A Guide to GTM Strategy with Sheila Shah and Max Lounds (L.E.K. Consulting)

TL;DR: We sat down with Sheila Shah (Managing Director & Partner) and Max Lounds (Engagement Manager) from L.E.K. Consulting to discuss best practices and how-tos related to go-to-market strategy. Sheila and Max provide a 101 level overview of GTM strategies for digital health companies, walking through the L.E.K. Digital Launch Excellence Framework, which unpacks three main modules: preparing the market, preparing the product, and preparing the organization. Below is a summary of our conversation.

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Table of Contents

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L.E.K. Digital Launch Excellence Framework

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• Part 1: Prepare the Market
• Part 2: Prepare the Product
• Part 3: Prepare the Organization

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Q&A

• Q1: The broader framework doesn’t seem like a linear process for most companies, how often do you find clients bouncing back and forth between market and product before they kind of converge to one singular model? Any advice for startups that are particularly resource constrained and how to go through these steps effectively?
• Q2: Which analysis within these modules do teams spend the most time on?
• Q3: In theory, segmenting and prioritizing customer types make sense. However, in practice, there's a lot of fear around narrowing the market too much that it's gonna hurt short term revenue. Any recommendations on how to get past this tension?
• Q4: I'm curious, how have you all seen success in following this framework by different client sizes and stages?
• Q5: How does go-to-market sort of change when you're pursuing your first versus 10th versus 100th customer? 
• Q6: Some startups for early markets have to grow, demand for the category alongside demand for their product and service – any mechanisms to identify category building costs, especially if high?
• Q7: How much time do you advise startups spending on channel partnerships in early days versus direct selling?
• Q8: I can imagine as an early stage founder, you are answering a lot of these questions for yourself. As you continue to grow through Series A, B, C, and you're hiring go-to-market, sales , etc. leadership roles – are there any inflection points that you all see as particularly good points for founders to be thinking about hiring for the team internally?
• Q9: There seems to be a common theme among really early stage companies to go hire an advisor. For instance, if you're selling to payors, go hire an advisor who's been a senior executive at UHC and use that person to build in-roads into these companies. How have you seen that play out as a particular strategy for early stage founders building this go-to-market strategy? And then how do you think about the team evolving over time from there?
• Q10: Any double clicks and pricing considerations for some of these models. In general, we want to price to value generation, but it doesn't always work.
• Q11: What's the number one thing that founders or leaders often get wrong with market segmentation?

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L.E.K. Digital Launch Excellence Framework

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Go-to-market strategy is a broad, complicated element of building any organization. And of course, one that is increasingly difficult to get right in an early stage startup environment where the team and disposable resources to execute upon it are limited.  

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Through their work with various startups and more established healthcare organizations across the health tech ecosystem, L.E.K. has developed a resource – the Digital Launch Excellence Framework – to help its clients strategize a game plan for their go-to-market motions.

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Below we will provide an overview of the three main elements of the framework:

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1. Preparing the market
2. Preparing the product
3. Preparing the organization

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Before we dive in, there are a few important things to note:

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• The three main elements – preparing the market, product, and organization – will and should take place as parallel processes. This is not meant to be a step by step process, with the completion of one step marking the beginning of the next. Additionally, you may find your organization flipping back and forth between the sections depending on at what point in the life cycle your organization is.
• This is a simplified version of the framework. If you’re interested in learning more or have questions related to your specific GTM strategy, please reach out directly to Sheila and Max (contact info below).

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Prepare the Market

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Preparing the market is arguably the most important element of this framework.

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• Understand the market to refine launch success factors and implications.
• Take time to complete a whitespace and competitive assessment to truly understand and be able to explain how you are different.
• Collect customer insights and needs to inform product strategy.
• Start to engage and build advocacy with your customers and decision makers for your solution.

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Prepare the Product

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• Ensure legal and regulatory compliance for your products, services, and data sharing.
• Establish a value proposition, secure market access, and generate evidence. This has become particularly relevant recently as we’ve seen a wave of digital health companies failing to prove efficacy with products in the market.  
• After you’ve identified the value proposition, establish positioning and develop promotional messaging that resonates with key customers.
• Set up a customer feedback loop to maintain lifecycle management (LCM) and ensure sustained success.
• Develop procedural excellence strategy

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Prepare the Organization

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• Set up the organization to deliver a successful launch
• Prepare effective customer interface
• Optimize product development

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Q&A

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Q1: The broader framework doesn’t seem like a linear process for most companies, how often do you find clients bouncing back and forth between market and product before they kind of converge to one singular model? Any advice for startups that are particularly resource constrained and how to go through these steps effectively? 

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• This framework is by no means meant to be a linear process – you’re not meant to complete module one and then move on to module two, but rather navigate through them all in parallel.
• For instance, oftentimes folks will jump straight to establishing reimbursement and regulatory compliance, but then realize they need to think about who are my main stakeholders in my end customer group that I should be focused on. 
• It is okay to start in one place and flip back to another, but they should all be projects that are on your radar prior to launch.
• As an early stage startup that may be resource constrained, there are actually plenty of online resources around many of these topics – e.g. market segmentation, etc. – that even a small team can quickly leverage to put some framework around your strategy. Putting that effort in up front will actually help you prioritize where your smaller team / limited resources end up going later on and ultimately setting you up for greater success.

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Q2: Which analysis within these modules do teams spend the most time on?

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• This will ultimately depend on the maturity of your organization.
• The companies L.E.K. is spending most of their time with are typically Series C+. Considering that, most of the work at this point is around preparing the market – including customer segmentation, pricing models, willingness to pay, building forecasts, how to think about KoL advocacy development, and identifying conferences to attend. 
• Additionally, there has been a recent renewed interest in an ROI solution sale (e.g. we can help you save $X by using our solution/platform). Because of that, they are spending a lot more time on helping orgs quantify what that ROI looks like. 

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Q3: In theory, segmenting and prioritizing customer types make sense. However, in practice, there's a lot of fear around narrowing the market too much that it's gonna hurt short term revenue. Any recommendations on how to get past this tension?

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In general, there is not a suggestion to not be opportunistic with taking on customers as they present themselves. However, if you do not take the time to segment your customers beyond the high level ‘all employers’ or ‘all health systems’, you will likely struggle to have a solid understanding of your TAM and how you should sequence going after them.

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Again, if you put in the effort up front to thoughtfully segment your customers, when your smaller/resource-constrained team goes to actually execute the GTM strategy, then can do so in a focused way that increases likelihood of success. 

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The goal of the customer segmentation work is to ensure the effort your sales team is putting in is focused on the ‘more likely’ to adopt customers - sounds obvious perhaps, but we often find that a lot of our clients are able to secure meetings, but struggle with converting them and are unclear why.

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Q4: I'm curious, how have you all seen success in following this framework by different client sizes and stages?

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• As an earlier stage organization with limited resources, you should prioritize all of the segments under the ‘prepare the market’ module.
• On the other hand, things that may be less critical include having a specific revenue forecast on the smaller company side. This is a priority for later stage organizations.
• When it comes to the items in preparing the product, such as value proposition, market access, generating evidence, etc. that is also critical. Of course, these will be more difficult to execute upon without that initial revenue coming in the door. 

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Q5: How does go-to-market sort of change when you're pursuing your first versus 10th versus 100th customer? 

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• For the first customer, this GTM process is going to be very fluid. As you move on to the later customers, you will continue to refine what works and what doesn’t across each of these modules.  
• Eventually, you should be getting to a place where you have a specific playbook for different customer segments and how to pursue each. So, at the point you reach your 100th customer, you are not modifying that playbook in any way.

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Q6: Some startups for early markets have to grow demand for the category alongside demand for their product and service – any mechanisms to identify category building costs, especially if high?

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Oftentimes, the customers (e.g. payors, providers, etc.) don’t always immediately understand the value of your solution and why they should invest in it. As such, it falls on you to define the value proposition and differentiation of your solution to them to find success. 

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The biggest drivers of costs are typically market education & customer acquisition. Unfortunately, analogs suggest that to succeed you do need to plan to invest in these areas (e.g., Hims&Hers, iRhythm etc.), which means you have to be extremely confident that you have created a solution for a very real problem / need.

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Q7: How much time do you advise startups spending on channel partnerships in early days versus direct selling?

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• Marketplaces continue to be an interesting avenue for customers to go to to identify and tap a curated group of solutions. A watchout here is when it comes time to think about monetization, just being aware of the % cut you’re receiving and if that is sustainable.
• GPOs are an interesting customer segment or someone who can help promote your solution in a broader organization. Although, something to be aware of is that GPOs are currently going through a bit of an identity crisis in that they themselves are trying to figure out their clear role in the hospital. 
• Another thing to consider in going after scaled channel partners in the early days is the potential tradeoff of losing the opportunity to connect with your customer, get in the weeds with them, and have them help you define a feedback loop. Thus, if you’re still trying to figure out PMF, you probably don’t want to immediately go to these scaled channel partners. 
• You really need to understand your channel partners’ incentives and what your relationship with them looks like ahead of time. 

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Q8: I can imagine as an early stage founder, you are answering a lot of these questions for yourself. As you continue to grow through Series A, B, C, and you're hiring go-to-market, sales , etc. leadership roles – are there any inflection points that you all see as particularly good points for founders to be thinking about hiring for the team internally?

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• In general, you start building the team when you have enough customers that require the additional support beyond what you as founder are able to individually provide.
• Interestingly, there is an emerging trend around providing educational support staff as opposed to 1x1 salespeople. Many of these digital health solutions actually require educational support, rather than just a salesforce to push solutions. 
• As you gain scale, think about what roles do you actually need to service your customers – is it education support or an account manager?

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Q9: There seems to be a common theme among really early stage companies to go hire an advisor. For instance, if you're selling to payors, go hire an advisor who's been a senior executive at UHC and use that person to build in-roads into these companies. How have you seen that play out as a particular strategy for early stage founders building this go-to-market strategy? And then how do you think about the team evolving over time from there?

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• It is always beneficial to seek out advisors. However, you want to be really thoughtful about the full value they are providing in exchange for how you’re compensating them. 
• Think critically about where you will want their help. Is it being a part of sales meetings? Be at conferences? KoL support? Etc.?

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Q10: Any double clicks and pricing considerations for some of these models. In general, we want to price to value generation, but it doesn't always work.

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There are a couple of pricing methodologies to consider leveraging below: 

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• Van Westendorp – What is it and how to use it here.
• Gabor Granger – What is it and how to use it here.

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In general, with pricing you have to land in between the spot where you have good margin and where customers feel comfortable paying. Finding that sweet spot will take some trial and error through getting customers on the phone. 

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You can also consider starting pricing at a lower point and then increasing it as you add features later on, aiming for an upsell. In the earlier days of an org, optimizing pricing out of the gate tends to be a losing battle as you are still building support for why your customers should invest in your product.

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Q11: What's the number one thing that founders or leaders often get wrong with market segmentation?

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Most often, it is that founders think they know the problem they are solving for. 

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For instance, an artificial intelligence company that does early detection of cardiovascular disease came to the L.E.K. team assuming that the problem they were solving for was early detection. However, what they found was early detection is actually not the problem that resonates with hospitals. Rather, it is ‘How do I improve my volumes?’; ‘How do I ensure that I can save the costs associated with more downstream, acute events in the future?’. 

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Try to figure out their preferred verbiage and aim to integrate that into your initial pitch. 

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Conclusion 

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That’s all for now, folks! We had a great time chatting with Sheila and Max from L.E.K., and appreciate them taking the time to share their knowledge with our fellow HTNers. 

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If you made it through this, and are finding that it sparked some additional questions for you on your company’s unique GTM strategy, we’ve included both Sheila and Max’s contact information in the case you’d like to reach out. 

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Sheila Shah: s.shah@lek.com

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Max Lounds: m.lounds@lek.com