Category Archives: value proposition

Why Selling New Technology into Hospitals is Hard: Overcoming the Status Quo Bias

You’re pitching your company’s new device or software solution to a hospital. You believe your product is clearly superior to the outdated technology the hospital is currently using. You know they have the money to switch. Standard economic theory would predict that the hospital decision-makers would rationally choose your product since it would provide them with greater utility. But the hospital decides to stick with what they have. What’s up??

There are a lot of barriers companies face selling into hospitals. One of the most pervasive and misunderstood, is the tendency for customers to make non-rational decisions to stay with the products they have. By non-rational, I mean the decision is based on an emotional preference, not an objective judgement that the current technology is as good as or better then the new one. Psychologists call this emotional preference the status quo bias. It’s a big deal.

Research in behavioral economics shows the status quo bias significantly affects important life decisions like health care plan choices, selection of retirement programs, stock market investments, recommended medical treatments, and all kinds of purchase decisions. It’s one of several biases scientists have identified to explain what appears to be irrational decision-making.

Think about it in your own life. The food you eat, the places you go, the clothes you wear, the things you buy… how often have you stayed with the familiar rather than trying an alternative?

While there are many explanations for the status quo bias, here are three of the big ones:

  1. Uncertainty: Good or bad, clinicians or IT directors know what to expect from the technology they use now. Switching to your product means taking a risk; they don’t know if it will perform as promised. As the old saying goes, “better the devil you know than the devil you don’t.” Scientists call this loss aversion.
  2.  Transition costs: It’s not just a matter of buying your product, it’s also all the  costs – time and money – involved in switching from what they’re using now. Training staff, updating clinical protocols, adapting workflows- all these things go away when a hospital maintains the status quo.
  3. Minimizing regret: People feel worse about problems that come from changing to a new product (action) than problems that come from sticking with what they have (inaction). To avoid regret,  hospital decision-makers choose inaction and keep the technology they have.

How can you overcome status quo bias so that customers buy your superior technology?

  1. Connect emotionally: Acknowledge and empathize with the tendency people have to stay with what they know. Give relevant examples of when that has worked for hospitals and when it has backfired and led to significant negative outcomes.
  2. Recalibrate their status quo: Change the reference point from the status quo being doing nothing to the status quo being doing something. Make the case that most hospitals are switching to new technologies- that’s the norm. The question is which to choose, and when.
  3. Reduce their risk. Demonstrate that staying with what they have is the risker option because it guarantees negative outcomes (be specific, e.g. more IT downtime, unnecessarily complicated workflows, less time with patients, incompatibility with EMRs or other devices, etc.).
  4. Reframe transition costs: Recognize objections related to transition costs. Acknowledge those that are true, then dismiss the remainder with evidence of savings that will result from switching.

Try it and let me know what happens. When you can overcome the status quo bias in these ways – and you can! – customer trust and sales can increase dramatically.

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The classic from the founders of Behavioral Decision Theory: Kahneman, D., & Tversky, A. (1982). The psychology of preference. Scientific American, 246, 160-173.

 

 

 

Be Like Vegas!… and 6 Other Tips to Increase Wellness Program Participation

Why aren’t more members signing up for our free health programs!?!

The 3Es behavior change framework offers a fresh approach to solving the problem of low enrollment in valuable health programs. Education, Engineering, and Enforcement are the components of the 3E framework, which traditionally has been used in the Injury Prevention field (CDC is a leader here). It’s time for others to harness its power as well.

A simple example: If we want people to drive slower, we can convince them why (education), we can add speed bumps (engineering), and we can ticket them (enforcement).

Another example: If we want people to quit smoking, we can convince them why (education), we can establish no-smoking zones everywhere (engineering), and we can fine them for lighting up in public (enforcement).

A third example: If we want people to participate in our Wellness program, we can convince them why (education), we can integrate Wellness into other membership activities they have to do with us (engineering), and we can charge higher rates to non-participants (enforcement).

OK, the last example may be a bit oversimplified, but you get the point. Now let’s dig deeper. Seven key takeaways:

1. Health Behavior Change is Hard

Doctors, insurers, and public health agencies all want people to adopt specific behaviors that will help those people be healthier. It may be taking meds as prescribed, losing weight, avoiding injuries, or a host of other behaviors that ostensibly benefit the individual, the organization, and society at large.

But sometimes the target behavior is simply getting people to check out a program that can help them, like CMS’s Health Insurance Marketplace. Or insurers getting their members to sign up for free Wellness programs. Typically, participation is disappointingly low. Program developers, marketers, and outreach specialists that create and run these programs are astounded by the number of people that don’t sign up for their offerings.

What’s going on??

2. Compare Company/Customer Perspectives

Insurance company: Our Wellness program is designed to help our members. It can improve their health and save them money. And it’s free. All people need to do is go on our website and enroll. Why aren’t people signing up like crazy?

Customer: Why would I do a Wellness program with my insurance company? They’re number crunchers, they don’t know about wellness and prevention. Anyway, it’s probably just a way for them to cut my benefits and make more money.

These contrasting perspectives indicate a serious relationship problem. As an industry, health insurance companies rank among the lowest in customer satisfaction in 2014, according to the American Customer Satisfaction Index (about the same as airlines, the US Post Office, and cell phone providers – but better than cable companies!). If satisfaction is low, trust is likely to be low too. This means insurers start pitching their Wellness program with a credibility deficit.

3. Don’t Make Assumptions

Insurers and others presume that members should value their Wellness programs. This is mistake #1, and for a couple reasons.

First, members need to know about the program in order to decide if they will enroll in it or not. You telling them about the program does not mean they know about it. All it means is you provided them with some materials.

Second, for members to care about your Wellness programs requires them to: a) understand what Wellness is, b) value Wellness,  c) want to enhance their Wellness now, d) want help in doing it, and e) want that help from their health insurance company.

Figure out what your Value Proposition is: Determine exactly what makes your Wellness Program unique and valuable to members. And from their point of view of course.

4. Go Beyond Convincing (aka “Education”)

It’s one thing to get members to take time and seriously think about your Wellness programs, commit to trying them, signing up, etc. And a small segment of members (the “low hanging fruit,” so to speak) will do just this. All they need is the opportunity.

Consider your own life. Let’s say you own a Toyota and your local dealer was offering a “Car Wellness” program with all kinds of helpful information so you can take better care of your car. To take advantage of their free program designed just for Toyota owners, simply go to their website, enroll, choose classes, attend, etc. You want your car to be in good shape and last many years. Would you do it? (I’m not talking to the car buffs here!). If not, why not?

There are a lot of answers to why not. Most people will say time and money, but that’s far from the whole story. We spend on what we care about. And we don’t always think through things and make rational decisions.

That’s you’ll need to go beyond the traditional and assumption-filled Education strategy, and bring in Engineering and maybe even Enforcement.

5. Be Like Vegas – Embrace “Engineering!”

In Vegas, slot machines are ubiquitous – they’re in bathrooms, by airport gates, everywhere. The environment is engineered to entice people to play. In fact, people need to go out of their way to not gamble.

Because Engineering changes the environment or product, it doesn’t require people to make any choices. The behavior just automatically happens (like slowing down over speed bumps or signing up for a default Wellness program as part of overall enrollment). Evidence suggest that this passive or automatic approach is usually more effective than those that require more active decision-making.

The key Engineering question is this: How can you make participation automatic? How can you make it so it’s easier for members to participate with your Wellness content than it is to not participate?  Really think about this. List your assumptions, which can then be validated or corrected.

To start, understand the member experience, so you can identify the best Wellness touch points from a timing point of view. For example, maybe when people newly enroll as members they are so inundated with information, that Wellness Programs are the last thing on their minds. But when they get their surprise hand-signed Welcome card from you (right?) a few weeks later, they may be very receptive. What are the best touchpoints for engaging members in Wellness?

Consider bundling the process of enrolling in Wellness Programs with other sign-ups. But don’t just focus on getting them to enroll. Focus on getting them engaged. Here are some suggestions to think about Engineering from the perspective of marketing content: Consider small tidbits of Wellness tips that can be included in every single interaction with members. Think about integrating invitations for your Wellness program at times when people may find them more relevant. Put heart health tips on EOBS for cardiology visits, add smoking cessation tools on rate cards that show the differential for smokers, put cold and flu prevention tips on Back to School pieces. In short, meet people where they’re at.

6. Make Them Participate: Enforcement

Enforcement is the “hammer” strategy (or “carrot” if designed well). If members don’t enroll or participate in your Wellness programs, it’s gonna cost them. Could be on the front end, could be on the back end. This approach requires policies or regulations that you then enforce.

Enforcement means you have clear boundaries, expectations ,and consequences. Most people don’t love enforcement, but at the right time and place, and in combination with Education and Engineering, it is a strong motivator of compliance and behavior change.

7. It’s About Them, Not You.

Bottom line, tailor your Wellness programs to fit the lives of your members. Don’t expect them to mold their lives to fit your programs.

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Good overview of the 3Es: The Three Es of Prevention: Education, Enforcement, and Environment

Good example: Railroad Safety

 

Why Should Hospitals Buy Your Device (10 Words Or Less)??

Med device and other life science companies often engage us to help them improve their marketing and make more money. One simple and revealing “litmus test” question we ask at the get-go is this:

Why should customers choose your product? (10 words or less!)

Often company execs, product managers, and marcom folks struggle to provide a clear, compelling, and jargon-free answer. Why? They naturally get caught up in their products and in doing what needs to get done. As a result, they lose sight of the “why” from a customer point of view.

The antidote is putting the customer first in all you do, and building that into how you operate day-in and day-out. It’s not easy, and takes long-term commitment, even when money is tight.

One step in a customer-first direction is challenging your team to create a set of answers to why customer should choose you. Keep them short, 10 words or less. Then test them with customers. Compare them to what competitors say and could say. Keep iterating until the answer is both persuasive logically and emotionally with customers.

Do this for every product and service you offer. Build it into your R&D process at the earliest stages. You’re on your way to a set of cohesive, distinctive and effective value propositions that can make all the difference in your marketing success.

Start now with your top of mind answer: Why should customers choose your product?