Population health is an opportunity

Population health is a top concern, but it represents an opportunity

The Affordable Care Act has affected everything for hospitals, including the struggle to be financially successful.

Notably, however, it prompted the switch from a fee-for-service reimbursement model to a pay-for-performance one that emphasizes the value of the healthcare service.

This in turn has prompted hospitals to take population health more seriously because their reimbursements are now dependent on the success of outcomes. For that reason, hospital CEOs have listed population health as one of their greatest concerns.

Population healthHospital CEOs now need their hospital systems to be further integrated into their communities, working with local organizations and instituting programs that help population health. By doing so, hospitals earn more money based on the pay-for-performance reimbursement. Better population health means a better bottom line.

While many administrators see this as a hindrance, it can actually be an advantage for hospitals looking to steal market share from its competitors. It represents an opportunity to create preference.

Hospitals struggle to create preference

Traditionally, hospitals have grown organically. A new facility creates a new audience, whether if it’s at a new location or represents a new specialty. A system starts with a name usually associated with a location, a founder or a prominent contributor from the community.

Hospitals rarely see themselves as marketers who are creating for preference as much as they are seeking awareness. They also often consider the internal audience (physicians, staff, contributors) more than they do prospective patients. They take the care of their patients seriously, as they should, so they focus on acquiring talent, technology and new training.

But the changing landscape of healthcare, especially when it comes to reimbursement, has made investing in the hospital brand more important. There is now more competition, with greater regulatory oversight and technologies creating savvier patients.

Hospitals now have to think of themselves as a true brand, analyzing the competition, conducting market research and putting more dollars into their marketing. The competition has simply gotten too fierce. The world has also gotten more complex.

Population health is an opportunity

The regulations surrounding the Affordable Care Act can be confusing for the hospital, the patient and even insurance companies. Those are the ones forcing the pay for performance model because they don’t want to pay out as much money. Insurance companies also want to see better population health because it results in fewer claims.

The knee-jerk reaction is to promote the hospital’s various partnerships and programs to raise the community profile of the hospital. That’s all fine, well and good. But those alone don’t raise preference. They are simply the proof points to your brand promise.

Population healthThe danger is that hospitals will sport brands that are all about better health and caring medical professionals. But those aren’t the reasons to prefer one hospital to another. They are just definitions of a hospital.

Instead, the process of increasing preference is to find the emotional triggers that make those things – including the overall healthiness of a community – important to the prospective patient. Why are those important? What are the drivers for those patients so that they choose your hospital?

Creating preference

The key to gaining preference is to be early in a prospect’s decision tree. The earlier you are positioned, the greater your preference. The struggle for hospitals is that no one wants to think about a hospital. It spells danger, risk and potential death. Instead, you must be important enough to prospective patients that, when they need a hospital, they have already chosen you. Even if it’s subconsciously.

To accomplish that, hospitals must avoid the clichés and trite messaging that comes with most hospital branding. A few tips:

Understand your competition. To be a true choice, you have to be truly different and better in your messaging. If your main competition has messaging focused on caring and expertise, you have an opportunity. Audiences filter out those messages because all hospitals claim to care and have expertise. Those messages mean little.

Go deeper. Most marketing stops at the wants and needs, but those can be fulfilled by any number of healthcare providers. True preference is created when you understand the reasons why those wants and needs are important. That means uncovering the precepts that drive behavior and the self-identification those audiences treasure. Aligning your brand with that belief creates audiences who are incapable of choosing anyone else because they would, in effect, be choosing against themselves.

The opportunity with population health exists because hospitals can be more important to communities. They can position themselves differently. Improving population health offers a gateway to a meaningful brand that goes beyond traditional hospital marketing. It means the promises of your hospital have changed and now you have the proof points to show for it.

Your hospital is now in the results business. Think about that as a hospital brand.

Selling insurance when people don’t want it

Selling insurance has one of the single most difficult hurdles to overcome. How to convince audiences that they should buy something they believe they don’t need.

Selling insurance isn’t like selling something people want. Consumers want iPhones and a nice-looking car. They will gladly pony up for them.

Selling insuranceHowever, they don’t want to think about what insurance is protecting them from: Death, illness, fire, liability, etc.

Selling insurance includes another dilemma. People believe that insurance companies are simply out to take their money and will automatically fight any claims. Whether that’s belief is true or not, it is believed. We have conducted research in this industry and that belief is the single biggest hurdle for insurance sales reps.

What are the other selling insurance hurdles?

Without giving away findings that are preparatory to our clients, our research has borne out a few themes:

  • People, including white-collar professionals, believe insurance companies are unfeeling entities, which means claims of caring rarely resonate.
  • Fear-based messaging (“What happens when you die?”) is ignored because it’s seen as the start of a scam.
  • Policies are confusing, feeding into the belief of insurance companies being deceitful.

Here’s the catch. Agents, those chosen to sell insurance products, often feel the same way. They also believe that messages about caring are not believable. They are also sick of telling the same story. And they find working with insurance companies to be cumbersome.

This should not be a surprise to anyone in the industry. What is surprising is that too few in the industry do anything about it. Yet overcoming those hurdles is exactly what would increase market share.

Let’s address each hurdle.

Insurance companies are unfeeling entities:

This is the most difficult hurdle because few believe any company cares more about its customers than its bottom line. This belief is especially acute with insurance companies because insurance is a low involvement category until they have to use it. Then it is high involvement and highly personal.

An effective brand message is the best step. Any message must be aligned with that belief (insurance companies are unfeeling) and positioned against the competition.

Selling insuranceAsk yourself these questions: What is it that audiences seek in their lives? What are they truly seeking when considering insurance? What are they rebelling against if they are forced by an employer to seek a particular structure of insurance, such as a health savings account?

More importantly, the message should be about the customer, not you. You lose the audience’s attention the moment you begin talking about you (either in person or in an TV advertisement).

Selling insurance becomes even harder when the rep knows that all products are the same and the only effective tool is the personal relationship with the individual customer. This is one of the main reasons an insurance salesman is such a cliché. Customers need insurance, not someone pretending to be their newest best friend. Be expert and understanding.

Fear-based messaging is ignored:

So stop doing it. Advertising for life insurance is especially guilty of this, often asking the question, “What will your family do when you’re gone?” This might have worked decades ago when life insurance was a relatively new idea. At its best, protecting your family is a category benefit.

Today, audiences have become immune to that message and consider their own investments as savings against such an outcome.

Think about this. Thousands of messages come into our view every day. Even the logo on a pen is a message. Humans, though, have a filter. They only hear messages that are about them.

What insurance companies and agents must do is understand the emotional reason why someone would want to protect something with insurance. Not a rational reason. An emotional one. Too much messaging today is superficial and paper thin. (A better example for life insurance: “It’s what a good father would do.” A definition of who they are when they buy insurance.)

Policies are too confusing:

This is an industry-wide problem. Policies have variations on variations, papers upon papers, language that is too confusing. Even agents have trouble deciphering everything.

To potential customers, it looks like an attempt to intentionally confuse them so the fine print can’t be understood.

So much of the world seems complex, so we thirst for simplicity.

Simple is best. Make everything you do, including how you explain policies, as simple as possible. What is the final result? The details are usually ignored.

The most powerful way to clear the hurdles

The most effective way to address all of these issues, however, is through brand. So many  insurance companies get brand wrong. GEICO spends millions on a message – “15 minutes could save you 15%” – that isn’t believed. The result if market share stagnation. As an even worse example, Genworth Financial once said: “We’re big, safe and friendly.” Ugh.

Selling insuranceBrand is about the customer. Who they are when they use your brand. We are winners when we wear a Nike shoe because we “just do it.” Apple positioned itself against everyone else, saying that its customers “Think Different.”

Developing a brand like that is hard work. It takes in-depth research, leadership willing to slay sacred cows and an understanding that emotion works better than the rational.

Insurance companies and agents should take note. Because audiences right now believe you are out to get them. And get them good.

The wasted dollars of product naming

Brands should hold every business to a high standard of eliminating wasteful spending. For example, few industries are worse at spending money on foolish efforts than medical devices. Pick up any corporate brochure from a medical device manufacturer and here’s what you’ll see: Mountains and mountains of individual product brand names.

For some reason, companies are in love with giving every single product they manufacture its own unique brand name. That’s not product naming for any meaningful purpose. That’s reducing preference.

The medical device industry is a $150 billion industry in the US alone. Few industries would tolerate the sheer amount of money wasted in product naming. In fact, the value of a company lies not in its individual products, but in the company brand and its equities. When consumers buy products, they are purchasing the brand.

Product NamingBut medical device manufacturers have gone insane over spending countless dollars that actually hurt the value of the company. No matter if it is a stent, wire or an ICD, it will have some clever brand name that means little to anyone but the company’s own marketers. Doing so does nothing to help define the parent brand or the brands of other products.

Instead, the medical device parent brands are crowded into the same space. They all claim to be forward thinking, innovative and reliable. Yet millions of dollars and countless resources are spent marketing the individual products like they are their own entities. Even when they are using the same language.

That reduces the corporate brand into an afterthought.

Cleverness is the enemy

The overabundance of cleverness is certainly not unique to the medical device industry. Marketing executives, in general, are convinced that a name or theme will be remembered if it’s clever enough.

The opposite is exactly true, which means the money to market them is ill spent. If the name or theme is clever, then it is not believable because it feels like an advertising firm wrote it. It will sound like marketing.

Let’s use an example from the medical device industry. St. Jude Medical, through its acquisition of Thoratec, has a left ventricular assist device called HeartMate. Its meaning is clear. It assists the heart.

But it still sounds like marketing and made up. It has no emotional meaning. Considering the sheer litany of products with made-up names like HeartMate, it won’t be remembered because no one says “Nurse, give me the HeartMate.”

Think about this. These names do nothing to create preference or add to any financial or emotional investment in the company. Just because a device has a clever name does not mean that hospital administrators and doctors will prefer that product. So why do it?

Product naming as an inhibitor to switching

Stealing market share means you must convince your target audience that what you offer is something you do not already have. That’s the definition of a switching trigger.

Product NamingSwitching is often seen as difficult because it means adjusting to something new. It’s a change even if it is a minor one. That means you must reduce the hurdles to switching if you want to attract the customers of your competition.

With so many branded products that have no relation to each other, but operate individually from other products, doctors and hospital administrators are reluctant to switch to them.

The same holds true for any manufacturer. A litany of unique product names creates a hurdle to adoption because audiences are asked to learn something new. That is especially difficult when you consider the entire scope of products.

It is easier for audiences to switch is if they know they are buying the company brand name instead of the product. It is just simpler.

What to do?

The answer to that question should be obvious. Don’t overdo product naming when it comes to individual products. We live in a world in which simplicity and control rule, meaning it’s the customer who is in charge.

Product NamingMedtronic, the giant in this industry that actually does better than most, makes thousands of medical devices. Nobody can remember the sheer litany of branded product names.

A list of its endoscopic suturing accessories lists these products:

  • Endo Stitch Single-Stitch
  • Endo Stitch Tripe-Stitch
  • V-Loc Wound Closure
  • Surgitie Ligating Loop
  • Surgiwip Suture Ligature
  • Endo Slide Single Use Knot Pusher

It would be better if the names were:

  • Medtronic Single-Stitch
  • Medtronic Tripe-Stitch
  • Medtronic Wound Closure
  • Medtronic Ligating Loop
  • Medtronic Suture Ligature
  • Medtronic Single Use Knot Pusher

Now the company is actually investing in the parent brand and not just talking about it. And the sheer amount of wasteful spending has been reduced while market share increases. You’ve asked customers to choose the parent brand. That’s all any brand manager could want.

Office Depot, Staples and new CEOs

What the future CEOs of Office Depot and Staples should know

Changes are afoot among the office supply chains with both Office Depot and Staples looking for new CEOs. This comes on the heels of the expected merger between the two retailers coming to an end over antitrust concerns.

That leaves both of them in a quagmire. What to do now? What do the future CEOs of these chains have to look forward to when they take office?

Office DepotFor one, they both will find declining sales and profitability. Office Depot will close hundreds of stores, including an exit out of Europe. Staples is doing much the same with sales declining 5% in the last quarter.

Both retailers have blamed the rise of internet spending for the kinds of products they both offer, and they are right about that. Amazon has become the go-to retail space and threatens the entire retail industry, not just the office supply chains.

From the perspective of consumers, why buy from office supply stores – especially in bulk – when shopping online is believed to be more convenient?

Where Office Depot, Staples stand now

The proposed Office Depot Staples merger was irrelevant anyway. Consumers never saw a true difference between them, so a Office Depot Staples merger would have largely gone unnoticed among them. (That is, until prices went up.)

Now that a federal judge has nixed the merger, both must think of the other as the enemy, not a potential partner. Stealing market share from Amazon is possible, but it’s impossible if target audiences cannot distinguish between the two suppliers. Consumers can’t choose either Home Depot or Staples when they cannot tell why they should choose one over the other. Audiences couldn’t tell you which is which.

Closing stores will mean nothing if consumers have no compelling reason to choose one of them over the competition. In fact, if Office Depot and Staples don’t uncover those reasons for choice, they will become the next Circuit City and Radio Shack.

Right now, neither has a brand claim that makes them relevant. The theme line for Staples is “Make More Happen.” Office Depot claims you shop there to “Gear Up for Great.”

StaplesWhat do those mean? Is either of them emotional enough to create preference? Both themes are used in current back to school advertising, but neither are emotional or say anything truly meaningful about who their individual customers are.

Taken at its word, the definition of a Staples customer is some one who wants to make more happen. The definition of an Office Depot customer is that they gear up for great.

Does either of these retailers truly believe these are the most emotionally intensive triggers for target audiences when buying office supplies?

What the CEOs of Office Depot and Staples should do

Let’s take one step back. Retail as a whole is an industry in crisis. Amazon has taken a big bite out of the market share of brick and mortar brands, and retailers have been late to respond. It’s not too late, but audiences prefer Amazon in greater and increasing numbers, thanks largely to its Prime membership.

But there are larger issues involved. Retailers have long taken for granted that the shopping experience will draw customers. Therefore, there is an entire science devoted to making the experience more fulfilling and enticing.

What if shoppers don’t want to experience a store at all? What if they would rather do something else and leave the shopping chores (such buying back to school supplies) to Amazon for the convenience or Walmart for the prices?

Office DepotThe answer to those questions is simple, but difficult to achieve. You must create preference for your brand.

Strangely, retailers invest very little in their brands. Instead, most focus on products, sales and sub-brands. The problem with that strategy is that you train audiences to shop based on convenience – which store is closer – and that means opening more stores, not closing them. Convenience becomes the rational trigger because all retailers sell similar products, hold sales and promote sub-brands. Customers can get them anywhere (even online).

Instead, investing in the parent brand as the reason for preference gives the meaning to why those products, sales and sub-brands are important. It demonstrates the difference between you and your competition to offer a true choice.

It’s the reason why Nike has rarely talked about the advantages of its shoes, instead saying the Nike user will “Just Do It.” The Nike wearer is a winner, who does not have time for indecision.

For the new CEOs of Office Depot and Staples, there is also no time for indecision. There is a future where both chains could close and the new executives will wonder why they couldn’t prevent it. Don’t be that CEO.

Insurance branding to create preference

The purpose of insurance branding.

Any process of insurance branding includes questions about creating preference. How do we gain preference for our products when, basically, they are identical to that of the competition? How can we convince target audiences to buy insurance when, if I’m being honest with myself, they don’t really want insurance? How can I assure our message is getting through when we go through a middleman, such as a broker or an independent agent, to sell it?

The insurance industry is one of the most heavily regulated of all, right there next to pharmaceuticals. It must respond to changing laws, reimbursement issues, market forces and, especially, health care requirements.

Insurance brandingIts other hurdles, however, are not that unique to its industry. Most markets are mature ones, meaning that products and offerings are similar, and true innovation is rare. Most of the products consumers buy they don’t really need (c’mon, who really needs an iPad?). And most brands don’t sell directly, meaning they depend on a retailer or distributor for sales.

Does that mean the answers to those questions posted above are the same for any industry? Yes and no.

Facing the belief about insurance branding

The reason they are not all the same is that insurance brands have an image problem few have. They are seen as a scam. We’ve done research for various insurance companies and respondents are very wary of insurance companies that make promises on which they don’t deliver. Any number of the general public can tell you a dreadful story about filing a claim and having to hire an attorney to goad the company into complying.

You could retort that all industries have failures and breakdowns, but the anger is stronger with insurance brands because the issues seem to be embedded into the process itself.

You pay your premiums without filing a claim for years, then you are denied when you actually do file. As it’s said in a Liberty Mutual commercial, “Why have insurance when you have to pay more to use it?”

In some ways, this anger is similar to what consumers felt about banks. In the face of the 2008 recession, anger at banks was at an all-time high.

Why do so few take action?

But few financial institutions, such as credit unions, aligned themselves with that anger to steal market share. Our studies showed that about 15% of customers seriously consider switching banks at any given time, but few actually do it because switching seems complicated and no one has a message that gets them over that hurdle.

In the insurance industry, switching is certainly one of the end games of insurance branding. But another is adding to the policies you already have with that customer. In that situation, customers are usually reluctant to add policies because of the negative feelings they have about insurance companies.

The Liberty Mutual ad campaign has been successful largely because of the belief among consumers that insurance companies scheme their way to take your money. It works as a message, but it would be more effective if the emotional pain of that the audience was embedded in the Liberty Mutual brand. Then Liberty Mutual could be preferred, rather than just considered.

hamster wheelSure, Liberty Mutual says “Liberty stands with you,” but that’s just marketing garble and identical to “Nationwide is on your side.” (We liked the question it asked years ago, “What’s your policy?”) To really make an impact, and provide preference, its theme should not be so forgettable and easily overlooked. It should hit the heart of how prospective customers feel and how they should see themselves in the Liberty Mutual brand.

Brand answers the questions

Therein lines the answer to all the hurdles discussed. Your products are basically the same as those of your competitors? They will become more important to target audiences if they are given emotional reasons why they exist beyond the tired of messaging of protection against the future. How to open up more policies for customers? If the brand fulfills an emotional promise, then those customers will be more open to listen to you.

That’s what insurance branding should do.

Want better control of the message? Then have a brand message that is unique because most agents, according to our research, are bored stiff repeating the same message over and over, regardless of carrier. That is why most of them compete on price. They have nothing else to say.

Let’s consider Liberty Mutual’s “Liberty stands with you” theme one more time to get at the root of the insurance industry’s problem. Intellectually, you might think that theme would be the answer. Here’s the problem. Like most insurance companies, Liberty Mutual truly doesn’t understand the power of brand.

The brand theme here is about Liberty Mutual, not about the prospective customer. Nike’s “Just Do It” and Apple’s “Think Different” are powerful because they are about target audience, not the company.

If there’s a larger problem in insurance branding than what we’ve listed before, this is it. Insurance brands spend millions of dollars in advertising to sell a message that simply will not resonate. That is insanity.