This article describes the strategic role and economic potential-return on investment (ROI)-of marketing programs designed to retain customers for a given product and its successors for as long as possible. It does so by highlighting one approach to retention marketing-customer care programs.
Call them what you will-customer care, customer service, or loyalty programs. All have the same goal: to increase the customer's value to the company over the customer lifecycle, thus maximizing the company's overall return. Although it typically takes years to realize the ROI that retention marketing brings, several pharma companies have reduced their patient defection rate by 10-20 percent annually. That can easily translate into $10-$20 million in revenue per year, even for a middle-market brand.
Although companies should address a customer care strategy early in the marketing plan's development, the primary benefit for most programs comes when products approach peak sales. Today, most pharma companies define market potential by the traditional product lifestyle standard, but there is a more efficient and timely way to maximize and sustain optimal profits. By targeting marketing dollars to reach consumers with the highest potential lifetime value, companies can reduce the overall marketing spend and optimize its allocation, investment, and efficiency.
Marketers must also factor in the individual customer lifecycle. In fact, the product lifecycle-and total profits curve-can be interpreted as the sum of individual customer lifecycles over time. Hence, a marketing strategy that focuses on individuals adds value to the product's lifecycle.
Customer care can combine patient education, disease-management tools, prescription refill reminders, and coordinated outbound retention marketing to targeted segments. Of course, companies must identify the target audience to whom they will offer such services, when to offer them, and the optimal format and delivery method.
Customer care is not limited to compliance with a prescribed therapy; it also includes guiding the therapy's appropriate use over the customer's lifetime, making behavioral modifications, lifestyle changes, and treatment an integral part of the process to help consumers achieve optimal clinical outcomes.
Approximately half of pharma customers-those who need one or two cycles of treatment to remedy a temporary condition-can be classified as acute. Investing in retention programs for that segment is unwarranted because the payoff is limited. It is the other half of the market-those with chronic conditions-that delivers positive ROI for customer care and retention. If properly organized, implemented, and maintained, customer-care programs directed toward chronic sufferers can result in optimized customer lifetime value.
Enter the Internet One of the most powerful new tools for customer care and retention marketing is the internet. Although most pharma companies spend approximately 65-70 percent of their DTC budget on television advertising-for acquisition and branding-those investments are unlikely to increase patient compliance or reduce customer "churn" over time. A comprehensive retention marketing and customer-care program requires targeted communications and interactivity to achieve maximum impact and optimal ROI. The internet is a relatively low-cost channel for interacting with targeted segments of the population in ways that television cannot.
People within various therapeutic segments want different things from a customer care program and will react in very different ways to marketing programs and services.
Allergy sufferers may be interested in a program that sends only an e-mail communication when pollen counts are high, whereas people with high cholesterol may want to receive a daily e-mail reminder to take their medication and hyperlinks to low-cholesterol dietary ideas.