part 1. the next extraordinary marketing opportunity- healthcare reform

The Next Extraordinary Marketing Opportunity

Lindsay R. ResnickChief Marketing Officer

"Health reform could benefit the insurance industry dramatically by generating

billions of dollars of new revenue and millions of new customers. Harris Interactive

Game ChangerRetailization of healthcare

“Insurers will compete head-to-head as health insurance exchanges open up

a $60 billion market in 2014 reaching an estimated $200 billion by 2019 and covering 28 million people.”

PricewaterhouseCoopersPwC Health Research Institute

“The health insurance industry is moving from wholesale to retail. A

direct-to-consumer sales process significantly changes the customer mix insurers are used to dealing with.”

PNC Healthcare

© 2011 KBM Group CONFIDENTIAL & PROPRIETARY

Market Transformation

Customer Connection

Marketing Remix

User Experience

Opportunity Pathway

If opportunity doesn't knock, build a door(MB)

Medicare

Medicaid

Medicare

Medicaid

1960 1970 1980 1990 2000 2010

HMOsHMOs PPOsPPOs CDHPsCDHPsMedicare

Advantage

Part D

MedicareAdvantage

Part DPPACAPPACA

History of TransformationAssess – Benefits – Cost

U.S. health care spending is $2.7 trillion going to $4.6 trillion in 2020 (20% GDP)

Average health care costs for families insured through their employer is $19,393

$3,280 Employee out-of-pocket

$4,728 Employee contribution $11,385 Employer contribution

Health Care Reform Marketplace churn

20112016

Scenario A2016

Scenario B

Employer 160 150 115

Individual 18 11 25

Uninsured 50 20 26

Medicaid 40 53 56

Medicare 45 58 58

Exchanges 0 24 36

Patient Protection and Affordable Care Act (PPACA)

10-years, $940 billion, 32 million covered


Uninsured Americans: 52 million customersWho are they?

Working families Low/moderate income

Adults v children Minority v white

Young adults High school only

Poorer health No coverage 1+ years

Don’t Want It Young Invincible

Pre-Ex Denied Temporarily Unemployed

Medicaid/CHIP Eligible Illegal Immigrant

Health Benefit Exchanges: 24 million customers

Organized, structured marketplace for individuals and small businesses to access, shop and purchase health insurance.

• Deliver consumer information• Provide plan choice• Promote price competition• Facilitate easy enrollment


VARIABLES

• Participation standards

• Benefit & rate variability

• Off-exchange restrictions

• Exchange navigator role

• Build it…will they come?

HURDLES

• Administration & IT

• Eligibility & enrollment

• Plan contracting & pricing

• Risk management & network

• Consumer outreach & navigation

Exchange CustomersWho are they?

Majority eligible for subsidies (133% - 400% federal poverty level)

Previously uninsured or uninsurable (affordability, health condition)

Pent-up demand for healthcare

Leaving employer coverage

Desire decision support resources

Small business employees

Exchange consumers are expected to be older, less educated, lower income and more racially diverse than privately-insured population.

Travel Web Portals (aka Exchanges)

90+ million visitors

KEY DRIVERS• Price• Benefits• Network• Quality/Reputation• Wellness


Previously Uninsured

Pre-Ex Timebombs

Abandon Employees

Opt-Out Employees

Individual Shoppers

Newly Subsidized

Medicaid Qualified

Newly Medicaid

Medicare Boomers

Medicare Switchers

New Market SegmentsSeize opportunity, buffer risk

Product Diversification

Risk Profiles

Compliance Maze

Administrative Complexity

Provider Network(s)

Customer Experience

Brand Position

Marketing Outreach

Distribution Channels

LifeTime Value

SEGMENTS IMPLICATIONS

Fish where the fishes are

Data Driven MarketingKnowledge-based customer intelligence

Enriched DatabaseAccuracy

Currency

Breadth

Advanced AnalyticsSegmentation

Profiling

Clustering

Predictive Modeling

Data driven, individualized consumer insights yield informed decisions


Customer ConnectionWho are they?

What’s important to them?

Where do they go?

How to get their attention?

What motivates them to buy?

Why do they remain loyal?

• Demographic attributes

• Socioeconomic status

• Psychographic characteristics

• Lifestyle choices

• Life stage or generational

• Responder indices

• Common purchasing behavior

• Attitudes and preferences

• Health or condition indicators

Customer SegmentationData is the driver, knowledge is the asset

Digital Devices Digital Destinations

EXAMPLE: Digital Segmentation*

* Digital Neighborhoods 2.0

Why consumers chose the digital devices they use

Will they re-purchase and/or upgrade

Who are early technology adopters vs. more conservative consumers

What are their digital activities: professional, entertainment, education, buying, bill paying

KNOW YOUR DIGITAL COMMUNITY

By knowing digital attitudes and behaviors across range of technologies and devices marketers can deliver customized messages to customers via their most preferred digital media.

What matters today are conversations

with & among consumers(LW)

Direct mail52% mail volume $45 billion spend

Every 60-seconds700,000 Searches 100,000 Tweets

Mobile web60% Smartphones 15 billion Apple apps

Third largest country600+ million Facebook Users

Monthly online shopping100+ million Amazon visitors

Multi-Channel PreparednessMessage to moments of maximum influence

Customers are in control. They’re talking about you, reviewing you, and price checking you. They have a choice and they determine your value…so listen to them and engage in their conversation!


Marketing RemixWherever, whenever, however

LOW ENGAGEMENT

Push advertising

One-way, top-down

Broadcast/print/outdoor

Brand-focused

Mass marketing

ENGAGEMENT

Push messaging

Interactive

Email/search/banner

Brand-response

Mass-to-segment

HIGH ENGAGEMENT

Customer dialogue

Always-on, digital-only

Social/mobile/video

“Me” content focused

Narrowcast

20% consumers trust advertising… 80% consumers trust other consumers

Conversational MarketingOffline to online continuum

UR UX SUX

Healthcare Consumer Squeeze

• Benefit and Financial Choices

• Care Delivery Options

• Family Budget Priorities

• Intergenerational Navigation

• Retirement Planning

• Lifestyle Management

• Information Overload

Relationships revolve around customer touch-points

Consumer Engagement

72% consumer say health insurance so complicated don’t know what’s covered or what it will cost them

Consumer Experience by Industry

Customer Experience Index, 2011: Health Insurance Plans, April 29, 2011

Every touch point in the relationship a company has with its prospects and customers.

The sum total of everything they see, hear, feel and experience as part of their interaction with your company―

…every visual encounter

…every telephone call

…every written word

…every transaction

…every online exchange

…every promise made.

UX

Every experience is a branded experience

HIGH ENGAGEMENTLOW ENGAGEMENT

End-to-End UXCreate bridge of relevant connections

Superior UX is a marketing tool extraordinaire!


Knowledge

Consistency

Transparency

Informed

Active Trusting

Big ideas precede big

achievement

Plan For UncertaintyTransformation yields opportunity


INNOVATE

OR DIE

Decision paralysis“Oh, health reform will be repealed”

Trend avoidance“They’ll never buy this online”

One-way marketing“But that’s the way we’ve always done it”

Cross-functional silos“That’s marketing’s problem”“That’s sales’ problem”“That’s compliance’s problem”

Eliminate FogeyismEntrepreneurship trumps bureaucracy

- Define what you stand for

- Establish why you are different

- Articulate your unique value proposition

Clutter-Buster

Differentiate BrandIn commoditized and standardized markets…

Who are your “best” most profitable customers?

What are your comparative marketplace advantages?

Why do you get beat in sales situations?


Give your “best potential” customers a reason to convert to your brand and always have a pathway to loyalty.

• Integrated data architecture

• End-to-end analytics

• Rich, actionable customer insights

• Personalized, creative communications

• Offline-to-online channel transitions

• Commitment to customer listening

• Leverage, optimize, leverage

360º Customer IntelligenceBest customers, best channels

Prepare for customers that never had or bought insurance before.

Customer InteractionNavigation resource and decision support

If we ask customers to shop for benefits and engage in clinical

decision-making, they need to be educated and supported

about how to make smart economical individualized choices.

Educate and guide your customers Provide information on price & quality

Reward healthy behavior & choices Reinforce purchase with after-sale sale

Data – from acquisition to retention to ROI, use informatics to optimize marketing

Different – break-through brand position and superior customer experience

Direct – accountable creative supporting retail healthcare selling channels

Digital – high engagement, socialized marketing to keep pace with customer trends

Marketing RemixFrom monologue to dialogue


Identify opportunity and fine-tune relationships by listening to and joining customer conversations

Lindsay R. ResnickChief Marketing Officer

Phone 773.372.4961

Email [email protected]

Web KBMGhealth.com

Blog lindsayresnick.com

Twitter @ResnickLR

Questions

Comments

Observations

Opinions

part 1. the next extraordinary marketing opportunity- healthcare reform

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preferences health

poorer health

health reform

health insurance exchanges

digital segmentation

health insurance industry

purchase health insurance

health benefit exchanges