Why Understanding Your Target Market and Buyers is Critical for Health Tech Founders
As a healthcare executive and marketing expert who has worked closely with early-stage healthcare companies, I’ve seen many promising innovations struggle to gain traction.
But not for the reasons you may think. The product was needed, to be sure, but it failed because the founders fundamentally misunderstood their target market and buyers.
In the U.S. healthcare system, the path from product development to successful adoption is rarely straightforward.
One of the most common mistakes health tech founders make is assuming the end-user of their product or service is also the buyer. This assumption leads to misaligned strategies and, ultimately, missed opportunities.
Funding for health tech start-ups experienced a rapid surge in growth over the pandemic, with $29.1 billion committed in 2021 alone.
However, the attrition rate for these ventures remains elevated. Around 80-90% of healthcare start-ups end in failure, with 42% of failures caused by an inability to understand the target market.
The Complexities of the U.S. Healthcare System
The U.S. healthcare system is a particularly complex selling environment since the various stakeholders involved in a purchase have different value drivers, budgetary constraints, and expectations.
These differences—which are driven by each stakeholder occupying a different level of the decision hierarchy—have only been exacerbated by the shift to virtual healthcare since the pandemic.
To start, it is imperative to understand that the end-user of your product is not always the person who makes the purchasing decision. Instead, it may be a staff member from the hospital’s IT team, procurement department, or even an external EHR vendor, for example.
Suppose a new health tech service was designed to streamline workflows for hospital-based physicians. It’s easy to assume that because physicians are the primary users, they represent the marketing campaign’s target audience.
However, selling to physicians alone may not secure the adoption of the product. As hinted at earlier, the decision to purchase and implement new technology in a hospital involves multiple levels of approval, from IT and procurement departments to compliance officers and financial managers.
Who Really Holds the Purse Strings?
Understanding who the actual buyer is—and what drives their decision-making—is crucial for success.
In the above example of a health tech service for physicians, the buyer might not be the physician at all. Instead, it could be the hospital’s procurement department.
IT may also play a substantial role, particularly if the service requires integration with the hospital’s electronic health record (EHR) system.
What’s more, the EHR vendors themselves could be buyers since they often have influence over which third-party services can be used on their platforms.
Note that each of these entities has different concerns. IT may prioritize cybersecurity and data privacy, while procurement departments tend to be focused on cost-effectiveness and ROI.
In fact, procurement’s focus on cost reduction and productivity was identified by Signify Research as one of five key trends impacting healthcare IT purchasing decisions.
To succeed, health tech founders need to address these concerns head-on in their marketing and sales strategies.
Crafting a Comprehensive Marketing and Communication Strategy
Once you’ve identified your buyers and stakeholders, the next step is to develop a comprehensive marketing and communication strategy that clearly defines your goals, communication channels, and tactics.
Remember to tailor your marketing strategy to the unique needs and concerns of each stakeholder group.
When targeting a hospital’s procurement department, for instance, a marketing campaign could emphasize the product’s financial benefits such as cost savings, improved efficiency, and potential ROI.
For IT departments, ease of integration, data security, and compliance with industry standards are more relevant. If EHR vendors are the key stakeholders, emphasize how your service complements their platform and enhances its value for their clients.
Communication channels should also be chosen with care.
While direct outreach to physicians might be effective for generating interest and building user advocacy, you’ll likely need a different approach for reaching procurement and IT departments.
Industry conferences, white papers, and targeted digital marketing campaigns can be effective tools for engaging these decision-makers.
The Importance of Seeking Expert Advice
Understanding your target market and buyers is not something that can be done on the fly. It requires careful research, strategic thinking, and often, the guidance of experts who are familiar with the complexities of the healthcare industry.
As a health tech founder, taking the time to seek expert advice and develop a well-informed marketing and communication strategy can be the difference between success and failure.
Conclusion
It is only with an understanding of the complex U.S. healthcare system that you can identify the true buyers of your product.
Take the time to understand the market in detail, engage with the right stakeholders, and develop a strategy that speaks directly to their needs.
The investment you make in this process today will pay dividends later as you bring your innovative health tech solution to market and ultimately, to the patients and providers who need it most.
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References
https://www.richardson.com/blog/healthcare-buyer-personas/
https://www.signifyresearch.net/insights/five-key-trends-driving-purchasing-decisions-in-healthcare-it/
https://www.htworld.co.uk/news/the-top-3-reasons-health-tech-startups-fail/
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10668566/
