Do you really know your ideal customer?

In this article we’ll cover:

1. Examples of ideal customer profiles

2. What to include in your ICP description

3. How to get the data you need to create your ICP

4. Why startups need to pick SMB vs enterprise in healthcare

Do you know who your ideal customer is?

Depending on how early your startup is you may not be able to answer this question. If you have say ten customers, your sample size is a bit small but you may be getting an idea of who your ideal customer is. Hopefully, it’s the same type of customer you were interviewing when discovering there was a problem worth solving.

So what is an ideal customer profile? It’s specific. If you answered with “health systems” or “provider groups of 5-50 providers,” then you’re wrong. That’s too generic, ESPECIALLY for a startup.

In reality, your ideal customer profile is probably more like:

1. Regional health systems on Epic who also use Zoom with 2-4 hospitals and a physician network of 200-800 providers doing annual revenues less than $2 billion.

2. Private practice therapists who have been in practice at least 3 years and are earning an annual income of at least $80,000 per year

3. Mental health organizations who have 10-100 providers who are on Qualifacts, Netsmart, or Echo, do not offer inpatient services, and also use Doxy.

When you sell technology to provider groups there are a few key aspects that make up your ICP:

1. Size of the organization. As you can see above, it’s not as easy as saying health system or community mental health center. Hospitals and health systems with 200-800 providers have much different problems and operations than IDNs like Northwell or Advent Health. These differences could come in budget, internal technology resources, staffing constraints, and more.

2. Specialty. There’s a number of reasons specialty needs to be in your ICP description. First, different specialties have different problems to varying degrees. For example, no show rate percentages differ by different specialties. Different specialties also have varying amounts of money to spend. A specialty ortho group prints money compared to a mental health center who gets all their revenues from medicare and medicaid. Therefore, they can spend different amounts on technology. Finally, and the most obvious reason, some solutions are designed for different specialties. For example, Upheal is an AI copilot designed for mental health.

   1. As shown in example three above, specialty isn’t always enough. Get more specific - mental health, substance use, psychiatry, behavioral health, inpatient/outpatient.

3. Existing tech stack. This matters more than people think. I’ve seen multiple founders who are new to healthcare technology discredit how important this is to sales. Change management when switching an EHR or a clinical technology is a nightmare. It might be so big it prevents your solution from even being considered if it’s the wrong tech stack you’re selling against.

   1. First, different EHRs come with different capabilities. If your solution fills in a gap, it’s important to know where this pain is more greatly felt. Epic may have more capabilities than Meditech in a number of areas, so are you better solving a pain point felt with Meditech? Different EHRs have different integration capabilities. Who can you integrate with the best?

   2. Second, does a combination of technology have pain points that you solve? When I was selling Mend, I knew that we had a tighter integration than the combination of Athena and Phreesia. I would use these pain points in my outreach to book new meetings and nearly everyone felt the pain I was solving.

   3. Third, be realistic with competition. You are not the only solution that solves the problem you’re attacking. You’re also not the best for everyone. Who do your customers say you’re better than? Take market share from them. Who do you always lose to? When you’re a startup you need to spend time going after deals you’re going to win. Go find the leads who are using the tech you’re winning deals against.

Finding your ICP

ASK. On your website you probably have a form so prospects can reach out and get in touch with sales. You are doing yourself a disservice if you’re not asking them what EHR they’re on, they’re specialty, # of providers, and if they’re already using a similar solution. If you focus on smaller groups then you may not offer calls with sales. In this case, ask these in the onboarding process to your product.

Whether your use Hubspot, Salesforce, Zoho, or even Notion, now you can evaluate your customer base for recurring themes in each criteria. You can also evaluate where you’re losing deals. And, congrats! You’re now on your way to a lead scoring methodology where the second someone fills out your lead form you know how hot of a lead they are for you.

So who is your ICP? SMB or Enterprise?

Early in your startups journey, you need to pick one in healthcare. You can’t serve a private practice group of two primary care docs and Advent Health’s physician group well. You can’t serve both a solo therapist and a 1099 network of 1000 therapists and do it well.

Let’s take a look at a few companies who have nailed this decision.

1. Grow Therapy

2. Alma

3. Headway.

These three companies are EXTREMELY similar. They provide credentialing, technology, and billing services to mental health providers. They’ve all taken off since the early days of COVID and in the past 4-5 years, they’ve combined to service nearly 100,000 providers. These companies only work with mental health providers - think outpatient licensed therapists. They’ve all grown by focusing on specific states and then expanding their geography as they’ve earned more payor contracts. They all focus on single providers or small groups.

On the flip-side of this, Epic is a great example of an organization focusing on enterprise opportunities. They service most of the health systems in the United States. In recent years, they’ve expanded into more outpatient settings and organizations like OCHIN have expanded their reach into FQHCs and smaller organizations. The same can be said for their Community Connect program. However, if you’re a private practice physician or even a small group practice with 5 providers, you simply can not go to Epic and sign up. Seriously, go to epic.com and try and find the form to say “Hey, I want to sign up”.

The differences between SMB and enterprise

Implementation

SMBs want their platforms designed for them. Example, SimplePractice can be pretty much be purchased off the shelf for a single therapist and ready to use in a weekend.

Epic is designed for health systems but has to go through a multi-year implementation process to be customized to the health system’s workflows.

Account Management

SMBs are about service at scale while enterprise healthcare organizations require a lot customer success, support, and account management resources. Moving upmarket can require creating entirely new teams.

Product Development - Admin

When you’re servicing a solo provider or a small group, the clinicians are the admins, the owners, the everything. They need to do everything. They might have a few admins helping them out, especially in a medical practice. In enterprise, the number of users increasingly expands. A large mental health organization alone might have non-clinical admins, billers, case managers, therapists, and prescribers, who all need different levels of access.

Product Development - Reporting

Depending on what your solution does, there’s two types of reporting involved. The first is for the business. How is the technology, the users, and the business performing. Second, is external reporting. Are there reports that other organizations, payors, or even the government may need?

Checkout this page from Qualifacts that calls out CCBHC, State, and other mandatory reporting.

Before moving upmarket, it’s incredibly important to survey potential customers for what requirements they have for data, security, permissioning, and reporting.

There’s a lot more to the differences in SMB vs enterprise, but healthtech companies generally underestimate the level of customizations moving farther upmarket requires in healthcare.

So, how do you move upmarket?

At first, it may even come to you. You’ll notice that inbound leads are getting larger and larger. Learn as much as possible about these organizations. It also may mean saying now. Get crystal clear about their requirements and identify areas they may require you to build new functionality. Moving upmarket should happen gradually. It shouldn’t be service a private practice with five providers and then doing everything you can to land your first health system medical group.

Moving upmarket too fast creates a very reactionary development cycle. Rather than developing based on a product vision, you’re developing based on customer requirements. Product teams try and justify building customer requirements by saying we don’t build things that only one customer asks for. But, building something that only 10% of customers use isn’t ideal either. If you’re promising functionality to win deals, are you improving functionality that is widely used, or creating something net new?

How to move upmarket/downmarket

If you’re ready to move markets be wary of giving your existing customer base partial effort. Moving upmarket can be just as much of a distraction as it is a strategic effort.

In sales, moving markets can look like an executive or sales leader testing a new market before hiring a new salesperson to focus on the new market. In return, this may require specific implementation or customer success roles.

If you’re moving downmarket, it’s important to find ways to remove sales from the process. Depending on the deal size this could be shortening sales cycles, reducing negotiating ability, or taking sales out of the process entirely and developing a new onboarding process.

When it comes to your product, there will be things you HAVE to do in order to win bigger deals. They may be SOC 2, HITECH, creating new user types, new permission settings. If these get spread out across your existing teams, you’re now giving your existing customer base less to take on a huge risk. At the outset of going after a new market, create a dedicated team or even single person to evaluate the needs of the new market. Hopefully these items are coming from your existing largest customers or hot prospects so you’re not building for no reason. The lead here, the product manager responsible for the enterprise experience, should be working with the existing team to evaluate how new featuers mold into the existing product set. Although, moving upmarket is a common reason people will raise, financially it’s not realistic to double your product teams and be working on two different products, one for enterprise and one for SMB. However, it’s also not realistic to keep your existing product teams the same size and tell them they now need to build for both. One way to approach this is to start with a small agile team focused on the enterprise experience and as time goes on, customers gets signed, there may be product teams like “billing” or “scribing” that are responsible for the needs of both customer segments; however, these teams will be larger than they were before.