5 Lessons on Moving from Pilots to Sales
Chicken or the Egg?
New digital health startups often face the same dilemma: selling a product that few clients (if any) have used despite the full weight of a highly-qualified team and investors behind it. Often times, startups may give away their product for free in the form of a “pilot study” to get validation and justification for a paying relationship down the road. Without a new startup’s ability to prove efficacy, a health system that is considering adoption of the technology must be willing to take a risk. In what has been coined Pilot-Paralysis, the compromise to mitigate this perceived risk has been for startups to conduct pilot studies endlessly, but often by underestimating the time it takes to convert pilots to paying contracts the startup ends up running out of funding before ever crossing the finish line.
Thanks to our team of experienced advisors sharing horror stories about never ending pilots, we knew that we needed to avoid this trap. However, the challenge we faced early on was how to effectively move away from pilots toward paid contracts.
Here are 5 lessons we learned in establishing a better model:
Don’t give things away for free. Even if agreeing to a pilot is the only way forward - charge for the pilot. We learned that customers respect us more and have skin in the game when we put a price tag on the work. If the customer walks away, it likely means it is not the right fit in the first place because if the solution solves a real problem, customers should be willing to pay.
Set expectations early. Don’t just be happy that someone agreed to a paid pilot, make sure they agree with what happens next. Build in a long-term contractual commitment at the beginning of the pilot, if and when the pilot goes well.
More than champions, find SUPERHEROES. A champion is someone who will go to bat for you and make introductions; a superhero on the other hand is someone who will roll up his or her sleeves, knock down walls, put his or her own reputation at risk, and not given up until the job is done. These are people who are an extension of your team and they are out there. Find them.
Stack the deck, ensure a return. Many startups get excited when a potential customer starts talking to them. They want to prove their worth by setting ambitious goals and knocking the ball out of the park. The reality is, things always take longer and are harder than anticipated in healthcare. We learned early on to set more realistic and achievable goals with early customers. It’s okay to set a modest goal of hitting 10% improvement and achieving 25%, rather than claiming a 50% improvement and only hitting 30%. Even though the latter is better in absolute terms, the former will get you paid.
Pick short term metrics. The beauty of startups is the flexibility to choose where to start - so choose wisely! Don’t pick an outcome that takes 10k patients and 3 years of clinical trial time to achieve, even if the outcome is “the holy grail” or “gold standard”. Pick an outcome that much easier and quicker to show, like “did the patient do X or not do it?”, which only takes 1 month and 100 patients to reach statistical significance.
Ultimately, we learned that success comes down to execution and persistence. We are still learning, but hopefully these lessons can help other digital health startups break through this silly chicken and egg dilemma and get to revenue.
About MEDUMO Medumo is an intelligent patient navigation platform that creates value for hospitals by improving operational efficiency and patient outcomes through multidisciplinary validated clinical algorithms. Through Medumo’s digital patient program called CareTours, Medumo provides a human touch to the delivery of every instruction a patient needs for the best possible clinical or procedure preparation. Learn more at www.medumo.com.