Notes Version: Part 1. The Next Extraordinary Marketing Opportunity- Healthcare Reform

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  • 1. 9/30/2011 The Next Extraordinary Marketing Opportunity Lindsay R. Resnick Chief Marketing Officer Game Changer Retailization of healthcare "Health reform could benefit the insurance industry dramatically by generating billions of dollars of new revenue and millions of new customers. Harris Interactive “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.” PricewaterhouseCoopers PwC 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 1
  • 2. 9/30/2011 If opportunity doesnt knock, build a door (MB) History of Transformation Assess – Benefits – Cost 1960 1970 1980 1990 2000 2010 Medicare Medicare HMOs PPOs CDHPs Advantage PPACA Medicaid Part D 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 $11,385 Employer contribution $4,728 Employee contribution Health Care Reform Marketplace churn Patient Protection and Affordable Care Act (PPACA) 10-years, $940 billion, 32 million covered 2016 2016 2011 Scenario A 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© 2011 KBM Group CONFIDENTIAL & PROPRIETARY 2
  • 3. 9/30/2011 Uninsured Americans: 52 million customers Who 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 HURDLES • Participation standards • Administration & IT • Benefit & rate variability • Eligibility & enrollment • Off-exchange restrictions • Plan contracting & pricing • Exchange navigator role • Risk management & network • Build it…will they come? • Consumer outreach & navigation© 2011 KBM Group CONFIDENTIAL & PROPRIETARY Exchange Customers Who are they? Exchange consumers are expected to be older, less educated, lower income and more racially diverse than privately-insured population. Majority eligible for subsidies (133% - 400% federal poverty level) KEY DRIVERS Previously uninsured or uninsurable • Price (affordability, health condition) • Benefits Pent-up demand for healthcare • Network Leaving employer coverage • Quality/Reputation Desire decision support resources • Wellness Small business employees Travel Web Portals (aka Exchanges) 90+ million visitors© 2011 KBM Group CONFIDENTIAL & PROPRIETARY 3
  • 4. 9/30/2011 New Market Segments Seize opportunity, buffer risk SEGMENTS IMPLICATIONS Previously Uninsured Product Diversification Pre-Ex Timebombs Risk Profiles Abandon Employees Compliance Maze Opt-Out Employees Administrative Complexity Individual Shoppers Provider Network(s) Newly Subsidized Customer Experience Medicaid Qualified Brand Position Newly Medicaid Marketing Outreach Medicare Boomers Distribution Channels Medicare Switchers LifeTime Value Fish where the fishes are Data Driven Marketing Knowledge-based customer intelligence Enriched Database Accuracy Customer Connection Currency Who are they? Breadth What’s important to them? Where do they go? Advanced Analytics How to get their attention? Segmentation What motivates them to buy? Profiling Why do they remain loyal? Clustering Predictive Modeling Data driven, individualized consumer insights yield informed decisions© 2011 KBM Group CONFIDENTIAL & PROPRIETARY 4
  • 5. 9/30/2011 Customer Segmentation Data is the driver, knowledge is the asset • Demographic attributes • Socioeconomic status • Psychographic characteristics • Lifestyle choices • Life stage or generational • Responder indices • Common purchasing behavior • Attitudes and preferences • Health or condition indicators EXAMPLE: Digital Segmentation* 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. Digital Devices Digital Destinations KNOW YOUR DIGITAL COMMUNITY 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* Digital Neighborhoods 2.0 What matters today are conversations with & among consumers (LW) 5
  • 6. 9/30/2011 Multi-Channel Preparedness Message to moments of maximum influence Direct mail 52% mail volume $45 billion spend Every 60-seconds 700,000 Searches 100,000 Tweets Monthly online shopping 100+ million Amazon visitors Mobile web 60% Smartphones 15 billion Apple apps Third largest country 600+ million Facebook Users Marketing Remix Wherever, whenever, however Product Price Data Direct CUSTOMER CUSTOMER Place Promotion Different Digital 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!© 2011 KBM Group CONFIDENTIAL & PROPRIETARY Conversational Marketing Offline to online continuum LOW ENGAGEMENT ENGAGEMENT HIGH ENGAGEMENT Push advertising Push messaging Customer dialogue One-way, top-down Interactive Always-on, digital-only Broadcast/print/outdoor Email/search/banner Social/mobile/video Brand-focused Brand-response “Me” content focused Mass marketing Mass-to-segment Narrowcast 20% consumers trust advertising… 80% consumers trust other consumers 6
  • 7. 9/30/2011 UR UX SUXConsumer EngagementRelationships revolve around customer touch-pointsHealthcare Consumer Squeeze • Benefit and Financial Choices • Care Delivery Options • Family Budget Priorities • Intergenerational Navigation • Retirement Planning • Lifestyle Management • Information Overload 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 7
  • 8. 9/30/2011 UX 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. Every experience is a branded experience End-to-End UX Create bridge of relevant connections LOW ENGAGEMENT HIGH ENGAGEMENT Knowledge Informed Ignorance Consistency Confusion Cynicism Active Trusting Transparency Superior UX is a marketing tool extraordinaire!© 2011 KBM Group CONFIDENTIAL & PROPRIETARY Big ideas precede big achievement 8
  • 9. 9/30/2011 Plan For Uncertainty Transformation yields opportunity Political Competition Regulatory Consolidation Value Consumer Chain© 2011 KBM Group CONFIDENTIAL & PROPRIETARY Eliminate Fogeyism Entrepreneurship trumps bureaucracy 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” I “That’s sales’ problem” N “That’s compliance’s problem” N OR DIE O V A T E Differentiate Brand In commoditized and standardized markets… - Define what you stand for - Establish why you are different - Articulate your unique value proposition Clutter-Buster What are your comparative marketplace advantages? Company Why do you get beat Who are your “best” in sales situations? most profitable customers? Competition Customers Give your “best potential” customers a reason to convert to your brand and always have a pathway to loyalty.© 2011 KBM Group CONFIDENTIAL & PROPRIETARY 9
  • 10. 9/30/2011 360º Customer Intelligence Best customers, best channels • 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 Prepare for customers that never had or bought insurance before. Customer Interaction Navigation 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 Marketing Remix From monologue to dialogue 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 Identify opportunity and fine-tune relationships by listening to and joining customer conversations© 2011 KBM Group CONFIDENTIAL & PROPRIETARY 10
  • 11. 9/30/2011Questions Lindsay R. Resnick Chief Marketing OfficerComments Phone Email 773.372.4961 lindsay.resnick@kbmg.com Web KBMGhealth.comObservations Blog Twitter lindsayresnick.com @ResnickLROpinions 11