Keeping Customers Through Care
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.
If a pharma company fails to target its ideal audience, the program will throw a wide net that captures many of the wrong people or misses the right ones altogether. The result is wasted marketing dollars and angry customers.
Although few pharma companies segment customers by value, they have all segmented physicians that way for years. The logic that applies to a physician audience applies equally to consumers; only the target criteria are different. Consumer value is determined by the dos-age and duration of the therapy that a consumer uses.
Pharma companies have begun to realize that a small segment of their target consumer market drives a disproportionate share of revenue and value. Just as 20 percent of doctors drive 80 percent of prescriptions in both volume and dollars, the 20 percent of consumers who meet the criteria for highest lifetime value represent 80 percent of the profit. Therefore, to be cost-effective, customer-care programs must be directed toward the profitable segment, and companies must allocate the lion's share of the marketing budget to make that happen.
On the tactical front, marketers should first analyze the potential value of customer care for a defined population, starting with the online audience. Research shows that the leading incentive for consumers to seek pharma information online is the need to obtain supplementary product-specific information after they receive a prescription, indicating a significant demand for information that physicians and pharmacists are not meeting. In a growing number of cases, consumers are looking to pharma companies for support and, ultimately, customer care. That gives the industry an unprecedented opportunity to extend its marketing focus from creating primary awareness of products to driving conversion and creating education, disease management, and retention marketing programs.
For Maximum Profits Such customer-care programs have two key attributes. The first is the ability to use precious marketing resources efficiently once a patient is acquired. By identifying the most valuable customers, companies can invest accordingly. The challenge until now has been a lack of data linked to a defined consumer base.
One solution to the problem is the growing presence and sophistication of product, care management, and unbranded therapeutic web sites. What makes such sites different from the thousands of failed care management programs, on the web as well as through traditional channels, is that they facilitate efficient data collection and analysis from patients, as well as the distribution of content and services to them, at a very low cost per interaction. Although the web should not be the sole point of contact for customer care, it can play an early role for companies seeking incremental profits for a relatively low investment compared with traditional marketing initiatives.
A second advantage is the ability to identify relevant consumer audience segments. Collecting data through an integrated online program enables companies to segment the audience based on several value indicators, including dosage, clinical indications, and behavioral factors, such as the likelihood of the consumer's discontinuing the use of a medication or defecting to a competing brand.
A primary goal of retention marketing and customer care is to optimize appropriate product consumption over time. In other words, companies must make sure that patients take their pills as prescribed and refill their prescriptions in a timely manner. Although all doctors want patients to comply with prescription therapy, most doctors and their patients need additional infrastructure and targeted messaging to achieve that.
The challenge for pharma companies is integrating customer interaction across all those touch points. The problem is that most product managers and marketing executives don't believe that the benefits of integration justify the initial or continuing investment. Typical questions include, "What will happen if we don't have a customer care program?" and "Will I actually lose customers and potential revenue streams?" They fail to see the near-term sales impact of retention marketing.
Integrated, intelligent customer care programs can go a long way toward optimizing product use and profits over time. Rudimentary initiatives, such as mass-marketed compliance programs, do not succeed through "brute force" alone. Intelligent customer care requires an integrated offering of programs, content, services, and personalization, driven by value segmentation. It is an approach that optimizes profits, bringing a new level of sales and retaining that pinnacle throughout the marketing exclusivity period. Nevertheless, achieving optimal gains over the long term requires an integrated customer care strategy and appropriate investments today
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