How Customer Relationship Management Can Help Your Hospital Improve Its Bottom Line and Achieve Its Mission

Are you looking for programs that can consistently provide you with a return on investment of 100 percent or more? If so, talk to your (wait for it)…marketing department about customer relationship management.

Just a few short years ago, most hospital executives would pay lip service to marketing, but not much more. The marketing budget would be the first budget to get cut, and it was not even necessary to employ professional marketers.  

But marketing has come a long way. To a growing number of healthcare providers, marketing is becoming an integral part of the organization. A primary reason is the recognition of how sophisticated customer relationship management (CRM programs) can benefit the organization.

These systems for healthcare organizations have been around for almost 15 years. Yet only 15 percent of so of healthcare providers are using them.

What is CRM?
Before we understand the benefits of CRM, let's define it. There are lots of definitions.  Here is the Wikipedia definition:

"Customer relationship management is a broadly recognized, widely-implemented strategy for managing and nurturing a company's interactions with clients and sales prospects. It involves using technology to organize, automate and synchronize business processes — principally sales activities, but also those for marketing, customer service and technical support. The overall goals are to find, attract and win new clients, nurture and retain those the company already has, entice former clients back into the fold and reduce the costs of marketing and client service. Once simply a label for a category of software tools, today, it generally denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to increase profitability, and reduce operational costs."

For healthcare providers, the three key elements of CRM are:

  • Capturing data from across the enterprise and consolidating it into a database (also known as a Master Customer Information File)
  • Analyzing the database to determine the best marketing opportunities, the best targets for those opportunities, and the best ways to communicate with those targets. This can include marketing to:
    • Patients
    • Non-patient consumers
    • Referring physicians (owned and non-owned)
    • Non-referring physicians
  • Identifying the return on investment from those campaigns

Benefits of CRM
Here are four benefits of implementing a CRM solution:

1. It improves the bottom line. One healthcare provider has been doing CRM for more than three years, and has made close to $16.9 million on a total investment of $5 million.

A CRM program allows you to target your efforts on your most profitable customers (consumers or physicians) and people who "look like" your most profitable customers.  For example, if you are doing a promotion for prostate screenings, CRM will allow you to target men who not only are most likely to need these services, but will also be more profitable customers for you.  

CRM also can improve your bottom line by lowering marketing expense. Since you know the best people to market to, what to market to them, and which communications channels to employ, you don't have to spend money marketing to others.

As one hospital marketer recently noted: "It is a great way to substantiate that marketing decisions are valid, that marketing does move the needle, and that we need to continue to market, even in bad economies."

2. It is quantifiable. CRM allows you to track the return on investment of your programs. By using control groups (people you don't market to, but "look like" the people you do market to), you can measure the impact of the marketing campaign, and counter the objection that "they would have come anyway."

As another hospital marketer said: "CRM has given us new insight and changes the way we utilize marketing dollars. We can track our return on investment, which has given us a greater deal of respect with the CEO and CFO."

3. It enhances relationships (and your brand) with consumers and physicians. Your CRM program will enable you to send the right message to the right people at the right time, thereby allowing them to take better care of their health. Programs such as these also can boost customer loyalty. This is true for consumers and physicians.

  • For consumers, for example, you can send women turning 40 a reminder to get a mammography. At the same time, you can offer an incentive, such as a discount coupon to a spa.
  • For physicians, you can offer special tours of new facilities, but only invite physicians who meet certain referral criteria.

4. It can help you achieve your mission by improving the health of your community. This may seem counterintuitive, since you may be reducing the number of people to whom you are marketing. But think about it:

  • Through targeting, you are sending your messages to the people who most need the services
  • Improving the bottom line will free up resources for charity care and other initiatives to help you better serve your entire community.

Setting up a successful CRM program
So how do you go about setting up a successful CRM program? Here are the key steps.  

1. Executive endorsement. CRM touches every facet of the organization, not just marketing. IT support is essential. Finance needs to help analyze data to identify opportunities. And the medical staff needs to understand how they will be affected. None of this is possible without a strong endorsement from the highest levels of the organization.

2. Involve the enterprise. After the C-suite endorses the initiative, implementing the CRM program should clearly be driven by marketing. But since the CRM program really touches every aspect of the organization, the team that actually selects the CRM vendor should include the following:

  • Marketing (to spearhead the process)
  • IT (to deal with the data)
  • Finance (to ensure all assumptions on ROI, etc. are correct)
  • Physician relations (especially if marketing to physicians is a key strategy)

3. Interview CRM vendors. Look at CRM providers that understand healthcare, as opposed to "generalists."  The CRM provider should offer:

  • A database specifically designed for healthcare
  • Built in segmentation or modeling that can quickly target the right people for specific campaigns (the ideal target is likely to need the service and be profitable)
  • Reports that can easily answer all your questions, from targeting to tracking ROI
  • Staff that are healthcare CRM experts

4. Make your decision. There are several excellent providers, but no one provider is the best choice for everybody. Here are the key steps:

  • Initial presentations at your location, focusing on how their solutions can meet your needs.
  • Compile all features and put together a matrix of all features, including pricing, so you can easily make comparisons.  After all, since CRM is marketing based on analysis, the decision on which vendor to use should be based on thorough analysis.
  • Check references.
  • Visit the finalists. Make sure you meet the person who will be your account manager.  And go through a case study from beginning to end.
  • Make your decision. You will have a lot of information to make your decision.  Trust your instincts.
Concluded another hospital marketer: "CRM is one of those things that once you have it and see what its capabilities are, it is impossible to go back to marketing without it.  Without it, you are almost marketing with blinders on."

Mr. Stern is president of L. Stern & Associates and has more than 20 years of marketing accomplishments across several industries, including healthcare, financial services, information and technology. His expertise covers all areas of both strategic and tactical marketing. He holds an MBA from the University of Chicago and a BJ in journalism from the University of Missouri.

Learn more about L. Stern & Associates, Inc.

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