analyze your pipeline (Salesforce, Monday) Use conversation analytics (Gong) to tease out insights on what’s working and what’s not. Use knowledge sharing software (Notion) to quickly disseminate and document important insights.
Parting thoughts
Building and managing a robust pipeline is a dynamic and ongoing process for digital health companies. It requires a balance of realistic expectations, careful measurement, and continuous engagement. By focusing on these aspects and learning from both successes and failures, you can ensure a healthy, evolving pipeline that will be instrumental in managing your business in the ever-changing landscape of digital health.
Remember, the pipeline is not just a sales tool; it's a strategic asset that, if managed well, can become the cornerstone of your digital health venture's success.
May the odds be in your favor!
Big thanks to Katharine Gilbert from our team for helping with this piece!
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