A few years back, we worked with a large dental practice that wanted to stand out in the market. In the initial meeting, we discovered management believed their best bet was to promote the expertise of their dentists, a decision based primarily on the results of an annual survey that showed respondents ranked “skill of my dentist” number one from a list of values they thought important when choosing dental care.

Think about that for a minute. Now imagine you’re buying a car, and someone asks you to rate the following values based on which are most important to your purchasing decision:

1. style
2. gas mileage
3. reliability
4. engine size
5. that it won’t catch fire when driving in temperatures above 75 degrees

Given that list, which answer do you think would come out on top? Wouldn’t you select “e,” because after all, do the others really matter if your car threatens to spontaneously combust when driving in warmer climes?

Yet that same logic applies to the survey question on how customers choose a dentist. We don’t know anyone (normal) that thinks, “You know, I like it when my gums bleed, or my dentist wields a drill like a jackhammer.” So we think it’s pretty safe to say “skill of a dentist” is a given when looking for dental care. But that doesn’t mean a dental practice should base its market differentiation on that value. Imagine a car company centering its marketing on the tagline: “The Wren – the car that doesn’t catch fire, even in the summer.”

How Customers Think

On one level, this story illustrates a bad survey technique, but more to the point, it supports our contention that when it comes to healthcare marketing, organizations need to stop asking their customers what they think.

To many of you, this will sound sacrilegious. Experts implore: “Listen to your customer, the customer is always right, be customer-driven.” But listening to consumers and asking consumers what they think can deliver two very different insights. Turns out it’s how you listen that matters. The key is to not listen to what consumers say, because research shows what consumers say and what they do has little or no correlation.

Perhaps one of the best resources on this topic is “How Customers Think: Essential Insights into the Mind of the Market,” by Harvard Business School professor Gerald Zaltman. Zaltman uses research to show that 90% of what influences a consumer’s decisions and preferences lies in the unconscious mind. Because surveys and focus groups only tap the conscious mind, accurate insights into the true preferences of consumers are missed. In fact, consumers are not aware of the hundreds or thousands of factors that influence their decisions and preferences, so simply asking for that information will result in predictable answers (i.e., “I value the skill of my dentist”), but not necessarily the answers that reflect future, or even past, behavior. (Zaltman proposed a deeper “metaphor-based” interview approach to tap into that unconscious thinking.)

In essence, consumers don’t really understand why they make most decisions, so asking this question can be fruitless, or worse, misleading. Other books that support the contention that companies gain little from asking customers how they think or act include:

Buyology – Martin Lindstrom
Selling the Invisible – Harry Beckwith
Predictably Irrational – Dan Ariely

The same ol’ same ol’

Yet despite the evidence that asking consumers what they think or want is misguided, hospitals and health systems still do it, and they do it a lot. They ask what consumers think of their advertising, which heart center they would prefer, and how many beds a new hospital should have. And they use the answers to guide their marketing strategies.

Why does this still occur? For some, it’s an opportunity to show they “listen” to their community. (Surveys and focus groups can actually serve this purpose, but just not in gaining a better understanding of what works in the market). The lack of popular alternatives is another reason – “How else will we know?” (more on that later). But the two most popular reasons are a), because that’s what they’ve always done, and b) “CYA.” Many executives feel that if surveys or focus groups aren’t conducted, the sole responsibility for a marketing program’s failure will assuredly be laid at their feet.

Redefining how to “listen”

So how does an organization truly gain understanding of its customers, what they like or how they act? Again, you can listen to your customers, as long as you listen to their behavior, not their words. (One exception is the metaphor-based interview technique outlined by Zaltman). Some examples of how to gauge behavior include:

Observe
The practice of ethnography – the social science of observing people in their natural environments – is a powerful tool used by leading organizations like Proctor & Gamble to understand how consumers actually behave in given situations. Observations often provide far more insight into potential problems and possible opportunities than traditional research can.

Prototype
Whenever possible, create a prototype and let your customers actually test the experience, instead of simply asking them how they would respond to it. This could be done with a prototype patient room in a new facility, or a new web-based tool. Combined with observation, you’ll learn a lot about how customers might actually respond to your offering in the real world.

Test and Adjust
For some marketing activities – advertising or PR, for example – it’s nearly impossible to gauge how people will react from what they tell you. They don’t even know how advertising impacts them, so how can they help? Whenever possible, test marketing efforts to see how responses vary. Use different creative approaches in different, separated markets to see if one or more drives different behavior, such as attendance at a joint-pain seminar. Or, how changing the hours in a clinic might vary utilization in one community when compared with other office hours in a similar community.

All of the above techniques can work in certain circumstances, but the silver bullet of absolute certainty about what works and what doesn’t with your marketing efforts is elusive and may never be found. There are interesting explorations into the consumer mind using fMRI technology (see previous blog post), but even those just answer what a consumer may be thinking, not the more important question of why. In the end, you need to trust yourself, your team and your partners — those who have dedicated their careers to understanding marketing and consumer behavior — to provide the best guesses when the unknown prevails.

After all, some of this is straight common sense. Running a consumer survey that asks “which is more valuable when choosing your care, your doctor’s recommendation or a hospital’s advertising?” will provide results that should surprise – or enlighten – no one.

The Truths We Hold Self-Evident

As immutable as the laws that rule nature (the sky is blue, the earth is round), are a set of guiding principles we at Interval refer to as the “Truths We Hold Self-Evident.” These “truths” influence pretty much everything we do. Our thinking. Our approaches to marketing and client challenges. Our recommendations for and execution of marketing strategies and tactics for our clients. This belief system springs directly from our experience marketing and branding hospital and healthcare systems exclusively over the past six years. We accept and believe these truths passionately, as do our clients. But every once in a while we encounter those that, for whatever reason, do not. Some are marketers stuck in the traditional approaches of the past. Others, skeptics looking for proof. Throughout the year, we are presenting a series of articles articulating these Truths, their implications, and why we consider them self-evident. That said, there is plenty of room for debate and controversy. Consider this a standing invitation to join what we hope is a lively and illuminating conversation. At the very least, theses articles will clarify our biases while helping you better understand the issues and broaden your perspective on them.

The one downside is the price. At $129, one would expect a text-book sized tome, not a small, paperback light on text and heavy on margins. The lighter feel does make for an easier read, however. And buying just one copy for a marketing department will more than likely provide a healthy ROI for readers in building more success and value for their marketing efforts.

(FYI – this was not a paid endorsement, though I’d love a cut of future copies sold given that sticker price…)

As the saying goes, ask 10 people their definition of branding, and you’ll get 10 different answers. In healthcare, however, you might get 20 answers. The confusion around branding in healthcare provider organizations – particularly among leaders and physicians – is widespread: “the brand is the logo, the name, the advertising.” The confusion around what brand means most frequently leads to the misunderstanding and oversimplification of how to apply the strategy of branding. One result is the plea to “tell our story” (also known as the “hidden gem” or “best kept secret” plea). If we only told our story, the assertion goes, then people would know how wonderful we are and our beds would be overflowing with patients, our coffers with revenue. But for branding to be effective over the long haul, there has to be a story to tell, a unique story. And that’s where Marty Neumeier’s new book, Zag, comes in.

One of the best resources for understanding the true nature of brand is Neumeier’s first book, The Brand Gap. His new book focuses on one critical aspect of brand building, radical differentiation. He cites numerous reasons for the need for differentiation, such as clutter in the marketplace and empowered consumers. Of course, in healthcare, this latter point has the potential to truly upset the apple cart. Consumers have more information (the Internet, cable TV, pharmaceutical advertising), more choice (overseas surgery, mini-clinics, Steve Case’s RevolutionHealth.com) and are being asked to foot more of the bill through consumer-driven health plans.

Branding is more relevant today than ever for traditional providers of healthcare, and differentiation is a cornerstone of effective brand building.

In Zag, Neumeier starts by building a case for differentiation, with the first paragraph setting the stage: “An overabundance of look-alike products and me-too services is forcing customers to search for something, anything, to help them separate the winners from the clutter. The solution? When everybody zigs, zag.”

In surveying the landscape of hospital and health-system marketing, the prevalence of “look-alike” and “me-too” strategies, tactics and communications is epidemic. On this initial point alone, Zag proves a must read for those who are leading healthcare provider organizations. Neumeier goes on to provide a 17-step process for “designing your Zag.” While the 17-step process provides a nice guideline, it’s the first part of the book that provides critical content for healthcare leaders. He stresses that companies must move beyond traditional differentiation to radical differentiation.

“Traditional differentiation is an uphill battle in which companies lavish too much effort on too few competitive advantages: the latest feature, a new color, a lower price, a higher speed. Radical differentiation, on the other hand, is about finding a whole new market space you can own and defend…”

In healthcare, traditional differentiation takes the form of patient satisfaction results, a new piece of imaging technology, a specialist’s certification, or another smiling patient testimonial. Neumeier’s cry for radical differentiation is, of course, a cry for innovation, which Neumeier acknowledges just a few sentences prior: “To succeed in a competitive business climate, you have to innovate.”

This message isn’t revolutionary, of course. It fits nicely with other calls for innovation and radical differentiation, such as Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne, Surfing the Edge of Chaos by Richard Pascale, or Purple Cow by Seth Godin. For healthcare leaders, however, the question is how? How can a community hospital in a small town, or a large multi-hospital system in a highly competitive market, create radical differentiation? Can a hospital that’s one of many in a large market truly become a Purple Cow? Not likely, given the services and structure it has that are so similar (by tradition and regulation) to others like it. One answer is to focus not on creating radical differentiation in an entire market (such as a hospital’s PSA), but in more focused markets. Can a hospital create radical differentiation in the market of maternity care? Or executive health? Or joint-replacement surgery? Certainly. And that’s where Zag and other books like it can best be applied to the branding world of health systems, hospitals and clinics.

Now think back to the all-too-common cry to “tell our story.” If your story is the same as everyone else’s, who will listen? The key is understanding that branding is about more than logos and names and advertising. True differentiation comes from innovation. As Neumeier himself says:

“Every brand is built with experiences, whether the brand is a company, product or service, and whether it serves individuals or businesses. The key is to craft those experiences so they create delight for the people who determine the meaning and value of your brand – your customers.”

The book uses the premise of evolution in nature; how species evolve not just gradually, but can make dramatic jumps when faced with radically changing situations. The result is that those species that adapt easiest and fastest leap forward, while others die off. The authors apply this philosophy to business, noting that when businesses face cataclysmic changes in their environments, those who are best positioned to innovate and adapt will thrive, and the rest face extinction. (The book uses the science of Complex Adaptive Systems to delve deeper into this concept.)

The authors use four laws of nature related to evolution and adaptation to make their points:

1) Equilibrium is a precursor to death. That is, those entities that are content in their current state and are not open to change are at maximum risk when chaos enters the market. The idea here is to be always looking toward the future, and to innovate constantly.

2) The edge of chaos is the sweet spot. Using examples in nature, the authors show how the most successful adaptations (i.e., innovations) occur at the edge of an environment, where entities are pushed to experiment as they bump up against the chaotic “outside.” The key here is to proactively push your organization to that edge to inspire innovation and change, but not to fall into the chaos that reigns beyond.

3) Self-organization and emergence are the distinguishing features of all living things. In this section, the authors argue that the best way to innovate is to turn your entity loose at the edge of chaos, with some direction, but little control. The entity (e.g., bee colony, hospital organization) will self-organize and emerge in better shape than if it were given detailed plans on where to go. The quote that best captures this in the book is one by General George S. Patton, “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.”

4) Unintended consequences are an inescapable byproduct of surfing the edge of chaos. That is, when you turn an entity loose with minimal direction to innovate, unforeseen consequences are unavoidable. Instead of trying to control inevitabilities, the idea is to prepare your organization to be flexible in dealing with whatever comes its way.

This book is full of theories and anecdotes that can easily be applied to the current state of provider-directed healthcare, and offers many ideas for the healthcare marketer in approaching the growing chaos in the market. For example:

How can you as a marketing leader help move your organization away from equilibrium to embrace change?

How do you identify the sweet spots in your market, seeking to not only keep up with your competitors, but also pass them by?

Your organization spends enormous energy and resources on quality, efficiency and patient satisfaction, yet according to the book, “optimization seldom leads to radical breakthroughs.” How do you incorporate innovation while still meeting the optimization goals that are necessary to survive in healthcare?

Healthcare providers may be facing chaos in their market, but with chaos often comes opportunity. Many who read this book may assume that the ideas are too radical for the heavily regulated, deeply traditional business of providing healthcare. But Surfing the Edge of Chaos will push you to think about the changes that are buffeting your industry, and how you can help your organization respond and compete more effectively.

The premise author Michael Gerber uses to launch the book is that 40% of all new small businesses fail in the first year, and 80% by the fifth year. The primary reason, he argues, is that those starting a small business have a skill, and they equate expertise in that skill to expertise in business, what Gerber calls the “Fatal Assumption.”

“The Fatal Assumption is: if you understand the technical work of a business, you understand a business that does technical work…two totally different things!”

His point is that the skills needed to run a successful business are completely different from those needed to provide a product or service within that business. Later, Gerber lays it out this way:

“The commodity isn’t what’s important,” says Gerber, “the way it’s delivered is.”

This thinking is parallel to our belief that to gain more than incremental marketing results, healthcare marketers need to stop focusing on the commodity – the doctor’s credentials, new technology, internal processes – and develop the experience that surrounds that commodity. We call it our donut model, where the center of the donut is the product or service provided – a screening, an MRI, surgery – and the outside of the donut is the experience patients receive. The analogy we use is Starbucks. In the center of the donut model is the coffee sold at Starbucks, the product. The outer ring of the donut model is the experience Starbucks provides: the inviting environment, the music, the service, the sense of place. Why do people go to Starbucks? For the coffee. What has made Starbucks one of the most successful brands in the world? Everything but the coffee (it’s good, but not that great!). It’s the experience they provide that keeps customers happy and loyal.

How can healthcare marketers (and leaders) put the lessons found in The E-Myth to work in their organizations? First, by viewing the services they provide as small businesses, which makes the challenges seem a little more manageable. And second, by remembering that patients won’t value the commodity you provide – the actual clinical procedure – as much as they will value the way in which you provide it. Focus on that experience!

The book starts out with an all-too-familiar story of a wealthy customer of a bank who was interested in refinancing his mortgage. Though an active trader with the bank’s brokerage services, and with high balances in a number of accounts with the bank, he was still treated like any other customer when he tried to deal with the bank’s mortgage department. Meaning, of course, that he was forced to jump through all the bureaucratic hoops someone off the street might, despite his high standing as a profitable customer at the bank. Growing frustrated, the customer complained to his investment broker at the bank, who tried desperately to break through the red tape and help the customer with his mortgage. Unfortunately for the customer — and the bank — the manager in the mortgage department was not authorized to step outside of set procedures, even for such a loyal and important customer. Frustrated, the customer refinanced his mortgage elsewhere, and eventually moved all of his savings and investments to another institution — one that served him better.

This story does a great job of establishing the premise of the customer centric model laid out by Selden: instead of serving customers based on internally focused channels — such as by product, as in the case with the bank having separate mortgage, deposit and brokerage departments — businesses will reap far greater success by structuring their offerings around key customer segments. In the case of the story above, a bank might establish a division geared toward “wealth builders” to serve the type of customer portrayed in the story. The book provides detailed arguments for why this model should bring success to most any business, and points to Fortune 500 companies such as Dell, Royal Bank of Canada and Fidelity as examples of businesses that have implemented the model.

Consider the case of Best Buy, the national big-box retailer that has embraced Selden’s model and is highlighted in the book. Instead of organizing stores (and the internal divisions that support them) around appliances, car stereos or computers, the company has focused on key customer segments, such as suburban moms or technology enthusiasts, and designed departments or entire stores (and the internal divisions that support them) just for them.

And how is the model working for Best Buy? The Minneapolis/St. Paul Business Journal reported in December that those Best Buy stores that employ the customer centric model had comparable sales twice that of other U.S. Best Buy stores and produced higher gross profit. When asked about the concept in a Minneapolis-St. Paul Star Tribune article, Best Buy CEO Brad Anderson said: “Best Buy shoppers are saying they will respond to innovation and to a more compelling customer store experience.”

In Angel Customers & Demon Customers, the customer centric model is explained in clear terms, and most anyone with some background in business or marketing can follow the points. There are also chapters on why some companies have difficulty embracing the model, the nuts and bolts of implementing the model, and more.

The book becomes somewhat weighed down in its explanation of the “Customer Segment Value Creation Scorecard,” the formulation that allows businesses to determine who their most important customer segments are. The Scorecard shows how shareholder return is the driving metric in determining which customer segments businesses should target. For example, Best Buy has identified five core customer segments on which to focus, all based on the potential shareholder return these segments can bring. One segment, nicknamed “Barry,” consists of affluent, upscale professional males who, for example, spend a lot of discretionary income on the best home entertainment equipment. Walk into a Best Buy aimed at “Barry” and the entire staff and the arrangement of the products is geared toward pleasing him. Following the financial formulas behind the Scorecard can be difficult, but fortunately it’s not necessary to be a CFO to glean the fundamental strategies inherent in the customer centric model.

What does all of this have to do with healthcare? In reading this book and in hearing the stories of how companies like Best Buy have embraced customer centricity, it becomes clear the value this model potentially holds for healthcare. Remember the bank customer in the opening story, who was forced to deal with investing, saving and mortgage departments separately, not in a way that was beneficial or convenient to him? Compare him to a patient who is forced to deal with radiology, oncology and surgery departments of a hospital, all for the same ailment, but not in a way that is beneficial or convenient to him. Not to be trite, but there is an obvious similarity between Best Buy selling televisions, ovens and computers to a hospital providing cardiology, pulmonology and radiology specialties to patients: they’re both “product” focused. As the book argues, and some companies have realized, designing an experience based on the consumer’s needs, as opposed to traditional organizational structures, can bring tremendous success.

An example of how this model is currently applied in healthcare is an executive health program, which is geared toward a very specific audience: executives in their 50s and 60s that lead very active, and stressful, lives. Take the Executive Health program at the Mayo Clinic in Jacksonville, Florida, which includes, among other services, a full range of preventive screening tests that cover cancer, heart disease and more. These services existed before, but were offered through different departments such as oncology and cardiology. Recognizing the need of the busy executive who could benefit from these tests, a program was developed just with that executive in mind. For example, all tests are scheduled over a one or two-day period to accommodate the executive’s busy schedule. The program then goes beyond the clinical element to further appeal to executives, as noted on the Mayo web site: “Corporate accounts are welcome, and we can arrange for special resort golf outings following your examinations.“

Of course, the model proposed in Angel Customers & Demon Customers doesn’t fit perfectly into the healthcare industry. Mainly, the model proposes focusing on the most profitable customers based on shareholder return and ignoring the rest, something not-for-profit providers could not do. But the concept of shaping offerings around specific customer segments holds tremendous potential for healthcare organizations, both in separating themselves from their competitors, but more importantly in creating better experiences for their patients. If you can make it through the thick financial formulations, this book can provide a new way of looking at your own healthcare organization.