Digital health startups all need customers and traction, and adding “pilot customers” can be quite appealing, particularly in the earliest stages. It’s no secret that low conversion rates, protracted sales cycles, and steep discounts can result in poorly designed pilot customer relationships consuming time and margins from scrappy startups. However, pilots can be similarly detrimental to the healthcare providers, ranging from hospital systems and physician groups to small practices.
The reason that pilot contracts are risky, even unfair, for providers is simple: pilots require substantial upfront cost with minimal guarantee of benefit. Research from Harvard on the value of sales cycles stresses not only the import of well-defined pipelines for vendors, but also long-term alignment for the benefit of the customer.
Health IT vendors, particularly those that are “serial piloters,” use the three or six-month period to squeeze data out of the customer, often consuming precious staff time. A solution designed to help the provider realize economic gain in quarter or years; however, the primary incentive in a pilot relationship is for the vendor to demonstrate value. Unsurprisingly, this frustration shared by both providers and startups manifests in the form of investor concern. Digital health though leader and investor Rock Health shared survey results showing that more investors worry more about sales cycles for digital health than all other concerns combined.
In an efficient purchasing process, the vendor does not put the burden of proof on the provider. Rather, the vendor/provider discussion is consultative and data-driven. To make this possible, health IT startups that hope to earn the business of innovative providers must take it upon themselves to define and collect the relevant metrics for patient engagement, satisfaction, and (of course) hard clinical outcomes, and providers ought to
- Ask for the data first, with high confidence intervals for clinical outcomes and lasting engagement for patient populations with chronic conditions.
- Check for experienced customer success and technical support teams.
- Opt for scalable monthly pricing in favor of high upfront or short-term “sprint-style” pilots.
Want to see how Epharmix, the evidence-based digital health company, uses clinical research and cutting-edge technology to engage patients with multiple chronic conditions and help improve health outcomes? Try a 3-minute demo of Epharmix here.
Graphic source: https://rockhealth.com/insights-digital-healths-active-investors/