Building Data-Driven, Consumer Marketing Strategies And Capabilities
CASE STUDIES
Learn From Our Experiences
Customer needs and lifestage data were aligned with the psychographic data. As seen in this matrix, these insights can help determine products and price points, and identify offers required for each segment.
Only partial matrix information shown here
Once the basic segments had been identified, targeted marketing programs and campaigns were developed for each of them. Campaigns, with the appropriate response tracking in place, were then tested for each segment to better understand their respective customer intent, decision journeys, media and channel preferences, and responsiveness. Several product benefits and price points were modified in order to better align with the segments’ needs. New offers were also found that would better match the new segments.
Results
Both an overall increase in sales and lowered marketing costs resulted from a better alignment of targeted segments with the appropriate products, media channels and contact management tactics. Testing by segment provided simple, but quantifiable, insights that drove better results. For example, it was found to be highly efficient to utilize the automated phone media channel with current customers but not with non-customers. We also found three categories of retention/loyalty offers that were highly effective depending upon different customer segments.
GOALS, STRATEGIES AND PRIORITIZATION
Case Study: Where To Begin?
Background
One of the largest U.S. health care organizations with 8.6 million patients and $43 billion in annual revenues was at a crossroads and in need of new, innovative approaches to their marketing business model. Their business had been built primarily on business-to-business sales to companies and gaining new healthcare patients through the employees of these companies. However, current sales trends were showing that acquiring new healthcare patients through businesses was stagnant and that there was greater growth in consumers directly joining the organization. This new trend was driven by several issues including the reduction or even elimination of healthcare benefits by companies. Upcoming major changes with the new federal health care law (i.e., Obamacare) would also soon accelerate the trend of consumers directly purchasing their own healthcare. The organization decided to pursue a strategy to leverage this trend by improving their consumer marketing capabilities and accelerate the growth of their consumer portfolio. The organization needed to build their direct to consumer marketing strategies and capabilities.
Obstacles
Extensive market research was available but analytic insights from customer data or actual results of marketing efforts needed to be greatly expanded. Marketing efforts were often inaccurately measured and there was little gained in the way of patient insights. Additionally, an analytic infrastructure needed to be built including a patient database, business intelligence tools and CRM system. Patient and consumer data had to be sourced from various operational systems including a campaign management system managed by a vendor.
We realized that we did not have time, nor the budget to immediately build out all the necessary data and infrastructure in order to overcome these multiple obstacles. Where was one to begin?
Actions
We began searching for areas that were in need of improvement and which could quickly provide results towards our goal, building our consumer business. This review included key marketing data and metrics across acquisition, cross-sell, retention and patient experience areas.
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We found several highly summarized reports at the line of business level that indicated an annual patient attrition rate between 9% and 16% depending upon the business line. We realized that in order to build a larger patient portfolio we had to staunch the leaking bucket.
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We also found that despite the Medicare marketplace growing at 6%, the organization’s Medicare portfolio was only growing at 3%. The Medicare line of business generated the bulk of this healthcare company’s consumer profits and it was clearly falling behind the competition.
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As compared to in-person and telephone sales, the online sales channel was not contributing significantly to acquiring new Individual Healthcare plans. Some felt that the nature of shopping and evaluating healthcare plans required an interactive, live sales person. This did produce results but with a high marketing acquisition cost.
The preliminary analysis indicated that the organization’s initial priorities were to build marketing capabilities (staff, processes, data and tools) and marketing programs that focused on three key areas. See the case studies with the approach and results for each of these prioritized areas.
Strategic Priorities
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Improving customer retention across most lines of business Case Study: Customer Retention
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Increasing customer acquisition for the Medicare line of business Case Study: Customer Acquisition
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Improving the online customer experience for Individual healthcare plans Case Study: Customer Lifecycle
PERSONALIZATION AND SEGMENTATION
Case Study: An Actionable Segmentation Strategy
A $70 billion organization had developed one of the top healthcare brands in six regions across the U.S. This organization had previously utilized market research to identify five major psychographic groups to understand Americans’ attitudes towards healthcare. Three of these groups were deemed a fit with the organization’s services and covered 57% of the marketplace. The company's brand marketing department well understood the values and relevance of healthcare within these groups and applied them expertly in developing their brand and brand messaging. Regular surveys indicated that customers in the market had increasingly positive attitudes towards the company.
However, customer values and attitudes are not specific enough to develop products, offers, nor efficient targeted marketing campaigns. How was the organization to become more targeted and efficiently apply scarce marketing resources and media budgets? What additional information and data were needed to target consumers in actionable marketing campaigns? The answers were found through segmentation.
As seen here, we first developed a segmentation framework as well as criteria from which to segment the customer population.
We found that the Individual health products were lacking data for many customer behaviors and triggering events. For Medicare, behavioral data, specifically around the decision journey, was also lacking. We filled many of the data gaps by working with IT and Operations, establishing campaign tracking, and some additional market research.
TEST AND LEARN
Case Study: Customer Insights Driving Acquisition and Profitability
Background
A major bank was rolling out a new consumer loan product. The “instant loan” product is an installment loan offered directly to targeted consumers that have been pre-screened. The pre-approved offer is accepted by depositing the instant loan check into any bank account. There were high expectations for this product but also many questions about the appropriate loan offer, targeting, and profitability.
There was only a generalized, theoretical understanding of the profitability of the loans, especially over the life of a loan (actual life of loan, bad loan rate). There were many schools of thought regarding the best loan offer with the appropriate loan amount and interest rate that would optimize response rates and profitability. Additionally, there were no tracking tools nor data that were available in order to measure the success of the marketing campaign.
Test hypotheses were developed to create insights into loan amounts, interest rates and consumer credit scores. The bank also wanted to expand outside their traditional geography and greatly expand their market so testing also included other geographies.
Tests were designed so that results would be statistically significant but also small enough so that little marketing dollars were spent in the testing. A small campaign database was established and results tracking was enabled by establishing a control group (i.e., no offers made) which could then be compared to test groups.
Results
Various ideas were tested over the six test campaigns so that profitability (NPV) eventually increased by over 400% from the first campaign. By the sixth campaign, over $4 in profit was being generated for every $1 spent on marketing. The optimized offers and campaigns were then used to eventually build a nearly $1 billion loan portfolio. Several key insights were gained: 1) optimal loan amounts and interest rates to appropriate targeted segments were determined, 2) campaigns outside the bank’s traditional market were not as profitable but still highly effective and well worth pursuing, greatly expanding the bank’s market size.
A particular lesson was learned regarding the development of test ideas. As seen in test 2, there was an improvement in the marketing ROI as this particular test campaign leveraged insights gained from test 1.
However, several non-data driven tests were implemented in test 3, and to a lesser degree, in test 4, which drove down the marketing ROI. Ensuing tests 5 and 6 again leveraged previous insights into key drivers to make further gains in the marketing ROI.
Bottom Line
Leverage the insights from previous results throughout the testing. Follow a test plan and avoid random testing.
Key Implementation Drivers
- Development of customer database and results tracking techniques
- Data analyses for key customer insights
- Predictive modeling and test design skill sets
- Test and learn campaign processes, tools and response attribution data
CUSTOMER LIFECYCLE
Case Study: Improving the Customer Lifecycle for an Individual Healthcare Plan
Background
As compared to in-person and telephone sales, the online sales channel was not contributing significantly to acquiring new Individual Healthcare plans. This was exacerbated by a deep recession at that time when consumer responses to marketing campaigns were declining and driving up the marketing cost per patient acquired. Some felt that the nature of shopping and evaluating healthcare plans required an interactive, live sales person. This did produce results but with a high marketing acquisition cost.
Obstacles
There were few metrics available, even in summary form, to diagnose any potential problems in the online customer lifecycle. There was little understanding of customer usage of the digital channels.
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Actions
As it would require extensive work to gain customer data along the entire lifecycle we decided to initially focus on the Shopping and Evaluation phase within the online sales channel. Aligning our internal campaign data with third party data enabled us to map and measure points along the customer Shopping lifecycle phase. Metrics were indicating that the click-through rates from paid and natural search, as well as paid display ads, were good (as bench-marked with other companies) but we did not see much internal sales via the online channel.
However, we identified several major gaps including a 64% abandonment rate of the landing page. By testing several web landing page designs we dramatically decreased the abandonment rate to 27%, more in line with industry standards.
Results
Reduced cost per acquisition by over 20% in one year for Individual health plans.
Key Implementation Drivers
- Implementation of web tracking software/vendor
- Understanding and breakdown of the customer lifecycle
- Development of key customer insights from internal data analyses
- Test design skill sets, test and learn campaign processes
- Implementation of web content variations
CUSTOMER RETENTION
Case Study: Customer Retention - A Superior Marketing Investment
Background
This $70 billion healthcare organization had little information regarding the drivers of patient retention and engagement. As a result, senior management had not prioritized a retention budget and few marketing programs for improving patient retention existed. We found several highly summarized reports at the line of business level that indicated an annual patient attrition rate between 9% and 16% depending upon the business line. We realized that in order to build a larger patient portfolio we had to staunch the leaking bucket.
Obstacles
A patient database had to be built, as it was essential to begin understanding who was leaving and why, but only a very small budget was available. We also needed to establish campaign management and results tracking systems to begin understanding marketing campaign results. Even the operational patient databases had limited patient information with valid email addresses for only 30% of their patient base (yes, they were a bit behind the times).
Actions
Focusing on actionable customer data, we developed in-house a limited CRM system by purchasing a computer server along with SAS and SQL software. We then hired a few junior staff to work with the internal IT and Operations groups to obtain data feeds in order to build a limited but efficient patient database. After populating our patient database we directed a series of patient analyses (e.g., CHAID, logistic regressions) which helped us gain several key insights into the drivers of patient attrition.
These insights provided clarity around several key drivers of customer attrition and led to our development of three executable marketing programs aimed at: 1) new patients, 2) patients with price increases greater than 12%, 3) patients with low utilization of our services. We also found a few previous but limited retention campaigns that had utilized several media channels. Our analysis found, a bit to our surprise, that automated phone calls were the most effective way to reach our patient base. This was primarily due to the very limited penetration of email addresses within our patient database, and the higher cost of mail. Finally, we worked with Finance to develop a financial model that could provide the economic value of retaining each patient. This allowed us to appropriately segment valued customers that would be prioritized for retention efforts.
Customer that readily utilized the healthcare company's services were more likely to stay than those with low usage.
Newer customers are more likely to attrite. Age also affects the likelyhood to attrite
Based on our analytical insights and market research, we began a series of value proposition tests.
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highlighting service benefits for those that have low utilization of services,
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for new members, providing early assistance and gaining early engagement by establishing a primary doctor visit,
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offering lower benefit/cost services to those with high rate increases.
We refined these tests from the results (e.g., building and applying response models, refining segments to better target, etc.). We continually tested, but over time, increased the budget allocation towards the most successful tests and, hence, optimized the overall LTV of our customers.
Results
We provided new retention and engagement campaigns with a one year marketing return on investment ranging from 500% to 700% and with increased levels of patient satisfaction. Senior management now recognized the enormous investment value of not only acquiring patients but also retaining them and went on to increase the marketing retention budget by 130%.
Key Implementation Drivers
- Development of customer database with internal data
- Data analyses for key customer insights
- Predictive modeling and test design skill sets
- Test and learn campaign processes, tools and response attribution data
CUSTOMER ACQUISITION
Case Study: Dramatic Increases in Customer Acquisition
Background
Despite the Medicare market growing at 6%, this $70 billion healthcare organization’s Medicare portfolio was only growing at 3%. The Medicare line of business generated the bulk of this healthcare company’s consumer profits and it was clearly falling behind the competition.
Obstacles
The Medicare line of business had highly fragmented marketing approaches managed by five geographic regions using several different data sources and marketing operations. Each geographic region was measuring campaigns in their own way, if at all, but essentially there was little tracking of campaign results and nearly no understanding of optimal media channels or creative, acquisition costs, nor the best possible contact management approach. The marketing budget was also reduced by 10% from the previous year due to the impact of the recent recession.
Actions
We created a centralized marketing department dedicated to this important line of business. As this was a politically sensitive issue, we also worked closely with the business line and the five regions to create centralized data and campaign operations. We promised the geographic regions we would consistently measure campaign results and provide them analytic insights for the price of consolidating their respective marketing budgets into one centralized marketing department. We then built an internal database with limited capabilities utilizing SAS and SQL.
We used fragmented data from previous campaigns and began populating our database with customer behavior data. The ensuing analysis determined an optimal mix of marketing channels (e.g. increase SEM, display, email budget) and eliminated sub-performing media channels (e.g., radio, newsletters). We also built a predictive response model from this data to better target potential customers. Market research implied that consumers wanted help, not just information, so we tested a new 3-5 step contact strategy to guide them through the sales and application process, eliminating as many obstacles as possible.
Results
Turned around the Medicare line of business by increasing sales by 30% year over year, with a marketing budget reduced by 10% from the previous year.
Key Implementation Drivers
- Development of customer database with internal data
- Data analyses for key customer insights
- Predictive modeling and test design skill sets
- Test and learn campaign processes, tools and response attribution data