Only one in 500 new businesses in the US will reach at least $100m in revenue, and only one in 17,000 will see $500m in revenue. Those sobering statistics, reported in the Wall Street Journal, are enough to make any startup founder wake up in a cold sweat.
Growing a healthcare subscription service business from initial sales to scalable and predictable run rates is complex. Nailing go-to-market is even harder if the founder comes from an engineering and product background and considers sales and marketing a foreign concept. But at GE Ventures, we advise on executing key principles on the path to success.
Jyoti Bansal, founder and chairman of AppDynamics, recently shared the top reason why eight of 10 startups do not survive – they could not find a good market for the product or service they were planning to sell. The inclination to focus on what is being sold, and not to whom or how it is being sold, can ground any startup. Our seven go-to-market principles offer a solid framework to allow your healthcare subscription-based business to fly.
Paul Magelli, co-founder and CEO of Apervita, a health analytics and data company in the GE Ventures portfolio, comes from a sales background. He believes these seven steps are precisely how startups need to think. He said: “It is a craft. You take what is qualitative and move it to quantitative. Week by week you learn new things, and test and assess your process to get better and better.”
Sales team – create a hiring formula: Just as you need the right components to create your product, your sales representatives need to possess the right characteristics to fit in your company’s culture and understand your buyers. Our friend Mark Roberge at HubSpot used this list to nail his hiring:
First, identify the ideal characteristics for your sales team. These could include:
• Coachable – are they able to change behaviour based on feedback?
• Curiosity – can they ask probing questions of prospects?
• Prior success – how have they excelled in sales or other endeavours?
• Intelligence – are they or can they become a subject-matter expert?
• Work ethic – are they willing to put in the effort to succeed?
• Preparation – how do they learn and ready themselves for a task?
• Culture fit – do they have the same values as the company, can they work well in its environment?
Next, detail ways to identify how well a candidate matches the qualities you deem important. What behavioural questions will you pose? Will you ask them to complete an exercise prior to or after the interview? Will you use role play, have them solve a case?
Finally, create an internal-use scorecard that reflects each characteristic, how you value it on a scale of one to 10, and how well the candidate reflects that quality. Make this process repeatable to analyse the correlation to the preferred hiring characteristics and sales reps’ success over time, and adjust if it is failing, or lean in if it is successful.
Sales training – make it harder: Some companies offer one to two days of training before they let their reps sell. In today’s complex world that is not enough. Qlik trains its reps two weeks before they start selling and we often see much longer training programs outside software, for example in medical device sales. The bottom line is that you need your team well educated to act as consultative sales professionals. To help them in the short and long term, it is helpful to create an end-to-end repeatable sales playbook. It should contain elements such as:
• Market overview.
• Your corporate message, including unique value proposition.
• Solution capabilities.
• Key use cases by industry and how to run a use-case workshop.
• Roles of target buyer audience and process for buying.
• Customer challenges and how you can help with return on investment.
• Customer case studies.
• Guide for telling the company or product’s story to any audience.
• Detailed buyer journey and sales process.
After creating and implementing a rigorous training program, ensure your reps know the material. Create exams or a certification process to verify their ability to represent your company and its product or service successfully, and ask customers for feedback on how they fare.
Sales management – make it programmatic but not robotic: Sales reps cannot be left alone and expected to succeed. They need to be cultivated and coached to grow within your company. Someone must lead the team, whether a vice-president of sales or a star sales rep who is up to the challenge. Follow a metrics-driven sales management formula. It enables you to identify the areas where each rep could improve and to prescribe measurable daily, weekly, monthly and quarterly goals and objectives.
You should also design an incentive program to encourage your sales reps. The incentive should drive the behaviour you want to see. For example, if your company is seeing higher churn than desired, conduct a sales contest that rewards multi-year contracts. Or if sales reps do not seem sufficiently committed to your company, outline a path for career growth based on actual sales.
Demand generation – we are not Apple: Good hires and great training of your sales team only goes so far. Startups, in particular, benefit from a marketing program to build awareness and interest in your company’s services. Implementing an effective demand-generation formula enables your company to build relationships with prospects and nurture bonds with your customers – especially critical to a subscription-based company.
A key component to a successful demand-generation program can be the creation of a content factory. For example, you can create a premium piece of content such as a white paper, analyst report or e-book to use as the anchor. It could spin off into multiple content assets, from blog posts and videos to webinars and premium checklists. In this process, you can gate some content – requiring users to provide contact information – and enable other content to be accessed by all.
Not only will the data collected from the gated content viewers fuel the pipeline directly, tracking for each piece of content will allow you to use predictive lead scoring to see what content generates higher quality leads and conversions.
Customer success – find the holy grail of all software-as-a-service (SaaS): Detail what success looks like for your customer and your company. Start with vision – what you want to help your customers do – and create your mission – how you will help them do that. Then detail each mission with the strategic goals necessary to achieve that mission, and include corresponding initiatives and measurement.
Here is how that might look:
• Vision: empower customers to extract maximum value from our services, driving our company’s profitable growth.
• Mission: make renewal inevitable and increase customer spend by driving use-case expansion and adoption of our services.
• Strategic goal number 1: make each renewal inevitable.
• Initiative for goal number 1: protect all customers and dollars up for renewal and identify customers who are potentially at risk and drive use-case workshop
• Measurement for goal number 1: calculate gross renewal rate, customer satisfaction rate or net promoter score.
Share the customer success mantra with all sales reps to ensure they understand what your company envisions. Better yet, align pay to customer success.
Revenue management – go from art to science: Revenue management is the cornerstone of data-driven sales. Here your vice-president of sales or chief revenue officer will team with your vice-president of finance to make sure the most accurate operational plan is built and signed off by the board.
These six levers – number of sales reps, ramp time, attainment models, cash impact of multiyear deals, commission plans and churn rates – will impact the health of your startup. Forecasting them as accurately as possible can significantly help you with fundraising, forecasting and managing your board of directors. Each of these six levers has an impact on how your go-to-market is run.
Product management and sales – learn from the best: Take a lesson from AppDynamics, which took 15 months and multiple pivots to find its product-market fit. The best way to find product or market fit is to talk to a lot of customers because it is about more than product features – it is about the business case. How does a handful of engineers developing a product and service do that? That is where the sales reps can help.
As Lars Dalgaard, who founded and sold software-as-a-service provider SuccessFactors to SAP for $3.6bn, said in a recent podcast: “Get out of the mindset that sales is a necessary evil – make them unconditionally inclusive within the organisation. We made reps know they were as important as engineers.”
As a result, the sales reps opened up and shared product stories from the field that were immensely helpful to the engineers.
Conclusion
Following these seven tips will allow your healthcare subscription startup to stand out from your competitors. By embracing this approach as a critical component of your startup strategy, you will have a strong head start to be one of those rare new businesses that defies the odds in achieving nine-digit revenue success.
This is an edited version of an article first published by MedCity News at http://medcitynews.com/2017/01/7-insider-tricks-ge-ventures-uses-scale-portfolio-companies/?rf=1