I was speaking with the new head of marketing from an employee benefit vendor that markets a service relating to wellness/health care. This vendor is considering a direct to consumer marketing and PR campaign - a push-pull strategy whereby you create consumer demand for a product with the hopes of convincing the general population (consumers) to ask their HR department to implement the product. In this case, a wellness benefit.
Sounds like a great idea. Unfortunately, it will likely fail.
Push-pull marketing is not new to health care. The most visible example is the pharmaceutical industry. In 1985 the FDA announced that pharmaceutical companies could advertise directly to consumers. Since then, drug companies have spent billions marketing direct to consumers hoping we'll ask our Doctors to give us that great new drug. It works.
However, it is hard to find successful examples of push pull marketing in the B2B market of employee benefits. The reason is because it usually does not make financial sense. The closest example of push pull working in employee benefits is AFLAC, a worksite marketing company that sells supplemental insurance (e.g., accident/disability insurance).
The strategy works for AFLAC for a number of reasons. Here are four:
Now, back to the employee benefit vendor who sells a wellness benefit and wants to implement a direct to consumer push pull strategy. Here are four reasons why it will likely fail:
- As a worksite marketing company, AFLAC is allowed to market direct to employees (consumers) in their workplace on a voluntary, payroll-deduction basis. In other words, AFLAC is in control. They build demand (and brand) using national TV advertising (everyone knows the duck) and then AFLAC (or a broker representing them) arrives at your workplace to close the deal.
- AFLAC primarily targets the small business market (under 50 employees) which happens to employ most of America. If they only sold to large employers, the strategy would fail because they would spend more on advertising than they could hope to make in annual revenue.
- AFLAC typically works through benefit "brokers" allowing them to cost-effectively reach small businesses coast-to-coast. If they relied exclusively on a direct sales force, it would not make financial sense.
- When an employee signs up for the AFLAC insurance, they become a paying customer for years - it's an annuity. So AFLAC can afford to spend more per customer than if it was a one-time purchase.
To reach a significant number of consumers and convince even a small percentage to go to their HR department, you will likely need to touch the consumer 6+ times (lots of $$$ advertising). And even if you convince a large percentage of the general population to actually go to their HR department and ask for the benefit, the likelihood that HR would implement the benefit is near zero for the average company. It may work at Google who has tons of money to respond to the needs of millionaire employees, but it would not play out so well elsewhere.
- They sell only to large employers
- They have a small direct sales force and do not sell via brokers
- Their benefit is sold as a group benefit - not voluntary - and they have no real ability (or control) to sell direct to the employee at the workplace
- It's not an annuity. In other words, the consumer (employee) pays once for the service and then they are done.
Bottom line is it does not pencil out. Your cost per "lead" would exceed the revenue you would make from the employee - and the revenue is not even recurring.
I do not have the privilege of knowing the details of this company's strategy. So, in fairness to this firm, their strategy may indeed work – if they are also planning on making other business model changes. But generally speaking, push pull marketing does not work so well in the employee benefit world.
Posted by Mark Willaman
Labels: direct to consumer, marketing, push pull marketing