Are You Ready for Consumer Direction?

In a new environment of consumer-directed care, social organisations will need to borrow some tools and techniques from commercial consumer businesses and adapt them  to the community environment, particularly in the disability and aged care sectors, writes strategy consultant Dale Renner.

The block funding era of social services has been like a steady wind blowing in one direction, driving all before it. With consumer-directed care, the wind is changing direction, and individual social organisations are trying to set their bearings and batten down the hatches for a more turbulent era.

Despite the uncertainties, the overall direction is clear: consumers will be able to choose their provider, manage their personal budgets, and, if all goes well, leverage competition to get the best value.

We will move from essentially a supply-driven system, to a demand-driven (but still financial constrained) one. Consumers and their advisors may be able to better match demand with supply, by choosing highest value suppliers, but also by managing demand.

This is a fundamental reorientation, with many new business processes and skills required. Most social organisations are not perfectly adapted to this environment, although many are quickly making headway.

What is becoming clear is that social organisations will need to borrow some tools and techniques from commercial consumer businesses, while adapting them for the social and community environment.

In working with clients on this process, I have developed a checklist of key strategies and business processes that are needed for success in a consumer-directed environment.

Many social organisations are evolving consumer-directed offerings that are aimed at those who will be subsidised by Government insurance or grant schemes (e.g. for Disability or Aged Care) but may also be attractive to un-subsidised full fee-paying customers.

As the consumer-focused techniques are very similar, it will increasingly make sense for social organisations to deliver both subsidised and full-fee services through one integrated consumer services system.

Here is a checklist with questions to help uncover areas that may need further development for your organisation:

• Customer profiles and segmentation strategy – Do you have clear profiles of customers, and understanding of what key characteristics separate them into cohesive groups (segments) with differing needs? – use these to better target service design and promotion

• Customer experience design / map – Is the end-to-end customer experience well-designed and integrated, from initial awareness of need right through to follow-up and ongoing service offers? Is there an acquisition and retention strategy? – use these to focus on ‘touchpoints’ of experience that increase perceived value and loyalty

• Digital self-service solution (including e-commerce) – Can you shift decision-making and even ‘co-production’ of services to consumers for empowerment and cost reduction? – use digital tools to engage, provide control and choice, and co-opt users to produce part of their own value

• Product offering and product packaging – Are your services ‘productised’ in that they are designed in discrete units, and packaged in ways that make purchase and budgeting predictable? – package services as products to make purchase easier and more predictable, and enable comparison

• Pricing strategy (including price differentiation where relevant) – What strategic position have you chosen, and what implications does this have for setting prices, and how do you charge differently for different offers or preferences? – initial competition in a new market often focuses on price as service differentiation is hard for consumers to understand

• Innovation, R&D and product development system (with floating funds for investing in growth opportunities) – Do you have a robust process that drives new growth opportunities and practical consumer-focused (not theoretical) innovation? – use innovation systems and skills to constantly identify growth opportunities, create IP and increase value to consumers

• Market research and ‘big' data – Have you trained staff to conduct ongoing research and have you defined the consumer data you need to collect to make key business decisions? – use a market research approach to complement existing social research to uncover new needs, test products and prices, and organise around what matters to consumers

• Growth options and growth strategy (geographic, market, product range, etc.) – Beyond the inevitable merger/acquisition discussions, do you have an organic growth strategy with investment behind it? – long term organic growth is hard to achieve, so a specific plan is required that sets goals for key executives

• Brand strategy – Is your brand and organisational reputation one that attracts consumers/clients and gains stakeholder support? Is it appealing/motivating, authentic and unique (differentiating)? – use a brand strategy to align marketing, advocacy and service behaviour around key points of difference

• Marketing communications strategy – Are you ready to invest in promoting the superiority of your services and products? How will you know what’s working? – social sector marketing has been focused on donors rather than consumers of services and has to shift – this involves new skills and spending patterns

These strategies and techniques, among others, can be used by social-purpose organisations to increase the value they deliver to individuals in need, increase ‘public’ social value, and also increase the financial sustainability of their organisation.

As Not for Profit organisations adopt more market-based techniques, there are also risks of misuse and over-enthusiastic marketing to vulnerable groups.

Social organisations may want to beef up ethical guidelines to apply to marketing, and deepen commitment to defining a clear purpose and a hierarchy (not a list) of values that will help frontline and marketing staff make judgments aligned with purpose and values.

As you set your course for this new era, it makes sense to catch the direction of the wind and learn how to sail in these new waters. To do better, we will all need to try new things, test them, and find out what works.

About the Author: Dale Renner is a former lawyer and management consultant who supports social purpose organisations with strategy, marketing and innovation advice and capability building. www.iconicconsulting.com.au  |  dale@iconicconsulting.com.au