March 6, 2007
Why Marketing 101 Lessons Still Prevail: A Case Study
by Barbara Bix
With apologies to Robert Fulghum, author of the bestseller, Everything I Needed To Know I Learned In Kindergarten, a recent experience provided solid proof that much of what we need to know as marketers was covered in Marketing 101. In it, I had the opportunity to participate in formulating the marketing strategy and tactics of a specialty health care practice--and relearn some essential and fundamental principles of marketing.
Now, at first blush health care may appear to be a consumer business. In actuality, it is the quintessential professional services business, depending on a complex web of professional referrals.
Test this claim against your own experiences: When was the last time you selected an anesthesiologist, pathologist, or any other expensive service you used when you required hospital, home health, or rehabilitation services?
My client, a faculty member at one of Boston's teaching hospitals, runs the hospital's clinical practice in his specialty, in addition to his teaching and research responsibilities. His employer recruited him from out-of-state to replace a respected faculty member who left to join a competing teaching hospital across town. Earlier this year, my client contacted me for help in rebuilding the hospital practice.
Over the previous two years, he had been meeting with local surgeons, trying to persuade them to refer at least some of their cases to his practice--and their alma mater--rather than referring everything to their popular and talented former instructor.
While he'd had some success achieving this goal, most surgeons persisted in referring to competing practices. Nevertheless, my client was convinced that if he could get prospective referrers' attention and persuade them to try his practice's services, they would then continue to work with him.
His goal: increase referrals by 5%. Six months later, referrals had soared by 25%. Our program consisted of:
- Segmenting our client base to try and profile the most promising prospective referral sources
- Writing prospective referral sources to ask for a phone meeting at their convenience to solicit recommendations on what we could do to increase referrals. As a way of thanking them for their time, we also offered to provide continuing education for their practices--and/or, at their option, for the primary care practitioners that refer business to them.
- Following up with each referral source to schedule the requested phone meeting with me and my client.
- Creating opportunities in the initial conversation for subsequent follow up.
- Following up and following through
Although no one spontaneously accepted our invitation to share their insights, most agreed to schedule a time to speak when we followed up with their office staff. In some cases, the actual conversation occurred in the following week or two. In other cases, it took a couple of months to get on their schedule. Once engaged, however, most respondents chose to continue the conversation beyond the 15 minutes of time we had requested and scheduled.
We found that the surgical practices we interviewed varied in their referral practices. Most used one or two sub-specialty practices. To our surprise, however, none of the practices that we interviewed made referral decisions at the practice level.
In most cases, individual practitioners made their own referral decisions. While most respondents refer cases to their former instructors at the academic institutions where they got their training, a large minority refer elsewhere for a variety of reasons. In a very small number of instances, they effectively left this decision to their staffs by not specifying which sub-specialist to use.
Almost without exception, the clinicians we interviewed were highly satisfied with every aspect of the services they received from their current providers. Although we asked about additional services, such as faster response time, newsletters, etc. few expressed interest.
They were sympathetic, however, to my client's situation. When asked for advice about how to grow his practice, some shared the experiences they had in marketing to their own referral sources, primary care practitioners. Although almost no one spontaneously offered to start referring to my client, many agreed to try his services when he specifically asked.
Interestingly, a couple of these individuals had told us at the outset, that while they were willing to speak with us, they were happy with their current provider and not inclined to switch.
We ultimately decided not to make major changes to the way my client's practice conducted business, as satisfaction was not at issue. While a couple of respondents took us up on our offer to provide continuing education, most have delayed the decision indefinitely. Those that accepted chose to make it available to their own referral sources, as a way of reinforcing that relationship.
Lessons Learned From Marketing 101:
In a highly competitive market, getting everything right may not be enough.
Almost without exception, the clinicians that we interviewed were highly satisfied with every aspect of the services they received from their current providers. Nevertheless, many were willing to change their referring patterns.
Don't make assumptions.
My client's hypothesis was that the managing partner determined which specialists the practice used. In fact, at each of the practices we interviewed, each clinician effectively made his/her own referral decisions.
It takes client research to select the most compelling value proposition.
To our surprise, we found that the most compelling value proposition was just "asking for help." From our interviews, it was apparent that many of the surgeons chose to increase their referrals just to help another clinician overcome hurdles that they had faced in growing their own practices. Sometimes, giving others the opportunity to feel good about themselves is as, or more important, than offering more tangible outcomes.
Understanding how clients make purchase decisions is as—or more important than—knowing what they want.
From our interviews, we learned that a minority of surgeons don't specify who should get a sample--effectively leaving the choice of sub-specialist to the support staff. Knowing this, one of the few changes we made was to redesign our packages and the accompanying forms to capture the support staff's attention and facilitate ease of use.
Persistence pays; it takes multiple impressions to make an impact.
Most of the surgeons who ended up referring cases to my client were already aware of his existence and reputation. Many had met him personally at trade association meetings. For this reason, most were willing to speak with us when we asked for an appointment. Nevertheless, it often took several calls to get the appointment and several more to reschedule those appointments that were canceled due to patient emergencies.
Test and refine; postpone major investments until you've validated your hypotheses.
Before conducting marketing research, the client was advised to invest in marketing communications to raise awareness. Our research showed that this money would not have been well spent since surgeons didn't make time to read newsletters and other communications.
Including a desirable offer, helps crack open the door.
When contacting the surgeons, we offered to provide free continuing education at their site as a way of thanking them for their time. We suspect that this factor is one of the reasons that we so many were willing to speak with us--especially since most expressed interest in taking us up on this offer.
Pay careful attention to your installed base. Even highly satisfied clients are vulnerable to competitive inroads.
Perhaps the greatest thing we learned is that customer loyalty can be fleeting. More than half the respondents—although highly satisfied with their current providers—agreed to redirect at least some of their business. Apparently, being good at your last at bat may not be good enough to erect barriers to competitive inroads.
What Ultimately Worked
Clearly it was a relationship "sell." As for the specifics, we have several hypotheses.
But most importantly, our experience shows that it makes sense to go back to the basics. So before investing in an expensive branding campaign, or for that matter, any marketing communications, remember to ask: "Who has the greatest influence over the buying decision?" "How do they decide who to recommend?" "What, if anything, can you say or do to influence that process?"