For years, direct mail has been the primary lead generation vehicle for most segments of the financial services market, primarily lending. By leveraging credit data, financial marketers are able to send very specific offers of credit (credit cards, mortgages, personal lending or installment loans) to the segments they are targeting. The same goes for insurance marketing: initially, direct mail was primarily used for life insurance, but in the last several years property and casualty (P&C) insurers began competing for auto policy lead generation.
Leveraging the same data-rich resources and many of the same tactics as the financial services vertical, P&C marketers have built tremendously successful direct mail campaigns. The common thread is that each of these industries compete for very specific portions of the market they are built to serve, and data-driven direct mail allows them to target just that specific segment.
With Health Insurance Marketing, Your First Shot Might Be Your Only Shot
Health insurance marketing is unique because of the universal Annual Election Period (AEP) that exists for the vast majority of healthcare programs. Imagine if you could only change credit cards between October and December, or only change auto insurance policies one time per year. During that time, all of your competitors are pounding away at your existing customers trying to get them to convert and you are trying to get them to renew. That is the wild world of health insurance marketing!
With most of our clients, we engage in a very systematic and continuous process of testing, learning, and improving our approach to their marketing. Each quarter we plan and prioritize a series of tests and then back tests and roll out these ideas throughout the year. But thanks to the AEP, with health insurance marketing, we have one shot—one opportunity. Will we capture it or let it slip?
Before you ask: yes, I did just paraphrase Eminem. In fact, there are many similarities between his iconic song, “Lose Yourself,” and preparing for the AEP. There are many “weak knees” and “sweaty palms” as health insurance marketing season begins and marketers have to answer the following questions:
- How much volume can you commit to testing when you can’t rollout until the following year?
- How relevant are test results from one year to the next?
- How much will the model change over the course of 12 months?
And those are just the most basic logistics questions. It takes planning, faith, and a lot of hard work to compete in the health insurance market each year. Knowing which tactics to use, and when to use them, is a huge part of nailing the balance.
The Preference for Direct Mail
Healthcare companies vote for their favorite media channel every year with their budget dollars and mail is a leading tactic for customer acquisition. What’s more, 70 percent of consumers indicate a preference for direct mail when receiving healthcare information according to a recent poll by advertising agency LAVIDGE. Decisions on health insurance choices require a lot of information, and the content-heavy feature of mail is just what the doctor ordered. Add to that the rich data resources that are available to healthcare marketers, and you have a win/win situation.
Television is also an important channel in this space—85 percent of healthcare consumers call it their medium of choice, according to LAVIDGE—and more and more healthcare marketers are adding to their mix, but mail is still the primary channel.
Targeting is Tantamount to Success
Here’s what Thorin McGee of Target Marketing magazine recently wrote in an editorial promoting a healthcare marketing event:
“[A]cross the board, it seems like making the marketing more targeted and customer-centric is either the active goal or the biggest looming opportunity.”
While this really can be said for every market, it’s particularly true in the healthcare space. Model sophistication, segmentation, and targeting currently lags behind in health insurance marketing, especially for direct mail. I think there are two key reasons for this:
- The Medicare Advantage marketplace is a flat out sprint to sign people up within the first couple years of reaching the age of 65. After that, customers are far less likely to change providers. Some people—myself included, at one point—begin to question whether the model is even required or helpful. The only real question is, “How many times can I afford to mail everybody?” Now, one argument we would make is that by knowing our top deciles vs. our lower deciles, we could spend far more budget on the top deciles. I would say the vast majority of Medicare Advantage marketers hit the entire file an equal number of times.
- It’s really tough to build out relevant segments and messaging when you have a three-month window to market. First of all, it takes a lot of bandwidth to build an effective segmentation test. Second, you can’t backtest until a year later and then roll out in year three. The nature of the health insurance marketplace makes this timeframe a difficult commitment. However, I would argue that this difficulty is also precisely why it must be done! With such a short window of commerce and stacking competition, knowing who the top deciles are and how to speak to all segments is critical.
With the peculiarities of health insurance marketing—a narrow sweet spot for timing, the cruciality of targeting, the thick competition—direct mail is an investment. It can take some time to develop results. However, it’s also the most targeted channel that allows you to speak directly to the segment of people you are trying to reach. Mail is the most trusted channel for highly complex and expensive purchase decisions. When you build this capability into your marketing plan, it will be a powerful lead generation engine that is completely unique to your organization. Stick with it and you’ll see the results.
Helping Consumers Understand a Changing Industry
The American healthcare industry is enduring a tremendous challenge as its future is being debated and influenced every day. Even for industry experts, it can be difficult to predict where the market is going—so what chance does the average consumer have?
It’s up to healthcare marketers to refine messaging, optimize targeting, and explain options to help consumers make the decision that’s best for them—and we can help. Get in touch with me today to find out how to put IWCO Direct’s expertise in the healthcare vertical to work for your marketing.
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