Learnings on Channels for modelH

We just wrapped up our 8th business building block sprint on Channels. In summary, we completed 2 objectives:

• What questions do we ask for the canvas regarding Channels?
• How do we treat the development and optimization of the Channels that help our Customer Segments find our Value Proposition?

Your Channel (communication, distribution, or service) is where your Value Proposition is delivered to your Customer Segments.  Channel development starts with understanding the Buyer’s Purchase Journey, defined by the specific steps a buyer takes while deciding to purchase a given Value Proposition. But healthcare business models must also consider which Channels are relevant to how a User actually “uses” a given Value Proposition. Finally, we’ll explore the effect that Key Influencers and Intermediaries have on a Channel’s outcome to achieve optimization.

Customers often use multiple Channels to decide upon and purchase (or consume) a given Value Propositions. Consumers have the expectation that retailers with multiple channels should have alignment across channels for both service and sales. Channel Threading is the intentional connection of multiple Channels with the understanding of how they will be used to complete an outcome for your Customer Segment.

Doing this well creates distribution channels that are linked together in a meaningful way and also enables healthcare companies to create personalized products and messaging. Market leaders in retail health first focus on helping consumers navigate through the maze of health options available. Market disrupters work to remove the maze altogether. As the maze is different for every individual, the most successful healthcare business models will know and understand their customers’ preferences for successful channel “navigation.”

Our canvas should help practitioners both:

1)     Design business models that optimize Channel mix based on Customer Segment preference, and

2)     Thread Channels together to create a meaningful purchase journey.

1^st – Questions to Ask on the Canvas for the Channels

What are the Questions that should be answered when developing Channels for a healthcare business model?

1. Through which Channels do your Customer Segments want to be reached?
2. Through which Channels are you touching your Customer Segments now?
3. Do your Customer Segments use multiple Channels, and if so how?
4. Which Channels work best for your target Customer Segments? How are you integrating your Channels with your Customer Segment routines?
5. Which Channels are most cost-efficient for your target Customer Segments?
6. Are there Intermediaries in your Channels?
7. How do you engage your Key Influencers into your Channels?

2^nd – How to Optimize and Thread Your Healthcare Channels

How do you design business models that optimize Channel mix based on Customer Segment and preference by threading them together to create a meaningful purchase journey? It is critical for healthcare business models to correctly use their multi-channel strategy. It is necessary to know your total traffic amount from each channel.  Moreover, you must be able to trace how consumer transactions take place – across multiple channels.  Most importantly, you need to make it as easy possible for the consumer to navigate where they need to go and convert.

Channel Threading is the intentional connection of multiple Channels with the understanding of how they will be used to complete an outcome for your Customer. It is tying together the touch points that exist today, as well as areas that are not being addressed but are desired by your Customer Segment. Furthermore, the modern customer uses multiple Channels to decide upon and purchase (or consume) a given Value Propositions. To do this well, it creates methods of distribution that are linked together in a meaningful way. This enables healthcare companies to create personalized products and messaging.

Channel Threading starts with understanding the consumer’s purchase journey. The purchase journey is comprised of the steps a customer takes in deciding to buy and use a given Value Proposition (product).  It involves the Channels in which the steps take place as well as the affect that Key Influencers and Intermediaries may have upon the outcome. However, healthcare it is very complex. There are two parts to the journey: the purchase and the use of the purchase. Both of these parts matter equally in healthcare business models, but, unfortunately, do not have equal treatment.  Traditionally, more time has been spent on the sale than on the use side of the equation.

Ultimately, the winning healthcare business models will not focus on helping consumers navigate through the maze of health options available but instead remove the maze altogether. As the maze is different for every individual, the most successful models will know who their customers are ahead of time and will understand their preferences.

Before You Begin

Keep in mind that you cannot be all things to all people. Increasingly complex consumer behavior is strategic to understand and address in your actual channel strategy. This strategy should stem from what your Customer Segment desires, instead of what you believe it needs. When you pick a channel, you must also pick an “EST” which creates a focused experience. For more on the theory of EST, I suggest you read Winning at Retail: Developing a Sustained Model for Retail Success by Willard Ander and Neil Z. Stern.  The upshot of this theory is that the best retail channel companies intentionally create a defined market position for themselves, and reinforce this position in the customer’s mind. In short, they dedicate themselves to being the best at one of the “EST” models, and then defend that advantage against the competition.

A Simple Plan

Basically, it is very simple to implement. First, pick which Customer Segments are most important to you. Then build what Channel(s) matters most to your customer. Put them in a priority list according to their needs and what is perceived as Value. Then craft an orchestrated Experience across the list.  Devise what adds value to your Value Proposition (both known and unknown) in an iterative fashion.

1. Building the appropriate channels for any business starts with identifying the jobs-to-be-done (JTBD) for each of the consumer purchase journey categories, or “bubbles” as shown above.
2. The next step is to identify all possible channels that the consumer can use to complete their JTBD. This includes channels inside and outside of your control.
3. After all possible channels are identified, consider the degree of fit for each selected channel: product and customer fit, profitability, goals and objectives, and sales goals.
4. By definition, a “hassle map” defines all of the actual steps that characterize the negative experiences of the customer.  For our work, we will use the term but understand that it does not necessarily equate to all negative experiences.  In this situation, we will define the Hassle Map as the “steps that characterize the various channel experiences of the customer in completing their JTBD.” The goal is to create the actual journey of the customer across all selected channels.
5. The next step is to create the desired “channel threads” from the representative gaps in the process. These threads show how the customer uses your channels in combination or sequence to complete their JTBD, planned or otherwise. The redesign requires accentuation of the existing positive experiences and improvement of those negative experiences that represent what is most appealing to the customer.  This minimum viable product approach to channel improvement is necessary because 1) there is a limited amount of work that can be accomplished at any given time, and 2) the customer’s needs and wants for a channel will change over time as they acclimate to the process (and like it). An example for this is the migration from retail banking to online banking.  This work also includes clearly stating what is being “left out of the process so that manual workarounds can be developed and communicated”.
6. The final task is to create a channel development plan.  This is in conjunction with the channel owners and other internal stakeholders, for the tasks needed to modify and/or link channels to optimize the consumer JTBD flow.

Build with the End in Mind

What happens when you Channel Thread without regards to good Experience design?  This is a key question. Watch this engaging video explains this concept.

In all seriousness, this is a funny video that does a good job of showing how multichannel retailing can work – although in this case, very poorly due to a bad customer experience. Your customers want and expect you to tie together their experiences across your channels (and others). Imagine ordering a pizza in the future and your health insurance premiums change with your toppings.

In Conclusion

There are three additional factors to consider when selecting your Channels and Channel mix: control, visibility and customer preference: Control – amount of control you have over the customer experience; Visibility – strength of potential to collect customer data; Customer preference – prioritizing options for direct or indirect channels.

Take time to consider any of these topics along with other relevant factors in the Channels block of your business model canvas. Regardless of whether your business model is aimed at Patients, Providers, Payers, and or Purveyors, you need to focus on properly defining your Channels, Channel mix and the threading of your Channels.   The goal is for the Customer Segment to successfully complete their purchase journey and realize your Value Proposition to its fullest.

What is Next?

Next up, we are going to do another doubleheader. We will examine Customer Relationships (1.9) and Customer Experience (1.10) simultaneously.  Hopefully, we can optimize making sense out of experience when juxtaposed with relationships.

Interested in what we are doing? Step up to the plate and get involved.

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To your health,

The Team at imagine.GO