Guest Article: Iterative funnel management improvement to reduce health IT sales failures

A frequent question I am asked by startups and their software focused leadership teams is, “how do we generate sales and what is the appropriate process to follow in creating our sales expectations.”  My friend Steve Carbonara has been selling software to healthcare enterprises for years so I asked him to write a companion to his piece on selling to hospitals. Steve is currently the Chief Sales Officer at Cohealo, Inc., a VC backed healthcare services firm that optimizes purchasing and consumption of medical devices and equipment. After 8 years in corporate sales with Misys Healthcare and Allscripts, Steve has worked as a consultant with many start ups and medium sized businesses to optimize their sales processes.  If you’re a tech-focused startup there’s a lot of help out there on the technical side but very little on the sales side so I invited Steve to share his advice on how to sell health IT products, especially EHRs, into physician practices and hospitals. Here’s part 2 of what Steve had to say on improving sales through better funnel management:

Thanks again for joining me for this second installment of funnel management.  During our last conversation we discussed setting yourself up for success by laying the foundation for your business to drive funnel management creation, now let’s look at the next steps, actually managing the funnel.

Once you’ve defined the scope of what you need to do and what your end goals are going to be, you have to manage the process.  Whether you utilize Excel spreadsheets or a Customer Relationship Management (CRM) software to track all of your deals, you need to make sure things don’t fall through the cracks.  Per the previous post on funnel management, after you have defined the steps of your sales process based on the feedback and validation from the market, you will then have to build your CRM tool around that process.  The individual steps defined and the workflow through this sales process should culminate in a repeatable action set that defines best practices and allows you to build a sales team that is measured off of real activities that are known to result in tangible results.  Now as your sales representatives complete each activity that is in your process, and thus being captured by your CRM, you will be able to create metrics that define success in your business and that allow you to more accurately forecast sales and modify your approach to meet the customer need.

A new company just does what needs to be done and then learns the appropriate metrics to measure, while if you are an existing business, you should already understand the metrics needing to be tracked. Your job as a sales leader within the business is to accelerate the sales process to drive new revenue per month/quarter/year, so learning how the activities in the process can be influenced is very beneficial.  How long from the first cold call to the contract signing does your team average?  How long does it take to turn a cold call into a demonstration of product?  What is your percentage of closure on prospects that did perform a discovery call prior to demonstration versus prospects that went into a demonstration without providing time for a discovery call?

With one quick glance at your tool you should be able to decipher answers to any question that senior leadership desires, knowing that the only reason they are asking is to see if you can drive new revenue faster today than you did last quarter or last year.  As you learn more about your market, your buyers, your competition, the easier this becomes and your team will become more efficient and effective.  This can mean many different things; 1- with more knowledge your team knows how to better target their efforts, thus not wasting time with tire kickers who aren’t going to buy, 2- pipelines will accelerate as best practices are put into use, 3- you may learn that your sales efforts require 4-5 highly trained and focused reps not 12-15 less skilled reps, this will drive your cost of sales downward as you don’t have to invest as heavily into your team.  In the end, this is not a report to be reviewed monthly; this is a day to day, week to week process which drives your decisions on everything in support of your sales team.

If tracking is under way and your data is good because you built your sales process to match your prospects buying process and your team is dedicated to tracking their activities in your tool, then the last thing to do is forecasting.  Now with all that being said there is still one more thing you need to do to be good at forecasting, you need to know your buyer.  Every business has trouble delivering the profitable revenue that they thought was going to be closing in a month or quarter. Ever wonder why this is happening?  Because even though you have all of the data and your team is driving activities through your tool, there are still unknowns.  You may be able to prove that 60% of all prospects that got into the proposal stage closed and thus you  can believe this to be true going forward.  The problem is that variables change and then in a quarter where you forecasted 10 new contracts, 5 of them push and so my team is going to miss their goal by 50%.  You have to know your buyer, your sales reps need to know exactly what’s going on in their deals, and this is how you avoid these huge hits.  Honesty is the best policy, why set expectations for revenue that isn’t real, have the hard and real conversations with your team and you’ll be forecasting just fine.  For example, during my time in the field I found that forecasting was pretty simple, there were 4 hurricanes in Florida one year, so my forecast was $0 every month for 4 months.  Now, my boss didn’t like hearing this, and his boss liked it even less, but once the area recovered I forecasted $500,000 and it came in within 60 days (on an annual quota of $1.2M).  Why, because I knew the customer, their needs and their issues and I was able to proactively inform my company of proper expectations.

Client Relationship Management – CRM

When do you move from Excel spreadsheets and Word documents to a fully capable CRM?  Good question, I wish I had an answer.  The answer is only dependent on your firm and your needs – do you have the budget to pay for one, if not, do you have the time to work with a free product?  Either paid or free product, who will own the day to day management of the system?  I’ve worked with many of these solutions; Sales Logix, Sales Mechanix, Salesforce.com, Sugar, and Netsuite; and the one thing I can say is that they all take a tremendous amount of time to set up prior to using.

Identify some of the following needs and choosing a solution will be much easier:

  • Do you want to track sales opportunities and the contacts at each prospect
  • Do you want to build proposals out of this product, or do you utilize another system
  • Do you want to build invoices and thus have some type of financial reconciliation
  • Do you want this system to be a full solution, including all financial needs, essentially replacing your QuickBooks solution – or do you just want a system to integrate to QuickBooks

These are just a few questions that would help you get down the line with deciding if you should even look into CRM solutions.  If you decide to go with one then my advice is to make sure you take the time to review your current processes and make sure that you don’t get caught in the ‘garbage in, garbage out’ issue.  I’ve seen companies that tried to implement a CRM quickly to make sure they captured all of the great data being generated, the problem was that they didn’t map out their strategy in how to utilize the CRM so they ended up just having a bunch of information that was not quite usable.  Review your processes and build the system around your best practices and know what you’re trying to gain from buying a CRM.

Also, don’t forget to review your needs for other efficiency tools like setting up an online base camp, where your team around the country can dial into a common set of folders where the latest documents are distributed.  This allows for everyone to see the same document, reducing the number of versions being reviewed.  Some CRM’s will allow for this as well but some won’t, so you may need to do this on a separate system.  Many of these base camp technologies also allow for messaging so that your team can communicate much more quickly and efficiently than just using email.  Reducing confusion and repetitive work will enhance your firms’ effectiveness and reduce stress on your employees.

When the Matrix is in Place but Does Not Work

Forecasting appropriately and closing business isn’t always easy; I’ve consulted a few firms that I had to forecast $0 not because of a hurricane but because their product didn’t answer a problem of the market.  This is where the company may have missed on their product, their marketing, their pricing, or some part of their overall strategy, because the market wasn’t buying it.  If your reps can’t forecast business appropriately or close business in a repeated fashion, then as a business owner you must go back to strategy and find out what you’re doing that the market isn’t accepting.  If you don’t do this you’ll end up going through rep after rep, just churning through effort that doesn’t deliver you any revenue.

Remember, sales people are the pulse of an organization – if they are churning then you’re firm is not providing them a reasonable method of making money.  They are there to make money, they will deal with a lot of stuff, but not making money is not an option, so when you see turn over start looking at your process and your strategy.

There is one difference to the above information if you have no sales reps and work totally with channel sales – the difference is that you have no control over the ‘partners’ that you have, so defining much of the above is not even an option.  Why is this?  Well, if you’re a big firm in the industry you may have a ton of control, but if you’re a young or small firm, you’re probably a late entrant and don’t have the customer base to exert power over your channel.  If this is the case, then you may request information from your partners but they have other needs, as many of them are carrying your product in their bag in addition to a core solution.  It is easier if your product is an ‘add on’ to the partner’s product, or vice versa; meaning that the two products are sold together as one.  If this is not the case, then the partner will always lead with their product first and then have your product as a ‘nice to have’.

These are the reasons you have to consider heavily for or against selling through channel partners.  You also have to know the market and the types of firms out there that may be a partner, versus working with anyone who will say yes to carrying your product in their bag.  Having partners who don’t provide you enough value means you will be spending a ton of your time managing to no revenue – when you could be out working deals on your own and at least generating some revenue.  The channel partner idea is the ‘fools gold’ where so many small start ups think that the spigot will turn on and riches will flow, that’s not the case.  With good planning and proper expectations set up in contractual form, channel partners can be a huge value add to your business and your bottom line.

Take away, funnel management depends on many things, from your sales and marketing strategy to your pricing strategy to your sales channels – don’t be afraid to modify or change processes that were implemented but aren’t working.  Don’t get yourself ‘stuck’ in a cycle of failure when you could be selling business and building revenue with a few minor tweaks.

Drop me a comment below if you disagree or have anything to add, I’d love to get some feedback.

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