Cable and telecom companies have a rich history of customer service horror stories, but one area where they often excel despite famously poor customer care is reducing turnover, or churn.
Healthcare is going through a period of change now where finding and keeping the best customers in their markets is a critical success factor. Organizations navigating this change are trying to figure out what makes a good healthcare customer, and how to attract and defend customers from competitive poaching. Healthcare can learn valuable lessons from the failings and the successes of cable and telecom companies.
The telecommunications, media and entertainment (TME) and healthcare industries are coping with similar changes to their traditional business models as they transition to much more direct-to-consumer orientations. In the TME industry, the threat is called "over-the-top" (OTT), which refers to the growing trend of consumers bypassing cable providers and purchasing preferred content directly via services such as Netflix and HBO GO. Healthcare is now facing its own OTT dynamic, as consumers increasingly have more choices in where to seek care and coverage, more insight into cost and quality, and more financial skin in the game when it comes to paying for both insurance and care.
Patients / members are now seen as valuable consumers and healthcare organizations are trying to reorient around treating them as such. Increased consumer power is driving both TME and healthcare entities to work harder to earn customer trust, and loyalty.
Here is how healthcare can benefit from the work done in TME to reduce churn and strengthen business performance by identifying, attracting, and retaining preferred customers:
1. Identify Preferred Customers
Healthcare researchers have been segmenting the market for many years to better understand patient populations and to provide better care1. However, applying these same techniques to consumerism in healthcare is a relatively new concept. To identify best customers, Organizations need to begin by developing meaningful market segmentations to identify the best primary and sub-groups of customers that drive business to key practice areas. Meaningful marketsegments for improving acquisition and churn will be structured to respond differently to marketing variables such as price, promotion, channels, etc. This allows the organization to test a range of incentives and techniques to optimize performance over time.
One useful example of healthcare market segmentation was developed by Deloitte Center for Health Solutions. They identified six broad segments to classify the US healthcare consumer2; those are:
A. Casual and cautious (34%) – not engaged with their health, not cost aware, and have no immediate need for healthcare services.
B. Content and compliant (22%) – unworried about their own immediate health, they focus on prevention, and use online resources as well as a trusted physician for medical information. They are interested in healthcare, but there is no immediacy.
C. Online and onboard (17%) – use online resources and look for new technologies and alternatives. They want to make smart and informed decisions.
D. Sick and Savvy (14%) – actively using the healthcare system, use online resources, and take an active approach to managing their health outcomes.
E. Out and about (9%) – likes to customize their health services and are not satisfied with doctors or hospitals, use alternative or natural therapies.
F. Shop and save (4%) - in pursuit of a good value, they will switch health plans and providers for better value. They are likely to churn and look for alternatives.
Understanding how your organization's own customer populations align with this segmentation can help give you a start on developing segments more tailored to your specific customer base, and determining which groups represent your most valuable customers. Preferred customer profiles should go beyond demographic and psychographic data, and look at a range of factors, including credit ratings, EMR data, payment promptness, health and wellness indicators, readmissions and other available in-house data to hone in on the most valuable constellations of characteristics.
2. Attracting New Preferred Customers
Compiling preferred customer profiles allows the organization to move on to the task of tailoring messaging and marketing dollars to those target audiences to attract their business. Here the challenge is determining which members of these preferred customer segments are most "winnable". Criteria will vary from segment to segment, but most organizations would focus on customers who are more likely to:
• Benefit from online resources related to their healthcare, options for new treatments, or cost saving ideas
• Be referred to your practice by another physician or group
• Respond to surveys regarding care and quality of service received
• Bring or refer family members to your facility
• Conduct research and comparison on elective surgeries and services before selecting their service provider e.g., knee or hip joint replacement
3. Retaining Customers aka Reducing Churn
In the TME industry, reducing churn is all about analytics. They invest in number-crunching algorithms to arm their retention teams with the data they need to know which customers are most valuable and what will work best to keep them. As in healthcare, there was a wave of investment in building big, expensive internal support structures, such as: data lakes, new warehouses, and new software and hardware, to perform these advanced analytics. However, building data analytics internally take considerable time, budget and human resources, and that first wave of investment gave way to a second wave of TME players going with an Insights-as-a Service model, where instead of spending to build their own ability to answer questions about customer behavior, they paid third-parties for the answers.
In an Insights-as-a-Service model, the company seeking analytics insights enlists a partner who can ingest client data and provide the external data, tools, data scientists, software, and computer power necessary to deliver valuable insights in a fraction of the time and at a much lower price point. Here's an example from TME that could easily be applied to healthcare when targeting marketing spend based on competitive footprint. Historically, marketers have not had the level of fidelity in their information to allocate marketing acquisition and retential budget on an individualized basis. An Insights-as-a-Service model can change that with a partner that can take internal data on geographic location of preferred customers and then overlay that with areas of competitive strength and weakness. This insight allows an organization to maximize the impact of marketing dollars by allocating more marketing spend where competition is higher and less where potential customers have fewer options.
Analyzing and understanding the healthcare customer in a much deeper and more detailed manner is essential to effectively target preferred potential and existing customers based on their needs and traits. The TME industry has demonstrated the power of this kind of insight to develop much more effective outreach campaigns, develop models to lower the churn rates of existing customers, and engage with patients on their terms. The faster organizations can understand and adapt these techniques for the healthcare market, the bigger an advantage they will have in this rapidly-evolving and increasingly customer-centric industry.
Nick Vennaro, is an executive vice president and co-founder of Capto and a twenty-plus year healthcare industry veteran.
1 "Using Population Segmentation to Provide Better Healthcare for All: the Bridges to Health Model". Milbank Quarterly pp185-208 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2690331/
2 The US Healthcare Market: A Strategic View of Consumer Segmentation; Deloitte Center for Health Solutions 2013. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-health-care-market-consumer-segmentation.pdf
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