What To Do When A Prospect Goes Dark

The CEO of a startup that I’ve been doing some consulting for wrote to me with the following question about a prospect that went dark. I know this is a challenge that comes up for a lot of people so I thought I’d post my response here. Here was the question:

I have a question for you. If a lead that you've been pursuing / developing for like over 6 months goes unresponsive to two emails, what do you do? In most instances where the development time has been that long, usually someone has said "yes" or "no" or "not now" but this is the first time of just radio silence.

Thoughts? And one backdrop to this is that our point person that we were working with for the 6 months left for a new job, we were handed off to another person that we had met with maybe for the last 3 months but in a different division.

My answer:

Your question is a good one. This is always a challenge. A few thoughts:

1. One approach could be to just get the person on the phone live. Block out some time during the day and just call the person (though I know it's hard to get people live these days). If you reach them, be clear that you're not pushing things -- that you just thought you'd call to check in to see where things stand as you're trying to prioritize projects for next year, etc. You want to gauge if there's still some interest.

2. If you reach out again by email, look for the 'no'. That is, do not reach out with the purpose of moving the conversation forward; reach out with the purpose of finding out what's going on. If it's a no that's great because you can put your energy in another direction. It’s hard to say no to salespeople, make it easy for them. something like "hi, sorry to reach out again, we're in the process of prioritizing projects for next year -- assume I shouldn't include you on that list? Please confirm when you get a moment. Thanks so much."

3. Another alternative would just be to back off. Remember nobody wants to date the guy that keeps calling and texting begging them to go out. Keep that credibility, you have better things to do than reach out to them. Perhapsgive it a couple months and reach out when you have a real update -- new clients, new funding, product improvements, etc. and setup a meeting to give them an update on what some of their competitors are doing, etc.

4. Finally, you'd know better if it's appropriate but you can always reach out to others in the organization. Just to validate that you're talking to the right person. There may be other groups interested in the product -- you can always try to go up to more senior execs. But if you do be careful to position that conversation as broader than the initial one you had (a CEO level conversation as opposed to simply a business unit conversation).

I don't know the situation well enough to accurately pick the right approach but I hope some of that is helpful.

Craigslist, Facebook & EMRs

Benedict Evans has a phenomenal post up on his blog where he discusses the future of LinkedIn. Go read it, it’s excellent. In it he talks about the law of bundling and subsequent unbundling of web services. He uses Andrew Parker's brilliant image below to illustrate the point.

Craigslist came along and bundled everything into one place and, as a result, completely dominated. They destroyed multiple businesses in the process (including the rental and roommate web service I worked with just after college). They were immensely successful.

But now we're seeing the unbundling of Craigslist. Small players are coming in and biting off small pieces of their business and providing superior value. AirBnB does room rentals better than Craigslist, StubHub is a better ticket reselling service, LegalZoom is a better place to find legal services, etc.

Craigslist detractors believe that this will be death by 1,000 cuts.

Craigslist isn't alone. This is exactly what Facebook has been going through over the last several years: Twitter is attacking the status update, Foursquare is attacking the location feature, Instagram is attacking photo sharing (so much so that Facebook was forced to buy them), Vimeo is attacking video sharing, etc.

Of course, while unbundling is bad for the bundler, it’s great for the consumer. Consumers get more value, more features and easier to use web services.

When I saw the Craigslist image I couldn't help but think of the large EMR (Electronic Medical Record) companies -- Epic Systems, Cerner, Athena, Allscripts, etc. These companies have provided immense value by bundling and integrating a massive amount of clinical data with a nearly endless variety of healthcare related software services. They manage ambulatory clinical data, inpatient clinical data, practice management, patient communication, prescription filling, patient scheduling, billing, meaningful use compliance, population health, specialist referrals, patient engagement, risk management and many other things under the same platform. And just like Craigslist and Facebook, they've benefited hugely as a result.

But you can begin to see some cracks in their armor. As clinical data moves to the cloud, more and more startups are coming along and biting off small pieces of the EMR business and providing better value. This is the beginning of the unbundling of the big EMRs.

That said, what's easy to do in b2c software isn't so easy in b2b software. There are significant switching costs associated with switching health IT vendors and most hospitals and health systems are very risk averse and will take their time adopting new technologies (it's much easier for an individual to buy a ticket on StubHub than it is for a hospital to buy a new patient portal).

But with the dollars that are flowing into healthcare focused venture capital and the excitement around those investments, it’s only a matter of time before we see this unbundling accelerate and see more value flowing to providers and patients. And that's a good thing for our healthcare system.

When Selling A B2C Marketplace, Worry About The C, Not The B

A traditional tactic for enterprise salespeople is to be very focused on their prospect’s business – their strategic priorities, their competitors, what keeps them up at night, how they’re growing, etc. But when you're selling a marketplace the focus should be less on the prospect’s business and more on the consumer. Some examples of these businesses include:

• Yelp
• Etsy
• Open Table
• WorkMarket
• Expedia
• Skillshare
• Amazon Marketplace

These businesses are selling their marketplace. They're really just a middleman between a business and a set of (hopefully) engaged consumers.

It's important for Open Table’s restaurant salespeople to understand their prospect’s business, but it’s much more important for them to understand the consumer. What do they want to eat, when do they want to eat, what kind of experience do they want, how do they want to be marketed to, etc. And most importantly, why is Open Table going to be their destination when they look for a restaurant?

Your customer’s know their business better than you do. There’s not much you can tell them that they don’t already know. But they very likely don't understand the consumer as well as you do. So when you’re selling a marketplace, don’t bore them by trying to be an expert on their business, educate them by being an expert on the consumer.

ACOs vs. HMOs: This Time It's Different

Last week I came across this article titled, Balancing AMC Mission, in the New England Journal of Medicine. The article talks about how Massachusetts hospitals – specifically Mass General and Brigham & Women’s – have reduced costs in response to Massachusetts' healthcare reform bill passed back in 2006. As part of the reform, these hospitals participated in risk-based based contracts with commercial payers and Medicaid and Medicare. The contracts, covering 400,000 lives, have them share risk for medical expenses for patients who see primary care physicians (PCPs) in their network. If the cost of caring for the patients that see a PCP in their network exceeds that of a comparison group, they pay a penalty; if it’s lower than the comparison group, they share in the savings.

A lot of people have compared this approach – commonly known as an ACO (Accountable Care Organization) -- to the HMO failure of the 1990’s. The authors in the article point out a few reasons why this time it’s different that I thought were worth posting here:

1. While the focus of the approach is on coordinating care through a PCP, specialists are much more involved in the coordination this time through automated referral management, virtual visits from specialists, team based care and home monitoring. As an example, they’re reducing costs for diabetes care by automating referrals to diabetes counselors and they’ve identified opportunities to do phone consultations with specialists, as opposed to face to face visits.
2. They’ve added 71 “high-risk care managers”. These managers work closely with the PCP in coordinating the care for 200 high-risk patients. The additional investment in this population is a huge step forward. As we know, the 80/20 rule applies to healthcare – 20% of patients drive 80% of costs.
3. They’ve consolidated all of their clinical and administrative systems into one electronic system – allowing for better, more efficient care coordination.
4. Risk is now shared across their hospitals and their physicians group as opposed to centering risk and responsibility on the PCP.

These are significant differences that have resulted in some early signs of cost reduction. It’s refreshing to see super successful, massive hospitals getting on board and innovating as we move towards a system that manages health instead of manages sickness.

In An Internet Marketplace, Competiton Helps

Fred Wilson had a good post yesterday talking about the Fallacy of Zero Sum Game Thinking in internet marketplaces. The Zero Sum Theory suggests that as more sellers come onto a marketplace it hurts the early adopters. I’ve worked in internet marketplaces in 3 different industries -- real estate, e-commerce and now healthcare -- and I can tell you that this theory is a myth. I posted the following comment on Fred's blog:

The zero sum game theory is really just a misunderstanding of how good marketplaces drive traffic and acquire new users.

If most of Etsy's traffic came from them buying SEM or running TV ads, then yes, there is a fixed amount of traffic that sellers are competing for. But I'd bet that the vast majority of Etsy's new buyers come to them organically. That is, a buyer has a good experience on Etsy, then tells a friend, and that friend tells a friend, and that friend tells a friend, and on and on.

More sellers >> more good buying experiences >> more buyers.

The beautiful thing about marketplaces where traffic is driven by a quality buying experience (and word of mouth) is that instead of sellers competing with one another for traffic, they actually rely on one another for traffic.

I recommend checking out the original post. There's some great stuff in there on how, despite the controversy, Spike Lee raising money on Kickstarter actually increased funding for lesser known filmmakers. Great topic.

5 Tips For Emailing CEOs

Over the years I’ve developed an approach for emailing C-level executives that has worked well for me. I thought I’d share some of that approach here. Here are 5 somewhat tactical tips:

1. Emails should be as short as Tweets. Write emails like you’re writing a Tweet. I think Outlook and Gmail should add a feature that shows a countdown from 400 for every character that you type – and if you go over 400 characters it won’t let you send the email. Unless absolutely necessary, keep your emails short enough to be read on an iPhone without scrolling.

2. Don’t worry about grammar and formalities. Marketers write perfect emails, people that do big deals don’t. Write short and quick and to the point. Here’s an example of what I mean.

Bad email: "Hi John, I’m writing to setup some time with you on Wednesday or Thursday of this week. I am participating in our company's board presentation this week and we are trying to lock down a couple of pieces of information about our potential partnership. I know that you are extremely busy, but It would be greatly appreciated if you could spare a few minutes so that we can discuss the details of our partnership. Please let me know the best way to setup a call. Kind Regards."

Better email: "Hi John, have 5 mins to chat this week? Have a board meeting coming up and need to get on the same page on two quick things. Thx."

3. Don't be afraid to resend. If you don't hear back, give it a few days. If you still don't hear back, take the initial email and forward it to the CEO and say something like, "Hi John, hope all is well. Following up on the below. Thx."

4. Make it easy to reply. If you have multiple asks in the email, separate them into multiple emails. Let them handle each email/task individually. Don’t let one task get stuck because the CEO doesn’t want to respond to the other.

5. Be their equal. Most important, write like you’re writing to a peer. Don’t be deferential. You are on equal levels. You both have something that can help the other – act like it. As I wrote a while back, don't be a salesperson.

My Interview With Yesware

Last week Jessica Stillman, a freelance writer for the Yesware Blog, contacted me to do an interview on the topic of CRM compliance. See the full interview here. One of the fundamental challenges with CRM compliance is that sales reps often don't understand why managers need them to do lots of data entry because they don’t know what managers are actually doing with the data.  The main point I made in the interview was that managers should be much more transparent on this. Not only should they show their reps how they use the data to manage their business and make good decisions and communicate what’s happening on the ground up to the board and executive team, managers should take it a step further. They should actually allow their reps present directly to the executives and/or board using reports that pull their own individual data from the CRM system.

I found that doing this is extremely empowering to reps and dramatically reduces the friction that comes from low CRM compliance.  If you find this topic interesting, I recommend checking out the full post.

Deviating From Your Core Competency

Related to Mondays post on core competences, it's worth mentioning that there are instances where deviating from your core competency can be a good idea. In fact, some businesses are able to leverage their initial core competency to enter entirely new businesses. And in some cases those businesses have become the major driver of profits. One example of this was General Motors. Everybody knows that General Motors' core competency was making and marketing automobiles. What many people don't know is that back in the early 2000s, most of their profit was generated by their financing arm, GMAC.  So in reality, their core competency wasn't making cars, it was lending people money to buy cars. GMAC was eventually spun off; likely to allow GM to put their focus back on making and marketing cars, and because the car business was dragging down the value of the financing business.

Lots of other businesses find that financing can be more profitable than their core business. Every time I go to a clothing store like Banana Republic they practically beg me to sign up for their store credit card. They're willing to give consumers huge discounts on their clothes (their core product) just to get them to sign up for their credit card. Sure, they probably have found that their credit card carrying customers are more loyal and buy more clothing when they shop, but I guarantee a large portion (in some cases, a majority) of these stores' profits comes from their credit card businesses.

Another example of an industry that has deviated from its core competency is higher education. Large schools like Harvard have found that they make a lot more money managing their endowments than they do selling tuition. Depending on the year, Harvard’s endowment has made 5, 10 or even 20 times more than they've made in total annual tuition. Further, in 2004, Harvard’s top five endowment managers made $78 million in annual compensation – that's 100 times more than the school's president made in the same year.

So, arguably, Harvard's core competency – and frankly, core business – isn't delivering a great education, its real core competency is managing its assets.

Of course there's nothing wrong with using your core competency to create a second, more profitable business. It reduces business risk and contributes to growth. Shareholders love it. But it can reduce focus.

As I wrote on Monday, trying to be good at too many things is dangerous.  And when you get too big, putting your focus in too many places puts the thing that you do really well at risk. And losing focus on that thing is even scarier when that thing is propping up an even more profitable business.

Sticking to Your Core Competency

I've been thinking a lot recently about companies and their core competencies. The idea that a company with a few employees and only a little bit of capital that focuses on only one thing can do that thing more effectively than a billion dollar company with tens of thousands of employees is hard for many people to comprehend. Bijan Sabet wrote about this a while back when he pointed out that so many of the embedded iOS apps have been replaced by applications from tiny startups. From his post:

The default notes app has been replaced by Simplenote

The default messenger app has been replaced by Kik

The default calendar app has been replaced by Calvetica

The default music app has been replaced by exfm, soundcloud and rdio

The default mail client has been replaced by Sparrow

Granted, Apple wasn't necessarily competing aggressively in all of these areas.  But the reality remains that a small group of people that focuses on one thing will always outperform a large group that focuses on lots of things.

With some of this in mind, I came across a blog post by Paul Levy last week on the increasing trend of large health systems getting into the payer space. Due to the growing pressure on reimbursement rates and the increasing prevalence of population health, it only makes sense for health systems to be inclined to cut out a middleman (the private insurers) and become more horizontally integrated. Health systems are finding that they can organize and work directly with large pools of patients (employers, trade groups, unions, etc.) and, potentially, insure and care for them more cost effectively.

While on the surface this may seem like a great idea, Levy points out in his post that many large hospitals have enough problems improving their existing businesses in this complex and rapidly changing healthcare environment:

Here's what I think, based on unscientific site visits, surveys, and discussions with hospital leaders. The vast majority of hospitals--and especially academic medical centers--have barely begun to crack the operational problems that exist in their facilities. The quality and safety of patient care are substandard, compared to what they might be and what has been demonstrated in comparable facilities. The degree of patient-centeredness, likewise, needs major work. Finally, the engagement of front-line staff in process improvement efforts is scattered.

Despite this, 1 in 5 health systems intend to become payers by 2018. And this is where the notion of core competency comes in. Given the massive transition that healthcare is going through -- from managing sickness to managing health -- might some health systems be wise to focus on improving and creating a competitive advantage on what they already do well? As opposed to entering a complicated and risky new industry (health insurance company profit margins generally hover around a very low 4% and the industry is subject to paralyzing state and federal regulation).

Just like Apple has wisely decided to focus their best energy on building great tablets and smartphones and to allow someone else to build great mail and calendar apps (on top of their platform), it might make sense for health systems to continue to focus on improving the quality and efficiency of care and cutting the costs of their existing operations, and to let someone else be great at the underwriting and actuarial work.

Spreading Innovation

There’s a long but good Atul Gawande article in this week’s New Yorker worth reading that’s relevant to what many of us are trying to do -- spread innovation and change minds. He writes about why some new innovations spread quickly and others don’t.  Talks about the fact that doctors adopted anesthesia really quickly but it took them years and years to begin sterilizing operating rooms (arguably a more important innovation).

Talks about the critical importance of the human factor in spreading innovation – and how a simple treatment for Cholera (a mix of sugar, salt and water) never spread in Bangladesh until human beings went out on foot and sold it, door to door.  Also uses a more relevant analogy:

This is something that salespeople understand well. I once asked a pharmaceutical rep how he persuaded doctors—who are notoriously stubborn—to adopt a new medicine. Evidence is not remotely enough, he said, however strong a case you may have. You must also apply “the rule of seven touches.” Personally “touch” the doctors seven times, and they will come to know you; if they know you, they might trust you; and, if they trust you, they will change. That’s why he stocked doctors’ closets with free drug samples in person. Then he could poke his head around the corner and ask, “So how did your daughter Debbie’s soccer game go?” Eventually, this can become “Have you seen this study on our new drug? How about giving it a try?” As the rep had recognized, human interaction is the key force in overcoming resistance and speeding change.

Healthcare Blogs

The other day a colleague asked me which healthcare blogs I read. I thought I'd capture them here.

• ACO Insights – chronicles national developments in the formation of ACOs.
• Health Business Blog – written by a healthcare strategy consultant; highlights business related healthcare issues.
• HISTalk – everything you ever want to know about EMR, PM Systems and healthcare IT in general.
• Life as a Healthcare CIO – John Halamka’s (CIO of BIDMC) personal blog.
• Not Running a Hospital – former CEO of BIDMC
• Howard J Luks – an Orthopedist that writes about healthcare/business issues.
• Atul Gawande’s New Yorker Page – surgeon at MGH and excellent New Yorker columnist.
• Nat Turner – founder of Flatiron Health – he rarely writes but when he does it’s usually great stuff.
• TechCrunch’s Healthtech category – most articles aren’t all that interesting but a good place to get updates on who’s raising money, new products, etc.

I’ll check out KevinMD once in a while but I’ve removed it from my feed.  Too much stuff that isn’t relevant to me.

By the way, for all of my blog reading, I use Feedly on my desktop and the Reeder app on my iPhone. I recommend both.

Being Wrong

Last week Penelope Trunk had a good post on 5 things she was wrong about. I've found over and over again that people that are alright with being wrong are far more successful (and pleasant to work with) than people that have to be right.  People that can be wrong have the right mix of confidence and humility -- two of my favorite qualities in a colleague. I recommend reading Penelope's full post, but in the excerpt below she captures why being able to be wrong makes people more successful. I liked it so much that I thought I'd post it here.

The real reason I don’t mind being wrong is that you can’t ever be right in a way that matters if you’re never wrong. Think about it: if you are right on something where everyone knows you’re right then it doesn’t matter that you’re right. If you are right about something where people think it’s surprising, then you take a risk of being wrong but you also open yourself up to the joy of surprising yourself with your own insight. It’s a risk high performers are willing to take.