Decoding Long Sales Cycles in Healthcare: Strategies for Startups
It’s estimated that, on average, in healthcare, it takes twice as long to close a contract than in traditional Cloud businesses….
What’s the impact of these long sales cycles on 2024 planning?
Resource Drain. Long sales cycles can be a significant drain on a startup’s resources. You can find your team dedicating substantial time and money into nurturing these deals; all without the guarantee of a sale.
Delayed Revenue. Bad news, that $200k of forecasted Q4 revenue from the Intro Meeting the last week of September, it isn’t going to get recognized this calendar year.
Increased Risk. Unfortunately longer sales cycles involve uncertainty. Market conditions can change, champions can change roles and move companies.
There are some strategies you can take to help:
Plan accordingly. Build these timelines into your Sales Formula. Make sure you are filling the top of the funnel with high-quality opportunities; and diversify your pipeline so you are not overly reliant on a small number of deals.
Build Strong Relationships. Invest time in building strong relationships with potential customers. Make sure you are building consensus across stakeholders to ensure your deals aren’t at risk from a single person moving company. For larger sales, you’re going to have to get cross-functional stakeholders involved anyway…so might as well do it early!
Don’t ignore your existing customers. You’ve already done the hard part making a sale. Make sure they are happy with your product. This can help reduce pressure to close new deals. It’s a lot quicker to renew or expand with an existing customer than bringing on a new one, especially in healthcare… if you’re nodding along -you’ve probably experience the joy of the “New Vendor Gauntlet” - RFPs, IT evaluations, legal review etc - aka the fun stuff!
Seek Funding Wisely: Make sure you have adequate funding to weather these long sales cycles and come out unscathed.
Ok, so by now you’re probably questioning your decisions and wondering why you chose to launch a B2B product in healthcare…
Don’t fret, there is some light at the end of the (very long) tunnel! The good news is that according to a report by Bessemer Venture Partners, healthcare SaaS and tech-enabled services have LTV/CAC ratios almost double those of Cloud Companies, so the marathon process is worth it in the end!!
