Across the US, healthcare marketing executives are looking hard at their marketing department structures, capabilities and practices, and asking if they have what it takes to transcend the ‘pay for volume’ to ‘pay for value’ economic model. It’s my belief that we’ll be living in both worlds for some time to come.
Nonetheless, it’s important for marketers to re-evaluate their marketing operations in this new environment, do a thorough assessment of capabilities and skills gaps, and move purposefully and quickly to reinvent the role of the marketing department. Building a high performing and accountable marketing team is job one.
Here are seven questions to help CMOs get started:
- What is the current state of marketing in terms of priorities, effectiveness, capabilities, skills, systems, structure and performance?
- Are our marketing strategies, activities and investments tightly aligned to the health system’s strategic vision and growth objectives?
- What are the marketing opportunities and challenges in regards to changes in the market (e.g., reform economics, market consolidation, competitor activities, etc.), and in the delivery system (e.g., care transformation, multiple geographies, expanding services portfolios, employed physician SBUs, etc.)?
- How are advances in technology (digital, social media marketing, CRM, etc.) changing marketing practice, and what new infrastructure, skills and competencies will this require?
- Do we have the infrastructure, decision-support systems and analytic skills to assess and quantify opportunities, drive strategic decisions, monitor and track return on marketing investments?
- How do I strengthen relationships between planning, business develeopment, marketing, PR and sales, as well as with finance, IT and operations, to better inform and support brand building, business development and growth priorities?
- What marketing capabilities and controls should be held by the corporate operation; what is optimally administered by major business units?
Now is the time for chief marketing officers to move boldly and transform healthcare marketing from promotions-oriented tactics to growth-oriented strategic leadership. Embracing change is the first step.
Marketing departments differ from health system to health system. Some are expansive, core business functions with strong growth accountabilities aligned to strategic planning, business development, clinical operations and financial management initiatives.
In others, marketing is configured more functionally to support the development and deployment of marketing tactics aimed at research, promotions and sales.
And some have not evolved far from those early days when marketing relied on a narrow set of tools (e.g. press releases, health fairs, advertising, newsletters) to promote programs and services, making it difficult to link marketing expenditures and activities to business outcomes.
Why such a difference? An organization’s approach to marketing is shaped by a variety of factors including strategic focus, growth objectives, culture or even leadership’s understanding of the marketing discipline.
Which of the following describes your health system’s approach to marketing?
- Product-driven. A product-driven marketing orientation assumes that as long as a health system has excellent outcomes and a top notch safety record, business will find its way to the front door. Performance improvement, leading edge clinical technologies, physician talent and development of clinical centers of excellence are core areas of focus. Awards and recognitions (such as “Top 100” designations) reinforce the organization’s quality achievements. Physician influence trumps consumer choice. The clichéd expression “build it and they will come” is an entrenched belief, as it the assumption that clinical quality alone will create competitive advantage.
- Sales-driven. Sales-driven health systems primarily view marketing as a tactical tools to drive volume to clinical programs. Filling beds, getting appointments, and securing contracts are primary goals. Consumer promotions, physician referral development and managed care contracting are core capabilities. The focus is on more volume for existing services. These are all good things, but a purely sales-driven organization may miss opportunities to discover new niches, create new products and lines of business, or enhance points of differentiation that grow overall revenue potential.
- Market-driven. Market-driven organizations place greater emphasis on market research to better understand customer needs and discover market opportunities that can be addressed in unique ways. Designing and developing services, programs and access points to attract key customer segments are priorities for the marketing operation, making R&D a core competency requirement. Marketing planning is more strategic than in sales-driven organizations, encompassing segmentation and targeting, product positioning and design, pricing, promotion and channel strategies – and is a more integrated process through which value is created. Because growing overall market potential and profitability is as important as growing market share, marketers must have a strong P&L mindset.
- Relationship-driven. Customer-driven organizations place significant emphasis on mass customization as a competency to create one-to-one relationships, enabled by sophisticated, enabling CRM technology that recognizes, supports and delivers customized messages, offerings and solutions for valued customers. Today, some of these capabilities are embedded in call center and CRM systems, but new advancements, such as the widespread implementation of electronic health records and growth in social media communities offer health systems unprecedented opportunity to better understand and predict the needs of patients and customers – and proactively design the marketing strategies, tactics and programs that stimulate and drive demand.
- Market-DRIVING. Market-driving companies are those that re-set the rules of competition through value innovation – radical, disruptive moves that create new markets, transform customers into fans, and build such distinct points of competitive advantage that they are difficult to duplicate. Think Apple, which continually breaks its own sales records, most recently having sold over 1 million units in the first 24 hours of the iPhone 4S launch. Innovation is the core competency – and success comes from developing deep insights into core human desires, discovering unmet needs, and bringing creative, profitable ideas to market. Who are the market-DRIVING health systems?
One approach is not necessarily “right” where another is “wrong” – what is important to understand is that each path requires a specific configuration of core competencies, staff capabilities, processes and investments. Misalignment occurs when management wants to achieve significant improvements in strategic growth, for example, but has a production-oriented marketing operation.
With all of the change going on in the industry, this is an ideal time for marketers to assess their marketing department structures, capabilities and investment priorities.
So where do we start?
Posted in Marketing Leadership, Marketing Management, Marketing Strategy
Tagged Chief Marketing Officer, health systems, healthcare marketing, Karen Corrigan, marketing, marketing management, marketing organization, marketing performance, marketing structures