The Payoff of Customer Segmentation in Healthcare
Last week, I wrote about the value of segmenting customers, using Lululemon, Coca-Cola and microbrewed beer as examples. I deliberately used familiar brands and products because they explain the value of segmentation in terms that are easier to understand. Also, Business to Consumer (BTC) companies often launch businesses, introduce line extensions and design marketing campaigns around distinct groups of people. With deep knowledge of their behaviors and preferences, these industries put segmentation into practice every day.
But segmentation isn’t just for clothes, beer and soft drinks.
It’s a strategy to consider in healthcare, too. And that includes healthcare startups, insurance companies and health providers.
‘Show me how,’ you may be saying to yourself.
As I mentioned in the first article, there are a variety of ways to segment consumers. According to my textbook definition, these are:
· Geographic (e.g., country, country region, city, density, climate)
· Demographic (age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, nationality)
· Psychographic (social class, lifestyle, personality)
· Behavioral (occasions, benefits, user status, usage rate, loyalty status, readiness state, attitude)
How might segmentation benefit health organizations? Here are a few possibilities.
Healthcare technology companies
Many B2B healthcare technology companies are creating products that consumers ultimately use. Take a company like Livongo, for example. This company provides a technology that allows consumers to receive real-time support from health professionals if their “numbers” are outside a normal range, such as a diabetic whose sugar levels are abnormally high or low. Though they sell the product to employers and health insurance companies, it’s the diabetic who needs monitoring.
By understanding the needs, behaviors and demographics of patients with diabetes and other chronic illnesses, the company could modify product specifications and fine-tune business development efforts. Hypothetically speaking, Livongo could use segmentation data to prioritize which patients are most likely to benefit from the program. Layering lifestyle data over disease burden, they would bebetter able to motivate action and improve quality of life for those who suffer.
Health insurance companies
Health plans are uniquely poised with mounds of patient data. In fact, in interviews I conducted last summer, many admitted they have a more complete picture of a person’s health than a physician since they have to process claims across the continuum of care. They also suggested, as Livongo also knows, that chronic conditions are a huge financial burden on the US healthcare system.
Imagine combining claims with behavioral data to keep healthy patients well and help get sick patients healthier. For example, if an insurance company knew that a healthy patient loved to play tennis and travel (ahem, that would be me), it could send a hotel discount at a tennis tournament as incentive for seeking an annual checkup (that’s a gesture that would retain my loyalty for life).
Understanding lifestyle preferences and motivations for chronic patients would be even more valuable. By offering meaningful incentives for diabetic or obese persons to get consistent primary care, for example, health plans would promote treatment compliance and save them (and patients!) lots of money long-term.
Tailored products, services and incentives could be well worth the investment, but deeper research about a patient/member — above and beyond medical codes — is needed.
Health providers
Providers acknowledge that engaging patients in their health and wellness improves quality of life and overall population health. The much-hyped concept of value-based medicine depends on it. Yet health systems grapple with how to capture patient mindshare before they get sick.
Segmenting a patient base into smaller groups helps health system narrow their one-size-fits-all approach to provide services, information and marketing outreach that resonates more deeply. As an example, a millennial single mom on Medicaid might benefit from information that touts the benefits of prevention and wellness. A 50-something wealthy working male might need a reminder to schedule a colonoscopy or information on treating back pain. Knowing the communication preferences of these two patient groups helps the provider reach them in more impactful ways.
The value in tailored outreach is gaining patient trust, promoting treatment compliance and helping them avoid costly emergency care. As patients bring sophistication from other industries to healthcare, they’ll demand greater convenience and better service. Health systems that rise to the challenge and meet their needs will enjoy higher patient satisfaction and collection rates.
Segmentation makes sense
In a world increasingly competitive, consumer-driven world, an investment in customer segmentation will pay dividends. Whether you are launching a healthcare technology, incentivizing patients to see the doctor or educating them on how to stay healthy, identify a small number of meaningful groups first. Knowing more about patients and prospects and catering to their preferences will keep them happy and healthy.
