Business type: Software
Industry: Healthcare Software
Product: New to market referral management software
Result: Scalable pricing model and successful product launch
In the mental health industry, referrals can be the primary source of new patient acquisition. Unfortunately, the referral process can be slow and consists of many documents sent via fax, email, and direct messages across multiple platforms. These documents are littered with critical details about the patient, their diagnosis, and requirements for qualified psychiatric facilities. A successful referral process ensures patient fit, timely treatment, and clinical effectiveness.
This client is a leading provider of fax digitization solutions, and invested in a new software solution to provide additional value to their customers, designed to:
The client needed help pricing this new software product for a successful go to market launch and leveraging it to help drive sustainable growth.
CHALLENGES AND OUR APPROACH
Challenge 1: The Anchoring Effect
Most established industries have an 800-pound gorilla that all other market players get compared to and must fight against for market share. In the world of healthcare software, that gorilla is Epic Systems. As a result, their pricing becomes the anchor and reference point in the industry, causing buyers to compare new offerings and prices to those of Epic.
Because of this, we needed to understand the unique value this new solution provided. Identifying the unique and differentiated value is an essential first step – and also necessary training for the sales team. It is critical for the sales team to address and correct customers’ anchoring behavior to focus on differentiated value. These capabilities must include moving buyers from the current anchor pricing by changing price metrics, improving or expanding product features, and/or improving value messaging.
Otherwise, purchasing decisions will be made off the anchor point, largely uninformed, and the opportunity is lost.
Challenge 2: Endless Use Cases
The mental healthcare industry tends to be fragmented. Providers could differ in: service provided, profit / nonprofit, ownership structure, size, and mission, to name just a few. If you layer the variety of stakeholders on top of this, you’d be faced with endless use cases and value drivers.
We considered all of this and recommended adjustments to the product packages to address the primary needs of each group. The good/better/best structure of the packages allow alignment of value for each stakeholder and their use cases.
Challenge 3: Anticipating Change
Policy changes in highly regulated industries such as healthcare can shift the entire market dynamic. This can cause headwinds when creating scalable pricing models. As an example, our team anticipates that there may be a move to Value-Based Insurance Design in the future, so we took that into account by selecting a "per patient" price metric. We also left flexibility in our value quantification model.
When new products or competitors (or in this case, regulations) shift the landscape, businesses must be able to quantify the impact on their differentiated value. Therefore, setting models up to account for that change is critical.
In many industries, companies cannot avoid the 800-pound gorilla. However, clearly understanding a product's differentiated value and effectively communicating that value can help break the anchoring effect and improve sales win rates.
Businesses can target different segments of a highly fragmented market by effectively packaging their offerings. Proper packaging and fencing of your products will allow customers to easily choose the optimal solution that fits their needs while ensuring you don't "give away" value or discount your offerings to close a client.
In established and fast-paced industries, build models that will allow you to adapt to change quickly. This includes incorporating possible policy changes for the future and how they will impact price metric, value, or scaled pricing as the product matures.