Segmentation in the Healthcare Insurance Industry

WHITEPAPER / SEGMENTATION Segmentation in the Healthcare Insurance Industry By Jennifer Wilson Senior Product Manager, Webtrends OVERVIEW Segmentation is used in a variety of ways by businesses today. The two most common applications of segmentation are reporting/analysis and targeting. Segmentation is often applied to reporting and analysis to help marketers understand the behavior of one portion of the population when compared to another. Segmentation is also used by virtually every responsible marketer to target sales prospects and customers. This white paper focuses on common applications of segments in targeting within the healthcare industry. COMMON MARKETING OBJECTIVES IN HEALTHCARE INSURANCE Webtrends is proud to say that we work with top notch marketers at the leading healthcare insurance companies—15 of the top 25 healthcare insurers 1 in the U.S. are current Webtrends customers, including the top six healthcare insurers. In our work with these elite companies, we’ve helped them address some common industry objectives: 1) Acquiring profitable new members 2) Retaining and renewing members 3) Growing lifetime value of current members Nothing of value in this world comes easy, including healthcare insurance marketing! While these objectives seem straightforward, achieving them is difficult due to some common challenges in the industry. CHALLENGES IN HEALTHCARE INSURANCE The challenges facing healthcare insurance marketers are numerous. These challenges of ten interfere with or at least complicate marketers’ ability to meet their objectives. 1. Many people involved in purchase decision Commercial insurers sell to businesses that offer their employees a variety of plan options from multiple insurers. Insurers selling regulated plans such as Medicare are typically selling direct to consumers. In either case, multiple people are involved in research and decision making before a plan is chosen. Specifically in the case of Medicare, prospective members often have other people involved in their healthcare decision making, including a spouse, sibling, child, health care advocate, friend or care taker. So the challenge for the marketer lies in trying to conduct segmentation and execute relevant targeting when there are so many types of individuals that may be involved in a single decision. Marketers must also consider the online research preferences of prospective members. According to research conducted by National Research Corporation involving more than 23,000 Americans, 1 in 5 people confirmed that they use social media to influence healthcare decisions. Social media usage was reported to be highest among the affluent (household income of $75,000+) and among people ages 35-45. Also, 50% of respondents said that healthcare provider websites are their preferred source of online healthcare information. 1 Top 25 US Health Insurance Companies from US News and World Report (2011) http://health.usnews.com/health-plans WHITEPAPER / SEGMENTATION 2 2. Research takes time Choosing a Medicare plan or general personal health insurance is not done in a day. This is partly due to the number of people involved, as well as the complexity of the product. There are so many considerations for each part of the coverage—hospital, medical, prescription, etc. Consumers typically evaluate their usage of these services over the last 12 months and the associated out-of-pocket costs compared to their current plan. Providing tools to help consumers compare plans and estimate costs given their current medical condition can have a big influence on plan choice. Our customers have had success using direct mail with personalized URLs that drive consumers to tailored content on the website. And since most consumers come back to the website multiple times before choosing a plan, tailoring the content they see through on-site targeting can drive up conversions. 3. Every year forces a new sales cycle Initial acquisition is complete, so now what? You have 10 to 12 months to build a positive relationship with your new member before their plan expires and it’s time for them to enroll again. So companies can’t wait until the next open enrollment period to start building this relationship. They need to interact with members throughout the plan year, providing them with relevant content and information to make their experience the best it can be. This isn’t typically content about their plan, but rather content such as wellness and nutrition information, caregiver and family resources, medical information, etc. And you can’t forget about the other folks who will influence the purchase decision, either. 4. Narrow window of opportunity Imagine if you could only market your products to your prospects and customers for a specific 90-day period each year, and they could only buy during a 45-day period within your targeting window. Also, assume all your competitors are doing the same thing at the same time. This is what marketers promoting Medicare coverage face! It creates a crowded marketplace that is often overwhelming for the consumers. So this is where relevant and tailored messaging and offers are critical. Interacting with the consumer in the channel they prefer can make a big impact. In the case of Medicare, these consumers often prefer direct mail that points them to resources online. SEGMENTATION Segmentation is as much an art as it is a science. It’s done a million different ways, and there is no right or wrong. It is important, however, to understand the nuances of segmentation a bit before jumping in. The segmentation categories listed below may help you devise a framework that you can use to influence your targeting activities. 1. Life Stage Segments These segments are used to classify your target audience into discrete segments, which are mutually exclusive. These may map to a defined business process within your organization, like a sales cycle; to your relationship with the individual; to the individual’s engagement with your brand, such as recency or social media interaction; or other factors. WHITEPAPER / SEGMENTATION 3 The possibilities are as endless as they are specific to your business. Life stage segments are often too broad to be used for targeting on their own, but they are usually the starting point for additional segmentation. 2. Focused Target Segments Focused target segments are used for very specific targeting campaigns. Typically, these segments are based on a combination of Life-Stage Segments, behaviors and demographics. People may move in or out of these segments, depending on changes in behaviors or demographics so the population is constantly changing. 3. Discrete Population Segments Discrete population segments are used to designate a specific group of people you want to track and/or interact with over time. These segments are typically behavioral-based (e.g. people who enrolled for Medicare in June) and governed by a specific time frame. Therefore, this population does not change over time. No one new joins the segment, and no one leaves it, either. These types of segments are sometimes referred to as “cohorts.” Discreet Life stage Focused target population segments segments segments Subset of people with Describe a specific set of Include EVERY person behavior(s)/attribute(s) individuals Mutually exclusive; people No natural relationship Static — people do not move only in one segment within or across segments in or out of this segment Track progression across Track membership (in or out) Track behavior over time segments and profile members and compare Use in combination with Can be used for specific Used for retention analysis focused target segments campaigns and offers and seasonal analysis Comparison of the different types of segments and their most common uses. COMMON LIFE STAGE SEGMENTS FOR HEALTHCARE INDUSTRY Mature organizations understand that you can have many dif ferent views of a customer depending on the lens. These same organizations track people in multiple life stage models, not just one. Why? Because life stage models are typically focused on dif ferent aspects of the relationship. Below are several common life stage models used in Healthcare today. 1. Sales Cycle The sales cycle life stage model defines the journey from prospect to customer through the lens of the buying cycle.