MCOL Blog

2008: Actionable Transformation

Three important themes are influencing health care marketing in 2008–customer narrowcasting, Big Truth messaging and new media. Addressing these challenges will form the framework for successful marketing efforts. I’m forecasting this not only as it relates to healthcare, but in the context of a consumer marketplace undergoing massive transformation in the way people are approached, courted and led into the sales cycle.

Customer Narrowcasting

Alternatively known as market segmentation or niche marketing, customer narrowcasting takes a business’ focus to highly-defined, targeted customer segments. Whether formulating an annual marketing plan, reengineering product messaging or planning a media buy you can't do it without knowing your customer.

Market leaders are embracing a customer-centric philosophy that puts products and services into distinct market segments, each with narrow customer definitions. In this setting, the customer is viewed as the central asset. Products and services are tailored to unique needs of each customer group, relying on a range of segmentation profiles including demographic, psychographic and lifestyle.

The key to the customer-driven “black box” is data. Gathering, analyzing and interpreting information that allows you to understand variations among customer segments and develop a snapshot of your most desirable targets. It’s the practice of dividing people into groups or cohorts that are similar in specific ways relevant to key marketing indicators—age, gender, income, interests, attitudes and spending habits. The more you know about prospects needs and preferences, the more you’ll turn them into customers ( and the more customers you’ll turn into your brand promoters ).

Big Truth Messaging

In a marketplace characterized by more choice than most people can handle, marketing communication is at crossroads. The challenge is to fight through the incredible amount of apathy already lingering in the air. So whatever you're selling, unearth a Big Truth about it. What is the "single most important thought" that you want to communicate?

Big Truth messaging should start a meaningful one-to-one conversation with your target audience; lead them in a value-based direction, and begin to close the sale with a distinct call-to-action. Finding the delicate balance between education and selling goes a long way to creating a positive buying environment. Take a seat where your customer sits and always be answering the question “ What’s in it for me ?”

The best messaging is grounded in customer profiling. This allows companies to connect with customers logically and emotionally by demonstrating you understand what’s important to them, what concerns them, and what they want from your products. Articulates the most powerful features of a product or service and then directly link these features to benefits for your audience.

New Media

Digital convergence is advancing at an aggressive pace and smart marketers need to adapt to a convenience-driven, instant gratification customer culture. Traditional media outlets are being overtaken because of their inability to dial down and focus on niche markets or micro-verticals. Marketing is moving beyond a discipline of advertising and communication to one that focuses on building a relationship with the digital consumer.

Web-savvy amateurs are leveraging the power of information, even subverting the power of the corporate brand. Enter the blogosphere, social networking, podcasts, and viral marketing. Suddenly every customer has a news reel and megaphone to speak to minority interests and ultra-segmented consumers. These approaches bring an ability to pinpoint any debate—political, product or service. Momentum is shifting from institutions to individuals.

The fact is people are simply doing different things in different places at different times. Over 120 million people are going online for health and medical information (averaging seven visits per month). They are getting ready for, or drilling down after MD visits and researching drug information. They’re checking prices and looking for indicators about quality of care and clinical outcomes.

Actionable Transformation

Marketing is changing quickly. On a daily basis it’s moving in many new directions. It’s critical to think about these transforming influencers in the context of your business, but more importantly, put in place actionable strategies so you don’t get caught short in what promises to be a competitive, fast-moving marketing transformation.

Lindsay Resnick

312.419.1973

www.finelight.com

Individual Medical: Opportunity Is Now

The individual health insurance market has reached a defining moment. Demographic, economic and workforce trends point to a tremendous market opportunity. These powerful dynamics are creating favorable conditions for individual medical insurance:

§ Shifting work-force (self-employment, early retirement, small business formation)

§ Movement toward Consumer Directed Healthcare, High Deductible Health Plans and Health Savings Accounts

§ Decreasing employer-based coverage options with increased employee cost sharing

§ Favorable Federal tax environment

§ Growing numbers of “non-poor” working uninsured.

An estimated seventeen million people under age-65 are covered by an Individual Medical (IM) insurance policy. Thousands of new eligible policyholders continually enter the market every day. Almost 16% of the U.S. population is has no health insurance. Of these 47 million individuals it is estimated that 20 million could afford an individual policy with tax, employment or other purchasing incentives.

It’s Not Group

Historically, lackluster products, legacy technology, high-cost business acquisition and poor pricing characterized the individual medical market. Few carriers had the resolve to embrace new ways of doing business and learn from past mistakes.

What does it take for success in the Individual Medical market – get in synch with both customer needs and profitable risk management. IM insurance is a blocking and tackling business requiring intense data analysis, administrative efficiency, sales acumen and proactive customer service.

However, the most important factor for health plans considering Individual Medical is recognizing that it’s not group insurance. Time and time again, carriers substitute “group” experience in formulating and executing IM business strategy. They do not fully appreciate the essential differences between the two product-lines.

For example, when pricing an IM product, medical loss experience patterns are vastly different. Underwriting with the “accept/reject” rules has significant consequences on the long-term effect of risk selection and needs to be built into baseline pricing assumptions and performance benchmarks.

Selling is another critical difference. Prospecting and selling IM is a one-to-one venture, impacting both the number of sales agents needed and how they are supported. And, complementing traditional field distribution with telesales can make a significant difference in production volume. On the customer front, servicing individuals without the intermediation of a group’s human resource department takes different front-end customer service training and skills. Individual Medical isn’t group insurance!

Controlled Growth

Competition in the IM marketplace is at an all-time high as health plans seek growth opportunities outside the saturated group market. These plans know that they need to offer a market-segmented product matrix that includes serving the needs of individuals.

The individual health market has attractive fundamentals. There are favorable operating cash flow characteristics and, given current opportunities for strategic outsourcing, fixed cost overhead can be contained while deploying state of the art technology and operating processes.

A successful foray into the IM market requires disciplined accountability. Several areas of focus can be identified:

1) Financial Control

AAAAAAA At the financial core are solid risk management tools and premium adequacy --- a focus on pricing, underwriting guidelines and claims practices. Risk controls are targeted to properly designed products and various customer and distribution segments.

2) Operational Efficiency Competitive advantage will come from innovations in information technology and bandwidth that renders traditional health insurance backrooms obsolete. Alignment with the “right” partners (without yielding accountability) can leverage an investment in intellectual property to contain expenses and broaden a company’s reach.

3) Marketing Expertise Understanding your target customer, whether young invincibles, empty nesters or prime market self-employed, goes a long way to ensuring success. This means data-driven marketing and direct response skills able to deliver the most effective ways possible to connect with customers—capture attention and interest of target audience, answer the question “What’s in it for me?” and, a call-to-action that motivates prospects to start a relationship with your company.

4) Performance Benchmarks Business metrics need to be in place to measure performance across functions: underwriting and claim costs, staffing and productivity, sales production and risk management. These benchmarks need to be buttressed with a robust decision support capability to ensure mission critical information is available and actionable.

Profitable Diversification

If you’re already in the individual medical market, but not meeting expectations, the cost of delay far exceeds the cost of action. Given IM pricing and cost structure volatility, there is a very short timeframe for crucial decisions if growth and financial results are falling short. A “wait-and see” approach can mean trouble comes fast in the form of an “underwriting death spiral” where healthy lives go elsewhere and severe anti-selection causes unrecoverable losses. These companies must act quickly to implement corrective actions and improve performance.

For new market entrants, the advice is simple - - - do it right! Study and learn from others’ mistakes. Establish a business platform built on disciplined management. Recruit knowledgeable leadership and engage expert external resources – risk and care management, marketing and telesales. Bring a commitment to change the way the market thinks about the individual medical insurance in terms of premium adequacy, product design, customer segmentation and sales distribution. Demand profitable growth. And always remember, it’s not group insurance.

For questions and comments contact:

Lindsay R. Resnick
Chief Marketing Officer
Finelight
150 N Michigan Ave, Suite 2900
Chicago IL 60601
312.419.1973
BLOG: www.lindsayresnick.com

Brand Direct Marketing: Value Driven Action Lifts Topline

Branding and direct response have long been cornerstones of successful marketing campaigns.  On their own, each contributes an important piece of the marketing puzzle. Brand establishes position, generates awareness and builds preference for a company. Direct response is actionable. It gives people a reason to connect with your business and moves them into the sales cycle.

The wall between branding and direct response is coming down. It has to! The pace of marketplace change—technological advances, generational diversity and product commodization—demands an integrated, efficient approach that drives topline results. Effective marketing means opening up a dialogue with consumers and carefully tracking the conversation. Companies large and small are doing it and, they are seeing sales increase and their brand equity enhanced.

Brand direct is a way of combining the emotion evoked from brand advertising with the workhorse tools of direct response. A balanced approach means consistent communications that encourage interaction from prospects and promises a more meaningful customer experience. Here, direct response marketing tactics (data-driven segmentation and in-market learning supported by a strong call-to-action) take advantage of general advertising tactics. Using this model you get marketing for all media that is measurable and tied to specific sales goals—it’s where strategic thinking and persuasive creativity come together.

For brand direct marketing to achieve the best blend of branding and direct response, consider these three guiding principles:

All communications impact brand, so make sure your communications have brand impact. In other words, don’t think of brand or image campaigns as being separate and distinct from direct response. Awareness is only the first step. Every campaign should be designed to build your brand while eliciting a specific response from your target audience. The key is to educate prospective customers while pre-selling your product or service. Then, show them how to navigate the purchasing process to start a long-term relationship with your company.

Customers and prospects are always telling you something about themselves…listen. New tools and technologies are giving marketers access to an unprecedented amount of data about consumers. Turn this data into intelligence that helps you understand how and why your customers buy. Discover who are your biggest promoters…and most pesky detractors. Listening enables you to refine and replicate the purchasing process for prospective customers. By effectively profiling and segmenting your target audience you can deliver the right message at exactly the right time and in the right place.

Be ready for the next big opportunity. Today’s marketing environment is dynamic and fast-paced. It means your business is constantly evolving due to the constant flow of useful information—sales statistics, click streams, response analysis, competitive intelligence and more. You can use this knowledge to maximize your marketing performance, tweak messaging, adjust creative approaches and evaluate new media outlets. This allows for better opportunity analysis, plus newfound agility when it comes to:

•  Achieving product–price–promotion differentiation.
•  Addressing competitors head-on in sales situations.
•  Articulating customer preferences and perceptions.

Smart marketing can no longer depend on traditional silos. Brand direct marketing effectively leverages the value of your brand with proven direct response tactics. It enables a company to call for immediate action, initiate a customer relationship and then maintain an ongoing, one-on-one dialogue creating loyal followers. And, brand direct produces powerful, measurable results. 

Lindsay Resnick, Chief Marketing Officer, Finelight, lresnick@finelight.com

 

Health Insurance Top 10 Issues ‘07

What’s going to drive change in 2007? How are health plans positioning for the future? Here’s a look at the trends shaping health insurance this coming year.

Technology From cybercondriacs to genomics, healthcare technology will be a huge force. With over 120 million people online searching for health information, the customer has embraced technology! For health plans, integrated benefit card technology promises a new era of administrative efficiency.

Differentiatio n Health insurance products have become indistinguishable. Going head-to-head with competitors means rising above this “sea of sameness”. Differentiation will come from unique brand positioning that connects with customers and has competitive muscle.

Boomers America’s 78 million baby boomers are expected to live longer than any generation this country has ever seen. They are educated, tech savvy and convenience driven. From empty nesters to Medicare, boomers are a growing opportunity for health insurers.

Consumerism “Proof-of-concept” will take center stage in 2007 as health plans justify Consumer Driven Healthcare investments. Employers are expecting premium savings and at the same time employees are suffering deductible shock and benefit intimidation.

Distribution Detailed customer profiles, psych-demographic data and predictive modeling are making multiple sales channels a competitive necessity. The result is improved product awareness and a one-on-one customer relationship that turns into sales growth.

Lifestyle Half of Americans now believe it is fair for people with unhealthy lifestyles to pay higher insurance premiums, deductibles and co-pays. New and innovative lifestyle management programs are embracing wellness and prevention and rewarding members to get healthy.

Individuals As employer-based health insurance shrinks and the uninsured population grows, the individual health insurance market is booming. Products need to be tailored to unique purchaser needs, striking the right balance between benefits, affordability and insurability.

Convergence Health insurers own banks and banks have healthcare business units. Financial planners are integrating benefits into long-term asset protection, and health brokers are weighing tax implications of HSAs. Today’s healthcare consumers are tomorrow’s payers.

Communication Customers are demanding information in user-friendly, readily accessible formats. Communications need to reflect demographic segmentation. It will take a new mix of strategies to ensure that companies are reaching their target customer.

Healthcare Concierge medicine, hospitalists, intensivists, retail clinics and medical tourism are changing health care delivery. Spending on prescription drugs will surge and employers will continue to cut back on sponsoring health benefits.

This year promises to be challenging. Smart health plan executives will set themselves up to anticipate market change, refine strategic vision and capture new market opportunities.

As Chief Marketing Officer of Finelight, I lead business development and strategic advisory services. In this role, I make it a point to stay currenton health care trends and innovative approaches to marketing to insure our clients success in the competitive landscape.

I am excited to be a contributor to the MCOL Blog. With 25 years of professional experience in the health care and insurance industries, I will be discussing such topics as consumer directed health plans, product branding, Medicare, direct-to-consumer selling and how to achieve a dominant position in segmented markets such as young invincibles, boomers and seniors.

There is much to talk about. I encourage you to participate in the comments section as we work together to tackle these issues.

Thank you,
Lindsay Resnick