There’s more to success than developing a solution that works – every great company needs to provide significant value to its clients. However, when products are evaluated at the pilot stage in a clinical setting, the assessment of value is easily skewed.
There are two reasons for this:
1) Pilot opportunities are given to early-stage companies by champions who are already aligned with a company’s solution, whether for business, personal, or clinical reasons.
2) Pilots are usually unpaid or heavily discounted from their market price – hence, champions are inclined to perceive value differently.
This creates challenges for founders – and investors – as they assess the viability of a go-to-market strategy and the replicability of a successful pilot in a commercial context. While great pilot results are a positive indicator, it’s important to consider whether this success is likely to be repeated on an ongoing basis, especially as the levers that drive a successful client relationship change with time.
"A happy pilot customer does not necessarily mean other happy customers"
This becomes especially relevant for AI companies, where a model can produce good results in a lab or pilot setting, given there is immense control over data quality, availability, and adoption. It’s easy to get caught up in this “science project” era – where technical success exists in a vacuum, separate from business dynamics. ROI is also skewed during the pilot stage, because clients are paying very little – or nothing at all – and founders are dedicating personal attention to delivering a solution tailored to a client’s needs. Early pilot clients often receive bespoke service, as founders develop features specific to their requests, customize their dashboards manually, and work to simplify the knowledge curve for users at a client site.
To assess if early strategies will lead to a successful business long-term, founders should avoid getting hung up on pilot results, with the understanding that the conditions of this environment will be short-lived. To more realistically evaluate a business plan’s scalability, founders should 1) replace themselves with key hires who will drive implementation and client success, and 2) focus on widely applicable solutions that aren't overly tailored to the preferences of a pilot champion. These solutions should require clinicians and other end users to meaningfully invest their time in getting ramped up, thus increasing usage and stickiness. Viewing value through this lens can sometimes turn an ROI equation upside down. This is why commercial rollouts can be challenging for startups post-pilot, despite rock-solid KPIs and internal references from pilot customers. Navigating this transition is key to building a sustainable business, and founders should structure pilots to set them up for sustainable growth at the next stage of a client relationship.
Our go-to-market experience has taught us that the risks of a choppy post-pilot transition can be mitigated in a few ways:
- Avoid being hyper-focused on satisfying only a client champion's specific or nuanced needs. Strive for balance and aim to prioritize requirements that cater to the needs of a larger buyer universe. When done correctly, this approach will set you up for repeatable sales and repeat customers.
- Ongoing value should be extrapolated into the future and must consider the dynamics and expenses of a commercial relationship. Consider that as a client relationship matures, a founder will no longer own the relationship, and engineering resources won’t be devoted to a client’s specific requests in the same way. If your assessment of value to a client is distorted by the relationship dynamics of an early pilot, it may be more challenging for them to justify an ongoing investment in your solution when you shift to a commercial contract and more standardized product.
- ROI should go a step beyond positive – if it isn’t truly significant, it won’t justify a client changing its status quo. Limited improvements are usually not enough to warrant an internal investment in deploying a new solution and getting users up-to-speed. If you're only seeing incremental indicators of value, it may be time to change your go-to-market strategy or rethink your ideal customer profile to propel the company forward.
- Shantanu Nigam, Co-Founder and Managing Partner @ SeedtoB