Defining a Value Proposition
Welcome to Part 2 of our Healthcare Hacks Series! Previously, we focused on how to define a problem to solve when first developing your digital health product/service.
Today, we focus on the next step to building a great healthcare technology business: how to define your value proposition.
Know Your Value; Show Your Value
A value proposition is a clear description of the expected value to be delivered once your product/service has been acquired by a user. Clearly defining a value proposition is a key aspect of designing a business strategy. It is nearly impossible to sell a product if clients are unable to easily imagine how they will be able to derive value from utilizing your good.
But developing a value prop for healthcare technology is - like everything in healthcare - more complex than other industries. Let's see why.
Healthcare Sales are Different
One of the most important things to remember when dealing with hospitals is that many are not-for-profit, mission-driven organizations. Unlike most B2B customers, a hospital's mission is broader than maximizing shareholder value and profits. In the case of hospitals, their shareholders are the communities and the patients they serve. Instead of looking to maximize monetary returns, they are looking to maximize the quality and quantity of care they can provide.
In fact, hospital C Suites face two competing financial pressures. If they invest aggressively into new technology & care innovations that don't pay off immediately, they run the risk of heading into the red.
But if a hospital leadership team ended the year with huge profits on their books, they may face criticism for not re-investing those profits into innovation and patient care. Keep this tenuous balance in mind when articulating your value proposition – it can’t be purely financial.
Sales prospects have many constituencies
For each constituent group, their incentives, motivations, and departmental culture will all be unique. The best methods for articulating your value proposition are derived from understanding this variation and considering your customer’s perspective and needs.
This means understanding everything from their daily workflow headaches ("no SSO?!") to their long-term goals ("we need technology to help us shift to VBP"). Having a holistic image of your customer will show them that you are aware of the current "pain" they face; you can use case studies from peer organizations to demonstrate your ability to ease that pain.
You need to be able to show real tangible results and figures. Effective tools for doing this are case studies which explain how a similar organization with a similar team leveraged your technology to drive change – and in doing so highlight the old systems they replaced and their shortcomings as well as the outcome and win achieved in the process.
Similarly, using demos of your product to articulate these same value propositions through this lens is a powerful tool; however, demo's should not be used as sales crutches, and putting too much focus on your demo without first communicating your value props has been shown to actually turn off your prospects.
There is a cost of switching solutions
New solutions often replace existing solutions, and that may require significant effort from your client to implement & integrate your solution. Value props should address the financial and implementation costs of switching solutions.
Without clear insight into the current solutions that a customer is using, it will be harder to highlight the correct metrics in your value proposition. If you don't know what solutions your prospect is currently using, just ask.
Hospital C Suites are smart, savvy buyers; they know a solution can appear to be cheap, but the internal resources required for implementation may be expensive. When developing your value props, address the transaction costs involved in adopting a your solution (implementation, IT resources, training staff, etc.) & why you are confident that the switch will be worthwhile for your prospective client.
By considering these aspects when defining your value proposition you will be able to connect with customers and show them that not only are they getting a great solution, but they are also purchasing from someone who truly wants to help them succeed.
Remember to ask yourself:
Who is the decision maker in this purchase? What is my value proposition to them?
Who is the end-user of this tool? How am I improving a process for them and/or driving new value?
What is the cost of switching to my solution? Why is it worthwhile for my clients?