Retail brands develop loyalty programs to get customers to do more of something. Buy more often. Visit more frequently. Put more in your shopping cart. They are trying to create an incentive that brings value while encouraging repeat business from the customer.
Healthcare plays by a different set of rules than retail. Unlike retail, a reputable hospital doesn’t want a patient to visit more or buy more if there is no underlying health-related need. And regulations and payment systems work against that type of incentivized activity.
Imagine a retailer, like Amazon, employing its sophisticated AI to dissuade customers from buying more products because the company would be fined for recurring business. In the value-based care model under Medicare, that’s the reality providers can face.
Healthcare organizations can’t just take a retail loyalty program and layer it into their business model. It won’t work. But what providers can do is learn from effective retail loyalty strategies to emulate their best practices within the constraints of their industry. By leveraging the foundational principles of loyalty, healthcare providers can deepen the patient relationship while driving both positive business and health outcomes.
A sophisticated retail loyalty program utilizes increased insights into individual consumer behavior to further personalize the shopping experience. Personalization should be a core pillar of any loyalty program, regardless of industry.
“We live in a world of mass personalisation and the businesses that personalise more will build more loyalty.”
–Philip Clark, Tesco CEO
Tesco, a UK grocer, fine-tuned personalization into an art form. By leveraging its loyalty program, Tesco collects data on all its members and uses those insights to create highly personalized offers, such as healthy diet incentives and newborn baby needs, driving traffic and spend. This information also supports individual store presentment and inventory management, enabling them to ensure that the products that local members buy are visible and available.
Personalization in healthcare will look different, but the intention should be the same—a curation of the patient experience uniquely tailored to the individual. In healthcare, providers can seek to “package” programs and capabilities to appeal to unique target audiences. Just as Tesco is looking towards an omnichannel future with bundled services for content like books, movies and film, so can healthcare organizations as they seek to meet the consumer where they’re at. For example, if a hospital wants to promote its maternity services, the programs, services, doctors, communications and content can be bundled together to enable expectant new moms to easily access all the services the hospital and associated providers make available to them, streamlining what can often be a frustrating and time-consuming process. This can be coupled with unique relevant attributes which creates further differentiation and creates stronger relationships over the person’s lifecycle.
Retailers frequently use loyalty programs to test out new offerings to targeted groups. Loyalty programs are uniquely suited to a test and learn, iterative approach, because retailers can quietly measure new benefits against unique audiences, assessing if the benefit achieves the response targeted, before rolling it out to the larger population. Lululemon utilized its loyalty program to carefully test a fee-based loyalty program, which enabled them to optimize target audience, offer and positioning and correct for any missteps before it was launched to the general public.
Healthcare could take a page out of Lululemon’s book. With the understanding of the payer or provider’s objectives and the target audience they are focusing on, relevant solutions, offers, communications, tools can be developed/packaged/leveraged to improve outcomes. And that target audience may very well be interested in paying for the privilege.
Consider caregivers. Looking at this group, are there specific benefits, features, capabilities that would make the very difficult task of caregiving less burdensome? The provider could develop respite services, educational videos, mental health hotlines and community tools that would alleviate some of the stress on that audience. Some of these services may already be available but targeting and packaging them as a solution could provide a unique point of differentiation and create potential revenue streams.
Loyalty, at its core, is a behavior modification methodology. As leading sportswear retailer Nike knows, behavior modification can foster improved outcomes for brand and consumer. Which is why its Nike Membership program nudges members towards personal fitness.
In a win-win for brand and consumer, running more unlocks more loyalty benefits, such as access to exclusive products and partner offerings. Not only are there rewards associated with Nike purchases, but there’s also content, expert guidance and community to support members in reaching their fitness goals.
Healthcare organizations can look to Nike as a model for how to leverage benefits to promote wellness. By reinforcing healthy behaviors in targeted populations, payers and providers can not only produce positive health outcomes but also reduce costs. Medication non-adherence contributes to $100 to $300 billion in annual healthcare costs. If a simple, app-based loyalty program that incentivized taking prescriptions could eliminate that waste and prevent the approximately 125,000 deaths each year caused by medical non-adherence, patient loyalty and long-term health would become synonymous, just as Nike and fitness have become a fixture in retail.
Retail has been forced to reinvent itself to meet the evolving demands of consumers. From omnichannel experiences to increased automation, retailers have had to adapt loyalty programs to connect with consumers wherever they may be. Starbucks created a member experience that makes it easy and efficient for members to preorder and prepay through the app, and then pick up in-store, curbside or drive-thru. These types of frictionless experiences prevent consumers from giving up and going elsewhere.
The healthcare industry is notorious for frustrating consumers. Payment is not clear. Waiting times to either get an appointment or be seen once you have one is too long. Discharge instructions are confusing and can lead to rehospitalization if not followed to the letter. Provider-suggested procedures can be declined by insurance and may pit providers against payers with the consumer in the middle. By redesigning the healthcare experience to foster more fluid and digital patient experiences, healthcare can, like Starbucks, make the customer feel better about the relationship and help engender trust.
Healthcare consumerism may have a few pitfalls. But best practices from loyalty in retail can be learned from and applied in a healthcare setting. By doing so, payers and providers can not only deliver a better patient experience, they can also produce improved health outcomes. Ultimately, loyalty is about better understanding consumers so you can deliver what they want and need. Healthcare could use a little more of that.
Senior Principal, Integrated Loyalty Solutions