During a recent layover, I struck up a conversation with a gentleman who had more than 30 years of highly successful sales and marketing experience across multiple industries. As our chat turned to my own work history, this man visibly cringed when I mentioned my 20 years working with, and selling into, hospitals and health systems. In fact, in a painfully recounted story, this man told me of his most disappointing professional experience: attempting to stand up an HR IT solution targeted specifically to multi-hospital health systems. “It was one of the most bewildering, confusing, and, ultimately, unsuccessful experiences I have ever endured.”
He never tried to sell into healthcare again, and, has actively avoided companies where the target is the hospital industry. “I don’t regret that decision,” he mentioned as we wrapped up our conversation. “In fact, I think it added several years to my life.”
This conversation has stuck with me over the last few weeks. First, I can empathize with this man’s story: selling into hospitals and health systems is just plain hard. Second, in looking back over my own experience, I was struck by the many hurdles I have faced in successfully selling solutions into this space; perhaps more important, it was bracing to think through the number of times I was not successful – and the hard-earned lessons I have gathered from those experiences.
Reflecting on these lessons (while painful) has made me realize that there are some important insights I can offer to leaders who are currently selling into (or thinking of selling into) hospitals and health systems: lessons that are not immediately obvious for those unfamiliar with the industry. They fall into three buckets: process, people and message. In this three-part blog series, I’ll be covering one lesson per week. Please feel free to chime in and share your own experiences and lessons with our followers.
Lesson 1: It’s All About Process
Generally speaking, selling into any business (what we call business-to-business, or B2B) is more complex than selling directly to a consumer (what we call business-to-consumer, or B2C). Since you are not selling to a single decision maker, there are multiple roles involved in the buying process, and the sales price is typically a large enough investment that you must prove the ROI before the sale. So why is healthcare at the most complex end of the B2B spectrum?
The answer is simple: the organizations themselves are staggeringly complex. Health system consolidation has led to sprawling entities comprised of multiple hospitals, physician practices, outpatient centers, labs and clinics. Those systems are typically governed by an equally sprawling range of leaders with varying responsibilities at both the health system and the individual hospital level. Layer onto this a dizzying range of governing committees, clinical committees, and board committees and you quickly begin to realize that the health system or hospital you are targeting is simply the entry point to a vast and confusing organization.
The complexity does not stop there. Add to that the fact that the vast majority of health systems are nonprofits, with razor-thin margins, that must answer to multiple constituencies. Add again that the rules in healthcare keep changing, with regulation and reimbursement policy constantly in flux. Add again the increased risk present in healthcare: at the end of the day, patient lives are at stake. Add to that the natural risk aversion of a conservative and rules-bound industry. All told, you quickly begin to realize that the complexity is broad and deep and requires rigorous and careful process to navigate.
So, what lessons can we pull from this complexity as it relates to process? There are several lessons here.
The decision maker is not the decision maker. Always assume your entry point into the health system is not the decision maker. Obviously, this is not always the case, but the vast majority of your entry conversations will be with the end user, or the individual for whom your solution holds the most appeal. The decision-making process is typically multiple layers above this individual, and often made by a committee. Almost invariably this person (and by extension, your company) will have to build champions and interest several layers above your entry point and across several different constituencies.
Having a crystal-clear understanding of how the decision to purchase will be made, who will be involved, the precise timing of that decision, and how you tee up and enfranchise your champions is an absolute key to success. Think about one of your current prospects: do you know (and can you quickly describe) the process for getting to a yes? Have you tested that theory with multiple individuals at your prospect? Are you positioning yourself as a resource to help your prospect manage the sales process effectively and successfully? These are questions that I encourage leaders to constantly be thinking about throughout the sales cycle. Speaking of…
The never-ending sales cycle. The sales cycle for hospitals and health systems is long. Purchases are highly scrutinized by many people. You have to jump a lot of hurdles before you get to yes. You have to consider multiple, competing executive interests. You have to prove not only the ROI of your solution, but also the clear value of your product across a number of fronts: patient safety, patient care, hospital finances, hospital operations, strategic pain points. Add to that the vital importance of showing that your solution can be implemented with scarce IT resources and minimal impact on hospital staff and patient care. Carefully crafting your value proposition and delivering that message across multiple layers takes time, and requires vigilant management – all to make sure you stay on the sales roadmap I described above. This leads nicely to the next point…
Creating urgency. Urgency is a perennial sales challenge regardless of the industry. But building urgency in hospital and health system sales is particularly important. Be explicit about the urgency lever you are deploying. Understanding the health system’s strategic challenges and priorities is vital in crafting urgency that is both authentic and customized. Health systems are rarely impressed with pricing urgency levers, particularly for healthcare IT solutions. That said, building in some kind of incentive that ties the decision to a specific point in time is vital for you and your sales team. One of the best lessons for selling into hospitals is knowing when to step back and deploy your energy and resources elsewhere. How a health system responds to, and respects urgency, is an important signal for you as to how seriously they are taking the evaluation process. Another thing to keep in mind is…
Budgeting terror. Any health system leader will gladly regale you with horror stories of how complex, archaic and time consuming the budgeting/capital process can be. Simply put, the budgeting process is lengthy, political, and highly scrutinized. You need to understand the organization’s fiscal year, and if funding for your type of solution is budgeted, or even in a current category in the budget. If the answer to either of those questions is no, be prepared to nurture that account through one or more budgeting cycles. Even then…
You will lose. Often. Even when you have done all of this, be prepared to lose, regardless of whether you have the yes. With the time it takes to get to signature, deals can fall apart at the eleventh hour. In fact, at one of my previous employers (one of the best sales organizations I have ever encountered) the best hospital and health system sales teams maintained roughly an 18% conversion rate: i.e. 18% of their deals that entered an evaluation actually closed. This speaks to the importance of comprehensive pipeline management: cultivating prospects to replace deals that fall apart (despite all your best process management) is a vital foundation to successful sales in this industry. By definition, this requires a deep and broad lead-generation engine – a topic that will be explored in detail in upcoming Gen5 blogs.
In part one of this three-part blog series, we discussed the process for navigating the complex waters of selling into hospitals and health systems. Stay tuned next week for part two, The Unique Impact of Clinicians on Sales.