If you are like me, you are a little numbed by all of the discussions about rising health care costs.  But this morning when I read that Safeway is now spending an amount more than double its annual profits on health care, and health care costs are rising a lot faster than earnings. 

While that’s crazy, I bet it’s common.

But the article “Do Health Care Savings Start in the Cafeteria?” written by Melanie Warner for The New York Times offers a recipe for how organizations can get some serious return on investment (ROI) in their wellness spending, that will translate into huge cost savings.  While the focus on the article is a company called the Full Yield that offers healthy food for corporate cafeterias, the article stops a little short of what I think the bigger message is.

There is no question that corporate America has looked for ROI on wellness programs, and in many cases it is very hard to quantify.  A better question for corporate America is what the ROI is in their health care investment, and you won’t get many responses.  I think at the heart of this, there are two very large known problems, but most of America is missing a key statistic that provides a clear path with respect to “how” to solve both problems.  The two problems are:

1) Health care costs are growing faster than a runaway train (Safeway is probably the rule rather than the exception)

2) Obesity, depression, diabetes, heart disease, and strokes are all on the rise and that fuels the cost of health care

Some statistics that most people don’t know include:

1) 50%, or 1 in 2 working Americans suffers from major or minor depression (according to the University of Washington)

2) At a cost of $13,500 for annual treatment per person, the cost for diabetes alone in the US was $174 billion in 2007 (according to the American Diabetes Association – the ADA)

3) Diabetes is typically directly linked as a cause of depression, heart disease, strokes, and others

4) In more than 80% of cases, people with diabetes who lose just 6 (six) pounds all symptoms and costs associated with diabetes go away and do not return  (according to the ADA)

So the key statistic that I mention above is that the overall bill for American health care would have been roughly $139 billion lower in 2007 if people with diabetes lost at least six pounds.  And of course that’s just the tip of the iceberg in terms of costs.  By going upstream of the high costs of health care, you are preventing a huge percentage of the heart disease, strokes, and depression that emerge.

That’s how to get a huge start on getting ahead of health care costs, and I bet if you take Melanie Warner’s guidance and have a company like the Full Yield put food in your corporate cafeterias, you will also boost employee morale a lot by showing that you care about their wellness and that takes the form of some great tasting food.

Is all of this talk about diabetes a thin veil over a discussion about obesity?  Maybe, though I would assert that there’s less stigma associated with diabetes than obesity, but more importantly, it doesn’t matter – focus on, “what” you want in terms of  the outcome of lower costs and higher employee morale, and this is “how” you get there.  So what are you waiting for now?

-Ric

There was an interesting article in The New York Times today, “At Checkout, More Ways to Avoid Cash or Plastic” by Claire Cain Miller.   The point of the article is that technology is presenting some increasingly more convenient and trustworthy ways to pay for things.  In essence, Miller is saying that services like PayPal and others are making truly digital money a real and practical possibility, when it doesn’t seem like so long ago that such a thing was humorously suggested to be futuristic in an episode of The Jetsons.  One interesting point Miller makes is the following:

“The way consumers pay for things has transformed only a few times. Coins replaced bartering, paper bills mostly replaced coins, and bank drafts and checks developed as an alternative to cash.”

While this is true, and a good example of “how” trap rethinking where advances enabled people to change “how” they conducted transactions, a key point that Miller doesn’t emphasize is suggested in this quote:

“Opening up the payment systems in a flexible and frictionless way like PayPal is doing is a really big deal,” said Dana Stalder, a venture capitalist at Matrix Partners

Really big deal doesn’t start to cover it.  It’s a widely discussed fact that the typical American is carrying more than $5,000 in credit card debt, usually with an enormous interest rate where some people struggle to make their monthly minimum payment, which makes the debt snowball.  Obviously some of this is because of poor money management skills, fueled by the need to keep up with the Joneses next door, but the fact is that for many, the credit card is a huge step backward in the sense that it straps, if not buries, people with their own debt.

One manifestation of the “really big deal” that Stadler alluded to is that this could well be a window for a service like PayPal and the others to actually slam the door on credit cards and their onerous interest rates.  We saw the online retail bank ING DIRECT eliminate paper checks from retail banking, which prevents people from bouncing checks – I think we could see some similar shifts with the digital money crowd where they charge lower interest rates and do more to help the consumer with their debts.

Until I read this piece, I didn’t have much hope for saving the American public from their credit card debt, but this gives me new hope that an easier way to pay, can become a smarter way to pay and manage debt and eliminate the 20% interest rates.

I am going to stay very interested in how this develops, and I hope to hear the credit card companies say “Ruh-Ro!”

-Ric

I have written about my frustrations with Comcast in the past, in large part because in their industry, because there are other options, it makes no sense to me that they have such horrible customer service and support.

So this morning when my friend Mark told me about how he is saving $800 a year this year on Comcast, I wasn’t so surprised – they know they have competition.

Mark told me that he had gotten an offer from Dish Network for $30 a month, so as a Comcast customer paying about $100 per month for cable TV with no premium channels, he called Comcast to ask for help.  Mark said he called in a very friendly voice and said he loved Comcast but he needed help with their price because his wife heard about the Dish offer.  And with that they lowered his bill by $70 per month for a year.

When I got home I went out to the Dish site, clicked on the online chat button, and with what I have today from Comcast (Showtime and HBO), I learned can get it from Dish for just $39 a month, so I called Comcast, like Mark, in a very friendly way, and with that they lowered my bill by $60 per month.  It took about ten minutes and I will save $720 this year as a result. Nice.

I think the trick is to have a specific price from a competitor and Comcast knows they have to match that.

So in the notion of the “how” trap that’s central to the book Rethink, this is an example of a way to change “how” you pay for your cable. Pass it on . . .

-Ric

My friend George Murphy who runs the marketing, branding, and strategy firm Modo-Group has been talking for years about how ineffective traditional advertising has become in terms of actually causing customers to buy products and services.

I was reading an article in the New York Times this morning about how Unilever has reached out to bands and street musicians (also known as buskers) and bands, offering them $1,000 to have a sign promoting there AXE deodorant.

It reminded me of an article that appeared almost two years ago (graphic to the left) that talked about advertising spending, and the article made a huge impression on me on several fronts.  First, the fact that organizations like P&G have marketing budgets approaching five billion dollars really shocked me.  Then to learn that most companies like P&G have no idea which of their ads actually works in terms of getting people to buy their products, let alone who is buying them.  The thrust of the 2007 article was that companies are entering an experimental phase where they are not only trying new ways to reach customers to get their brand and their message in front of the right crowd (like busker supporters . . ), but they also want to know who is actually responding to those messages.  Obviously the internet is making a lot of that information more capture-able, but companies still seem to be slow to move on that opportunity.

Related to that, I was talking with a friend about services like Tivo that let people record programs and watch their shows when they want to, and also skip through the ads and the person commented that advertisers must hate that.  In fact I think that any hate that exists will be short lived, because what is already increasingly common is product placement in the TV show itself.    Recently I was watching an episode of the Showtime series Dexter, about a serial killer who works in the Miami crime lab, the name of the character is Dexter Morgan, and in one scene he was making margaritas in for about 15 seconds, a bottle of Captain Morgan’s rum was prominent on the TV screen.  Dexter also uses an Apple laptop, which is made known on every episode.  Another series I watch Californication, the very funny series with X-files alumnus David Duchovny, features a down-on-his-luck author who ends up teaching a class at the local university and he learns that one of his students works nights as a stripper  – one night he takes his friend Charlie Runkle to the strip club to see her and he asks around for his student and no one knows what he’s talking about and then she shows up and says she works under the stage name “Ashley Madison” and she says the name at least three times, which seemed excessive.  So I did an internet search on Ashley Madison, and sure enough, it’s the name of an internet site for people already in relationships, who want to have a secret fling.  Very clever product placement, though because of services like Tivo, since people can be watching the show at any time, it can be hard for Ashleymadison.com to figure out which of its customers came from Californication.

So it’s going to be very interesting to see how companies rethink the ways to connect with customers, while at the same time collect data about who is, and isn’t buying it.

-Ric

Waiting Room Promotions is one of those slap-your-forehead I wish I had thought of that ideas.

One of the reasons I love the idea of having wall mounted flat panel screens with educational and entertainment programming for doctors’ offices is because I need it.

I distinctly remember sitting in the waiting room a number of years ago, looking at the stack of People magazines that had historically been a secret indulgence of mine (it was the only place I would pick up that magazine).

It dawned on me that the waiting room is, by definition, mostly full of sick people and if sick people had been holding the magazine, then it was covered with their germs and there really wasn’t any amount of Purell that would make me feel comfortable picking up one of those magazines.  So in recent years (I have high cholesterol so I have to get that tested pretty frequently), I have resorted to staring at the fish tank or doing busywork on my iPhone, trying to avoid so much as even looking at the magazine stack.

So Waiting Room Promotions (WRP) solves that problem.  I don’t have to touch anything (though someone probably has to control the remote. . . .) and I can sit there and watch the screen and relax and learn.

Problems solved:

1) Health – people don’t have to touch anything

2) Boredom -no more staring at (blank) walls

3) Education/awareness – whether basic hygiene or the latest research, there’s all sorts of information to share

Great idea!   I look forward to seeing the WRP screen the next time I go to see Dr. Smith.

-Ric

While branding and marketing are more the fields of Scott Bedbury (A New Brand World) and George Murphy of Modo-Group, in the book Rethink I do have an entire chapter about business value and one of the three pieces of the definition of business value has to do with brand and identity to test  which aspects of your organization are why customers, partners, and even employees like do do business with you (the other two relate to key performance indicators and the value of improving the performance of something).

Something I don’t talk about in Rethink is something that I will call “brand illusion” where companies build their brand based on something REALLY misleading, and they succeed mostly because the customer just doesn’t know any better.  It’s a very risky thing to do, but it often works well.  The case of payroll giant ADP is especially clever but I am going to work my way up to that one.

Folgers -“It’s mountain grown”

Schlitz – “Our bottles are washed with live steam”

Lucky Strikes cigarettes – “It’s toasted”

Microsoft Windows 7 – “I’m a PC and Windows 7 was my idea”

What these ads did is take something that everyone does in their industry and make it sound like they are unique in doing it.  All coffee is mountain grown, live steam is a standard process in bottling, all tobacco is toasted, and customer feedback drives almost all products in almost all industries. Yet these ads were very successful (the Microsoft ad launched Monday, but feedback has already been positive).  Creating the illusion that something generic is something special.  Brand illusion.

In the other direction, there are companies that deceive customers with a message that clouds what is really happening.

Progressive insurance told customers that if you go out to their web site, they will not only give you a price quote for their own insurance products, they would also quote the prices of other insurers in case they had better rates for you the customer.  Isn’t that incredibly nice of Progressive!  Not so fast.  Progressive was actually being extremely devious.  Insurance is all about risk management, and when Progressive sees a customer that has a high risk profile, they send them away by offering a “better” rate from a different insurer.  The illusion of helping you when they are really selecting the customers they want.  Risky, but very clever.

Payroll giant ADP is my favorite though.  ADP manages over 50% of American payrolls, and for years the message has been that they don’t really make money from their payroll services, they claimed their profits came from the “float” the time between receiving funds from an employer and the time they pay them out.  The fact is that with current technology and regulations, the notion of float is all but nonexistent.  So why would ADP say this?  Because they are really expensive and they actually make a lot of money from their base services.  The illusion was to lead the customer to think they were getting a bargain and that ADP was generating the profits in some other way.  Very clever.

So circling back to rethinking, the notion of how you message your value to your customers is key.  These are just a few examples of companies that have successfully manipulated customer perception through a variety of different illusions.  Food for thought in how you connect with your customers.

-Ric