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Retention Marketing: Tips from Don Marsh on Behalf of CareCredit

Retention Marketing: Tips from Don Marsh on Behalf of CareCredit
Don Marsh
June 27, 2011
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This article is sponsored by CareCredit.

Many marketing plans are focused on new patient acquisition, with little if any attention paid to patient retention, despite numerous industry surveys showing that to get a patient to return to your practice costs only a fraction of the marketing dollars that it costs to get them to come to your practice in the first place. Patient retention has long been one of the problems in the hearing industry with retention rates reported at 23 - 25%. In recent years in particular, the percentage of first-time patients has been less than forty percent, and the traditional forms of marketing (print aids, yellow pages, direct mail) to attract new patients are not as effective as they were in the past. Returns have diminished over time. Retention marketing can help you take the competitive advantage using your own patient database.

Why retention marketing?

In challenging economic times such as these when marketing dollars are stretched thinly, retention marketing can be very cost-effective in developing new revenue streams for your practice.

Many practice owners are in the habit of being in what I call the 'hunter-gatherer mode' where they are always out looking for new patients. When I work with individual practice owners as an independent marketing consultant I often find that they don't know quite how to mine their own databases. When you look at patient data and purchase histories there are all kinds of information there to help give you the inside track as to what will drive patients to come back in.

LTV is an acronym for Life Time Value and has been a part of the marketing lexicon for about 20 years. In hearing health care LTV is a way of looking at how many dollars a practice can be expected to earn over the course of a customer or patient relationship. This is a sum total based not just on hearing aid sales to that customer, but also through referrals, ancillary products, extended warranties, and all the other revenue streams you can create simply by cultivating the relationship. LTV is especially significant in times like these. It is also likely impacted by newer technologies like open fit solutions that are targeting younger audiences than before. If you have a first time patient who comes to you at fifty to fifty-five years of age as opposed to seventy to seventy-five years of age, as was the case in the past, you can expect more purchase cycles and therefore more revenue to result from that. Retention marketing is designed to get patients to come in more often and shorten the purchase cycle, thereby increasing LTV.

Building a retention marketing plan

Focus on the customer experience

Before I discuss specific retention marketing programs that you can develop, it's important to note that building a patient retention system begins with creating a good patient experience from the very first point of contact. This is a relationship business, and the relationship with the patient begins with the first person they talk to on the phone, the first face they see when they walk in through the door and continues through every point of contact.

Along with LTV, the concept of what I have referred to as "the 3 Stages of the Patient Relationship" also comes into play. The three stages are: First-time Patient, Repeat Patient and Patient Advocate. Patient advocates are people that will stay with you no matter what small adjustment period there might be with new hearing aids. They're also much more likely to accept having to pay higher prices, in large part because from first-hand experience they know the value of what you add to their lives, and are also more likely to provide more patient referrals. Patient advocates are the byproducts of a good patient experience. When you build patient advocates, at the end of the day, you're spending fewer marketing dollars to yield a higher percentage of return of patients and new revenue streams.

Sales letters

In a good retention marketing program one size does not fit all. The most successful program will involve targeted marketing to specific segments of your database. One of the earliest programs to highlight this concept was put into place back in the '70s, by non-profit organizations who wanted to find a way to identify high-end donor prospects and put a higher emphasis on appealing to them. The result was something that came to be known as "RFM (Recency, Frequency, Monetary) Modeling".

In RFM Modeling, an entire database was divided into fifths, or quintiles, in essence ranking each donor on a 5-1 scale, based on the three criteria: Recency (how recent a donor was received), Frequency (how many donations were received within a given length of time) and Monetary ( the total number of dollars given), then adding all three scores together to provide an ultimate ranking.

Although it can be a bit labor-intensive, practice owners can create their own version of RFM Modeling, with the result being an increased amount of service dollars (repairs, batteries, and other after-market products) being applied to patients in the highest quintile, in an effort to keep them in the highest quintile.

An increased amount of marketing dollars can be applied to patients in the second quintile, in an effort to motivate them into moving into the highest quintile.

And over the course of time, practice owners using this system should be prepared to reduce, or perhaps eliminate altogether, the amount of time, service and money being applied to those in the lowest quintile(s).

To mine your database, you have to know what to look for. There are software programs available that have been developed just for practice owners that provide at-a-glance purchase histories, including when someone bought the last time, the make, model and serial number, and what they paid for the hearing instrument(s). To build a successful patient retention program, however, we need to find out more about why people bought or did not buy, not just the 'hows' and the 'whens''. In marketing terms, this is referred to as purchase bias.

For example, suppose you are looking at two patients' records. Patient A has a history that shows over the course of X number of purchase cycles, he has always bought premium technology. He had the financial wherewithal to pay for the technology, and invested in better hearing with high end products. This may suggest Patient A's purchase bias is technology. Patient B never cancelled an appointment, always came in faithfully and had a history of purchasing a lot of after-market products such as batteries and extended warranties, as well as referring friends and family. This history may suggest Patient B's bias is service.

You can develop a series of retention marketing sales letters that appeal to these different purchase biases, in Patient A's case, a technology bias and in Patient B's case, a service bias. It seems there's a fairly even mix between patients pursuing new technology and those coming back to a practice because of the service element. If you can extract those sets of information, you've got two very good beginning points - technology versus service. You may also see other biases emerge from your database, and you can build a small library of retention marketing sales letters targeted at these biases. One of the keys to such a program is ensuring you and your staff consistently input the information into your database so you can use it for your retention marketing efforts later.

Set up criteria such as month of purchase, and set up a schedule to send out the sales letters. For example, every Monday send out letters to those who have purchased two years prior. Use the targeted letters based on each patient's bias. If you give it some time, you should see new business accruing from your database.

Trade up programs

There's an interesting program that I had a chance to help develop some years ago called Trade Up program which was designed to get patients to come in sooner than they otherwise would. The short explanation of the program is that it's based on the anniversary month of purchase. So people who purchase in April of whatever year would get a letter at the beginning of April and they would be incentivized to purchase new instruments, for example by getting a percentage off based on their original purchase investment. Programs such as these can shorten the purchase cycle.

Offers

When marketing to your existing database, you can get creative in thinking of offers that would be appealing to your demographic. Offering extended warranties to those patients who didn't initially purchase an extended warranty up front is an offer that may appeal to those with a service bias. Because new technology is coming out much more quickly than in years past, some practices are enabling patients to apply a portion of their current purchase toward the newest technology when that comes out in eighteen months down the road.

Direct marketing is offer driven, and your success is based on the offer. When developing an offer, think of your patients' perspectives. When they see your offer, they'll ask themselves, 'What's in it for me, why should I respond?'
Create new offers that you think would be attractive to your patients, and give patients a chance to respond. Often times it is not any more complicated than that.

Focus groups

One of the most valuable internal marketing programs a practice can run today is what I call a Focus Group Program. I designed this program years ago, with the goal of getting current hearing instrument wearers and their spouses to come to a neutral setting, such as a community center or local library, to hear a technology presentation, or review advertising samples. The presentation would be followed by a discussion period where participants would be asked for their advice and opinions or could ask questions.

Conducting focus groups has many benefits for your practice. Participants in the focus groups become self-qualified to come in sooner for new technology than they otherwise would have, because they heard a ten or fifteen minute presentation and had a chance to ask questions about new technology in a comfortable, non-threatening setting. When it comes to advertising, there is great value in listening to your patients talk about what newspapers they read, what they remembered from a certain print or newspaper ad, what TV shows they like to watch, and what they don't like in the way of commercial or hearing aid advertising. The marketplace always decides how well our marketing efforts succeed or do not succeed. The Focus Group Program will provide you with specific information from your marketplace that will help you market more effectively and in a more cost-effective manner.

The focus groups can be conducted in approximately 90 minutes, and you can run several per day with up to 25 people per group. You should leave your schedule open in the days following the focus group for appointments, as the participants are now pre-qualified or pre-disposed to coming in for a new fitting.

Who are candidates for a Focus Group Program? It is basically a question of how old their current instruments are, with those who have instruments two to three years old the first to be invited. You don't want these to be large events; they should be small and intimate. If you send out 200 invitations you should get a good response, as in my experience people enjoy coming and giving their opinions. While you may want to incentivize people to participate by giving them a few packs of hearing aid batteries or a gift certificate to a local restaurant or a Target store in their community, in general it is not always necessary. People appreciate coming to have a chance to listen and learn, and to share their opinions.

Like the other forms of retention marketing discussed here, a Focus Group Program shouldn't cost all that much in terms of marketing dollars. It is designed to get patients to come in to see you more quickly, and to shorten the purchase cycle.

Targeting non-purchasers

Tested not sold

Up until this point I've been discussing marketing to patients who have purchased from you in the past. Industry statistics suggest that seventy to eighty percent closure rates are the norm. Another way to look at that statistic is two to three out of every ten people that have a consultation will not purchase. Of course, closing rates will vary by practice and by practitioner, but it's safe to say that your database likely contains a significant number of patient prospects who were tested not sold hearing aids. The term tested not sold refers to patients who had a hearing test but did not purchase hearing instruments. A full 30% of people who were given a hearing test but did not purchase hearing aids will eventually purchase elsewhere. Only 3%, unless otherwise prompted or incentivized, will return to your practice.

Tested not sold programs are a key way of developing revenue streams from your existing database. These programs can take on any number of aspects.

They can be as simply defined as creating a series of contact points. Perhaps you first follow up with every tested not sold patient the day after the consultation. Many practice owners may not have the time, but they can delegate this to the front office staff if necessary. As this is a relationship business, I would recommend that whenever possible the professional should take a few minutes and follow up directly with the patient. They can see if there are any questions, remind the patient of financing options and the benefits of better hearing. They may want to remind the patient of why they came in the first place - were they tired of being told the television was too loud, or not hearing the telephone when it rings? Maybe they told you that they were tired of missing out on family conversations at restaurants or places where noise is present.

After the initial phone call, a letter can be sent out a week later, and a second letter a couple weeks after that. You can determine the timing you think is best; the key is developing a protocol of systematic follow up with these patients and having the letters already in cue and ready to go out.

In terms of messaging, over time the message to these patients might become a little bit more urgent. You might ask "What everyday life situations would you like to hear better in?" to remind people that the reason they came to your practice in the first place was not by happenstance; there's something about their life that's missing because they simply aren't able to hear and enjoy it as well as they want to. Maybe three months later, there's a second letter or third letter or fourth letter or whatever number you determine, that really pleads the case that time is of the essence. Its messaging indicates that there's something that they should be thinking about doing, to benefit not just their own lives, but their families lives, and their work situation. The success of a Tested not Sold program depends on sticking with a protocol over time and reminding people that you're there to help.

One of the "5 Key Concepts" that I talk about during my presentations on "Marketing to the Mature Marketplace" at industry conferences is "Connectedness". As a practice owner, you must stay connected to your patients so that they feel, in turn, connected to you. Otherwise, industry statistics suggest that they'll wind up going somewhere else when it comes time to make a choice for better hearing. A Tested not Sold Program as part of your retention marketing efforts will help incentivize or encourage people to come back to you, instead of going somewhere else.

Regular communication with your patient-prospects, whether in print or online, is also a way of ensuring your database remains clean. According to the Postal Service, 5% of the "50+ Mature Marketplace" will change addresses in a given year, with fully half of them staying within the same zip code.

Patient Referrals

Patient referrals are an underutilized resource. A lot of the practice owners I've worked with don't look at referral sources as something they have the time or interest in developing.

Cross-marketing is one mechanism for generating referrals, where you as a practice owner develop relationships with other professionals that have a similar customer base such as physicians, otologists, etc. You can also ask for referrals from your patients, so that they feel comfortable referring family members, co-workers or golf partners, etc. and this is the type of referral I'd like to discuss here.

One of the oldest axioms in marketing is that word of mouth is the best form of advertising, and there is truth to that. It is also certainly one of the least expensive forms of advertising. With patients who have been referred by other patients, you already have a credibility established before you begin the appointment. It's not that they were introduced to your practice through an advertising vehicle such as a print ad for example; one of your patients actually gave first-hand testimony to how you and your practice improved their life. While these referrals may not necessarily come in ready to invest in better hearing and purchase instruments from you, they at least have a higher interest level and trust level that allows them to better receive the information that you have to offer.

Sometimes patients will refer people to us on their own, and that's great if that happens, but developing protocols to generate referrals is a key step in developing a larger patient referral base.

Such protocols need to involve all the staff - professional staff as well as front office staff. It may be just a matter of developing a couple paragraphs or a couple sentences worth of information so they can feel more comfortable and incorporate it into their routine to ask patients for referrals. We can also develop printed materials or handouts to ask for referrals as well, but often times it's just a matter of readjusting the mindset of the staff.

Professional staff should not be hesitant to ask for referrals. If you have created a relationship with a patient such that the patient is returning to you for products or service, it is not stepping outside the boundaries of that relationship to talk about referring a friend or family member.

When do you ask for referrals? At every contact with the patient from the successful fitting onward, part of the conversation should be, "By the way, if you know anyone else who could benefit from our services, please feel comfortable in referring that person to us".

I mentioned that printed materials can also be used to help generate referrals from existing patients. A simple hand-out, either folded in half or just a panel card will suffice. It should thank the person for choosing you for their hearing care, and encourage them to suggest someone they know whose life can be improved by better hearing. Printed pieces like this have a long shelf life as they're not filled with information that will become outdated or need refreshing.

One question I am asked is if patients should be incentivized to provide referrals. There are both legal and ethical restrictions on the kinds of "rewards" a medical professional can offer a patient in return for a new referral. I do not recommend monetary incentives such as dollar-based or percentage-based discounts. Experience suggests that the best rewards are those that provide a "soft testimonial" to the value of what you add to patients' lives: Gift certificates to a popular restaurant or theatre, for example.

Financing options

As you design your retention marketing efforts, keep in mind that financing options are very important, especially for a slightly younger than traditional audience of hearing aid wearers. The goal of retention marketing is to shorten the purchase cycle and increase LTV. Therefore, when patients come in for an appointment as a result of your retention marketing programs, you want to enable them to invest in better hearing now. A financing program such as the healthcare credit card provided by CareCredit may mean the difference between a purchase today, or having to wait until they have the cash on hand or financial resources to do it in full in the future.

Remind your patients in the workforce that MarkeTrak shows a direct correlation between hearing loss and income loss. There is as much as a $14,000 per year income loss when hearing loss is not addressed (Kochkin, 2010), and hearing aids can mitigate that loss. Patients' technology may be obsolete; financing options may allow them to purchase newer technology. Since two-thirds of all people with hearing loss today are still in the workforce, those statistics should not be disregarded. For working patients, taking advantage of a financing program to invest in better hearing now may go a long way in helping to get that promotion or to being more confident and effective on the job.

Conclusion

The message here is rely on your current database. Over the course of many years and many marketing dollars, you have earned a number of patients, and they can be encouraged to come back. Your database is a goldmine, whether it contains 2,000 names or 20,000 names. Sometimes it's just a matter of changing your habits and sending out weekly letters, following up all consultations with a phone call, or asking for referrals and ensuring your staff does the same. In challenging economic times like these, retention marketing programs are a cost-effective way for hearing care practices to best utilize their own resources to stretch marketing dollars and increase revenue.

References

Kochkin, S. (2010). MarkeTrak VIII: The efficacy of hearing aids in achieving compensation equity in the workplace. Hearing Journal, 63(10), 19-24,26,28.

2019 NIHL Series | 4 advanced-level live webinars | June 5, 12, 19, + 26 | 12:00 pm EDT | Guest Editor: Brian J. Fligor, ScD, PA

Don Marsh

Marketing Consultation Services

Don Marsh has more than 25 years’ experience in Marketing Communications, in both staff and consultancy roles. After serving under contract to several of the industry’s leading manufacturers, he is currently providing customized marketing services to hearing health care professionals/practice owners across the country.  He is the author of one book and more than 300 articles. His talks on Practice Marketing have been presented at state-association and manufacturer-sponsored meetings in 40 states and eight foreign countries.



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