The Future of Healthcare Marketing

I had a chance to talk with Bill Moschella Co-founder & CEO of eVariant about the future of healthcare marketing at the SHSMD conference this past September. Here’s that interview. What advice do you have for marketers seeking to improve marketing performance and build future ready marketing operations?

Make Marketing Performance Measurement a Priority in 2011

No doubt about it - strategic growth and improved financial performance are top priorities for health systems and hospitals in 2011, putting increased pressure on marketing leaders to deliver effective returns on marketing investment.

Where to start? Begin by establishing and gaining agreement on performance targets and metrics, and putting in place the mechanisms to track and report on progress against goals.

Marketing performance measurement and management (MPM) is the process of analysis and improvement of the efficiency, effectiveness and accountability of marketing investments and activities. This is accomplished through alignment of marketing activities, strategies, and metrics with business objectives.

A marketing performance measurement framework can be a useful tool for developing those measures and metrics most relevant to an organization’s strategic growth goals.  Three categories of measures are often considered:

• Enterprise growth: measurement of overall performance against business outcomes, growth goals and competitive sustainability; e.g., revenue growth, profitability, market position, brand leverage, etc.
• Marketing strategy: measurement of return on marketing investment (ROMI) from core marketing strategies and processes; e.g., high-impact segmentation strategies, service line development, market expansion, portfolio diversification, retail innovations, clinical partnerships, etc.
• Marketing activities: comparative measurement of effectiveness, efficiency and outcomes of specific marketing and sales tactics or programs; e.g., direct mail campaigns, web traffic, risk screening events, physician sales,

Some marketers use a marketing performance dashboard to monitor, manage and report results.  Marketing measurement systems can also be designed to report at health system, regional, facility and service line levels.

So what are the critical success factors for marketing performance management?

• Making marketing performance measures, monitoring and reporting systems a priority
• Targets and metrics aligned to strategic planning, business development and operations priorities
• Decision support systems with timely access to performance data
• Cross functional collaboration to set and agree on targets and metrics
• Cross functional accountability for outcomes
• Regular reporting intervals to review progress against goals
• Timely adjustments to strategy and/or course corrections

A high-performance marketing operation requires outcomes accountability for marketing activities and expenditures.  A marketing management measurement and reporting system can be a powerful tool for building support and helping health leaders better understand the inter-dependency of strategy, operations and marketing in achieving growth and marketing goals.

What have been your successes and challenges in marketing performance measurement?

What is Your Approach to Marketing Leadership? Part 2

Marketing orientations differ across hospitals and health systems for a variety of reasons - culture, philosophy, strategy, even knowledge or understanding of the marketing discipline.  One approach is not necessarily “right” where another is “wrong” – what is important to understand is that each path requires a specific configuration of core competencies, staff capabilities, processes and investments aligned to organizational vision, strategy and business objectives in order to produce results. Misalignment occurs when management wants to achieve significant improvements in strategic growth, for example, but has a production-oriented marketing operation.

Which of the following best describes your organization's approach to marketing management?

Product-driven

A product-driven marketing orientation assumes that as long as a health system has excellent outcomes and a top notch safety record, business will find its way to the front door. Performance improvement, leading edge clinical technologies, physician talent and development of clinical centers of excellence are core areas of focus. Awards and recognitions (such as “Top 100” designations) reinforce the organization’s quality achievements. Physician influence trumps consumer choice. The clichéd expression “build it and they will come” is an entrenched belief, as it the assumption that clinical quality alone will create competitive advantage.

Sales-driven

Sales-driven health systems primarily view marketing as a tactical tool or set of tools to drive volume to clinical services or programs. Filling beds, getting appointments, and securing contracts are primary goals. Consumer promotions, physician referral development and managed care contracting are core capabilities. The focus is on more volume for existing services. These are all good things, but a purely sales-driven organization may miss opportunities to discover new niches, create new products and lines of business, or enhance points of differentiation that grow overall revenue potential.

Market-driven

Market-driven organizations place greater emphasis on market research to better understand customer needs and discover market opportunities that can be addressed in unique ways. Designing and developing services, programs and access points to attract key customer segments are priorities for the marketing operation, making R&D a core competency requirement. Marketing planning is more strategic than in sales-driven organizations, encompassing segmentation and targeting, product positioning and design, pricing, promotion and channel strategies – and is a more integrated process through which value is created. Because growing overall market potential and profitability is as important as growing market share, marketers must have a strong P&L mindset.

Relationship-driven

Relationship or customer-driven organizations place significant emphasis on mass customization as a competency to create one-to-one relationships, enabled by sophisticated, enabling CRM technology that recognizes, supports and delivers customized messages, offerings and solutions for valued customers. Today, some of these capabilities are embedded in call center and CRM systems, but new advancements, such as the widespread implementation of electronic health records and growth in social media communities offer health systems unprecedented opportunity to better understand and predict the needs of patients and customers – and proactively design the marketing strategies, tactics and programs that stimulate and drive demand.

There is one more position to consider: the MARKET- DRIVING organization. Market-driving companies are those that re-set the rules of competition through value innovation – radical, disruptive moves that create new markets, transform customers into fans, and build such distinct points of competitive advantage that they are difficult to duplicate. Think Apple, which sold 1,000,000 iPads in less than 30 days from the product launch. Innovation is the core competency – and success comes from developing deep insights into core human desires, discovering unmet needs, and bringing creative, profitable ideas to market.

Who are the market-DRIVING health systems?

What is Your Approach to Marketing Leadership? Part 1

Marketing departments emerged in health care organizations in the early 1980s when prospective payment methodologies made it evident that certain clinical programs were more profitable than others. Hospitals began to compete for patients for those services and procedures that produced better financial outcomes. Many of these early marketing programs were administered by existing public relations or community relations functions, and had a strong communications focus. Over the next two decades, marketing practices matured to include other aspects of the discipline such as research, sales and referral development, segmentation, product development and brand building.

Today, marketing management systems differ significantly across health care organizations. Some are expansive, core business functions with strong growth accountabilities aligned to strategic planning, business development, clinical operations and financial management initiatives. ROI expectations center on overall growth, profitability, brand equity and creation of sustainable competitive advantage.

In other health systems, marketing is configured more functionally to support the development and deployment of marketing tactics aimed at research, promotions and sales. Success is measured by research metrics such as increased consumer awareness and preference, by response metrics such as increased call center or web traffic, and by sales metrics such as referrals, ER visits and procedure volumes.

Some hospitals, however, have not evolved at all from those early days when marketing relied on a narrow set of tools (e.g. press releases, health fairs, advertising, newsletters) to promote programs and services. The marketing department orientation is production – number of news releases, advertising campaigns, circulation – making it difficult to link marketing expenditures and activities to business outcomes.

Why such a difference? It can largely be explained by an organization’s approach or orientation to the market which is shaped by a variety of factors including strategic focus, growth objectives, culture or even leadership understanding of the marketing discipline.

In an upcoming post, I'll describe different marketing orientations and the configuration of competencies, staff capabilities, processes and investments that are characteristic of each.