Several weeks ago I posted about the comeback of the American consumer and its impact on the financial services market. Since then, I’ve engaged in the same discussion with healthcare device makers and distributors who are also wondering how a stronger consumer will impact their business.
The obvious reality is that every sector in the United States ought to be positioning itself in light of strong consumer sentiment and data. Let me quickly set the table by restating a few key points from my previous post about market conditions and business climate that are relevant across industries, but are certainly applicable to healthcare equipment makers, manufacturers, and distributors:
- The stock market is at or near an all time high
- The business media seems to be whistling a happy tune about the comeback of the American Consumer
- Earlier this year, according to Bloomberg.com Macys’, Target and Gap reported sales that topped sales estimates in January, 2013
- This past February, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 76.3 from 73.8 in January
- Ernst & Young cited stronger global markets and calls the US markets “very positive” in its most recent forecast.
- With property values rising and the job market strengthening, Americans seem to be poised for an uptick in wealth
So, what does the comeback of the American consumer mean to Healthcare consumption? From 10,000 feet, two things: 1) The American healthcare consumer will have more money and more confidence to spend it and 2) that confidence and willingness to spend will be tempered by impact on the collective psyche still felt from the 2008 market crash.
Who will benefit from this consumer wealth effect? Consumer medical specialties, like dentists and cosmetic dentists, plastic and cosmetic surgeons, dermatologists, fertility specialists, bariatric surgeons, and those companies who are selling to them, as well as hospitals and surgi-centers who will deliver care in these service lines. We believe that other specialty areas will also see benefits such as certain areas of orthopedics, We see a healthy return of discretionary income spending in the aforementioned areas. At a recent meeting of Plastic Surgeons in New York City, a Baltimore based doctor said: “we’re seeing people coming off the street and dropping a $1,000 to $1,500 on procedures, and that hasn’t happened in a long time.” As I write, there’s a strong bi-partisan push in the senate to repeal the medical device tax. I wouldn’t hold my breath if I am a device manufacturer or distributor. Just as a reminder, the 2.3% excise tax is on the gross sales price of taxable medical devices. Regardless of whether the medical device tax is repealed or not, companies who better position themselves in this climate relative to the American consumer, will have a whopping advantage over those who don’t.
Here’s how healthcare device companies and distributors can better position themselves in light of the coming wealth effect:
1. Down-line Education – Three pronged approach: 1) Get out in front of the market by arming your buyers with the information they need to make an informed buying decision for your products. Include information on what the wealth effect could mean for both their business and patients. It is likely that they themselves are feeling the wealth effect personally. Of course, buying certain equipment will put your buyers in a better position to serve the needs of their patients who will now feel more comfortable in spending discretionary dollars on healthcare services. 2) Consumer down-line education through web and digital strategies will provide fertile ground to drive consumer education and show buyers your commitment to their success. 3) Peer-to-Peer education for buyers of healthcare devices and products. Down-line education must have a strong digital component, especially with the rise of mobile and the coming of Google Glass, which will once again revolutionize mobile. [A quick aside: I was one of the privileged few to recently accompany a Google employee on a Google Glasses tour and indeed healthcare must be prepared for the coming revolution, but that's a post for another day.]
2. Brand Like You Mean It – This is a great time to get back into the market with a healthy respect for your customers. Communicate with them on a level that they come to expect and specifically communicate value. Your visuals must be stunning, your value lasting. Now, I have been on the record and continue to be by saying that branding is “not what you do,” it’s a “result of what you do.” For those companies who have been lacking in promoting their products and services to exceed market expectations, the time to start building a foundation for your brand has never been better than right now. This is especially true now because some of your competitors will inevitably continue to rely on the same strategies, thinking the same old ways, or their size, or whatever will produce results in this environment. Good, let them. For companies who consider themselves brand leaders in their space, don’t rest on your brand laurels, because your customers will now need more information to make buying decisions, and have more access to information about your products and your competitors’.
3. Mobile & Digital Will Drive Marketing Strategy – Linkedin just surpassed 1 million doctors and nurses worldwide. Our own proprietary research shows that as of January 27, 2013, there were 500,000 people who have identified themselves in the United States as “dentists” on Facebook and 33,000 in the same category on Linkedin. There were 2,918 people who identified themselves as “general dentists” on Linkedin. Combine that with Healthcare topics being the most consumer-searched subject online in the United States, and you now have an idea of how important the digital environment is to your business. Educating the consumer and the market about the value of your products in the digital world is crucial to building consumer awareness and driving demand to your customers (doctors, dentists, hospitals, surgi-centers, clinics). Web and digital content must meet the expectations of the market, and if it doesn’t your company risks brand erosion. Positioning your products juxtaposed against value – remember, your customers and the consumer is once bitten and twice shy by now – will go a long way to making the case for your products. Your digital reputation and your customers’ must be spotless, because it is your reputation. So, move away from creating social pages and posting to meaningful digital strategies. Location strategies relative to how you sell should play a critical part. For example: if you’re selling an intra-oral camera, or gastric sleeves, you may want to share with your customers who else the in the area is using your technology via a mobile map application. The very least you ought to do is mobilize your websites to make it easier for your sales force and your clients to access your products and services.
4. Be a Category Creator – In Why It Pays to Be a Category Creator (Harvard Business Review, March 2013), the authors found that “category creators experience much faster growth and receive much higher valuations than companies bringing only incremental innovations to market.” Researchers found that category creators, while only 13% of the companies studied, accounted for 74% of the group’s growth. Consider the dental industry’s fore into sleep medicine. It was a blue ocean strategy, which opened up a new market for dentists and provided patients with yet different way to utilize and view their dentist. Whatever category you choose to create, and at the risk of overstating the obvious here, it has to be both ethical and make sense for the patient. So, be creative, you may surprise yourself.
It’s an exciting time to be in healthcare. Being nimble and entrepreneurial and taking advantage of selling into the current climate no matter size of your company is a virtue and highly accretive to growth in this environment. So, jump right in, the water is fine.