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Healthcare System Shifts From Mass Marketing to CRM

A nine-month campaign introducing one-to-one direct mail to an Arkansas health system's marketing strategy resulted in $700,000 in profit and a cumulative profit-to-dollars-spent ratio of 6.68 to 1.

For Northwest Health — which operates hospitals in Bentonville, Johnson and Springdale, AR — the change in strategy represented its first experience with customer relationship management marketing and a shift from pure mass marketing.

Tami Hutchison, the system's senior vice president of business development, said she had success with CRM while working at other hospital systems and thought she could get similar results at Northwest.

Northwest ran a CRM program dubbed “Lifetime Connections” with four parts: a new-mover mailer, a mailer triggered by a consumer's birthday, a physician-referral mailer and a newsletter. CPM Marketing Group, a healthcare marketing agency based in Middleton, WI, helped develop, manage and track the campaign, which ran from April 2002 to January 2003.

Northwest's customer market of 117,000 households is “a study in contrasts,” Hutchison said. It includes longtime locals and newcomers who are arriving to take advantage of job opportunities at the headquarters of corporations such as Wal-Mart, Butterball, Tyson and several trucking firms. The area has little unemployment.

The campaign targeted current residents as well as the new movers — who, because the region is the sixth fastest growing in the nation — represent a substantial source of new business. Mailings offered screenings and health information tailored to individual consumers, plus free physician referrals.

The largest part of the campaign, in terms of revenue and dollars earned compared with dollars spent, was a standard #10 mailer sent to consumers around their birthdays. The letter reminded them to get needed immunizations and health screenings for themselves and their children, making recommendations based on their age and gender.

Mailings were restricted to consumers with the highest risk scores for specific health categories, including cardiology, orthopedic services, hematology/oncology and obstetrics. A total of 45,632 consumers received mailings.

More than one-quarter of recipients responded, producing $417,000 in profit for the hospitals measured by total profit on billings for health services to respondents. This resulted in a ratio of more than $10 earned for every $1 spent. The mailers cost 99 cents each for a total of about $45,000.

Part of why the campaign worked is that patients prefer to be treated as individuals, something they can miss in mass marketing, Hutchison said. Using CRM, healthcare providers can respect patient privacy yet speak to them one on one.

“If any business should exhibit knowledge of customers as individuals and not as a group, it's healthcare,” she said. “Who knows more about customers than their healthcare provider?”

To new movers, Northwest sent a 6-by-9-inch envelope with a letter welcoming them to the area and offering physician referral, emergency numbers and an offer of a free first aid kit. Non-responders got a second 6-by-9-inch envelope urging consumers to take a proactive approach to their family's health with regular care and offered access to an online calorie counter at a personalized Web page.

Of the more than 7,000 households mailed, 18.6 percent responded. Billings to these consumers earned the hospitals more than $110,000 in profit for a mailing that cost about $24,000, a ratio of $5.67 to $1.

Other mailings included a 6-by-9-inch envelope containing a personalized letter and refrigerator magnet offering physician-referral services sent to 3,800 consumers who had indicated they had no doctor, either during clinical encounter at one of the system's hospitals, at a class, during an inbound telephone call or on a health-assessment survey. Northwest also sent a personalized newsletter, customized by the individual's age, gender and health status, to its top 15,000 prospects quarterly.

Northwest has not abandoned mass marketing, as it is starting a mass media campaign dubbed “Follow the Leader” to coincide with the opening of a new hospital. However, the company plans to invest more in its mailing efforts and will expand its new-mover mailings.

“We are definitely pleased with how it worked in this market,” Hutchison said. “We'll definitely continue to use it substantially.”

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