We just wrapped up our first business building block sprint on Customer Segments. I wanted to thank the modelH Community for the fantastic participation over the last 2 weeks. In summary, the sprint for Project 1.1 on Customer Segments completed 3 main objectives:
- A Revised Image for Customer Segments
- Customer Segmentation Models for Healthcare
- Questions to Ask on the Canvas for the Customer Segment Block
1st – A Revised Image for Customer Segments (Buyers and Users)
Through our canvas, we are asking all healthcare businesses to think downstream far enough to understand how they impact the patient and their care – or as we are calling it, participating in a sense of shared value. So even though a specific business model may have a Buyer who is not the actual healthcare end User, the business model does have an effect on one or all of the “value lenses” we have proposed:
- Improved consumer experience yielding an informed decision maker aligned to their risk and reward,
- Increased access to necessary care through an engaged delivery system, and
- Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model.
So we are modifying the canvas image itself to have 3 parts within the Customer Segment block.
a Buyer (the customer of the business),
a User (the person who will use the product or by-product of the business), and
an Intermediary (the person who filters, persuades, and affects User healthcare decisions).
When the User and Buyer are not the same, and they almost never are in healthcare, it splits elements of the business model into two (or more) paths. As an example, one User and one Buyer create two Relationships, two distribution strategies (Channels), two Value Propositions, etc.
We feel that our health model canvas in both form and function must enable practitioners to account for 1) the overall value created and 2) multiple paths to get there. So, along with the revised image, we are applying the following rules to the Customer Segment block.
- Users should always be considered an individual (consumer).
- Buyers can be the user, a business or a government.
- Users and Buyers have different driving motivations and thus different Value Propositions.
- Intermediaries act in conflict or benefit between the Value Proposition, Buyer, and the User.
2nd – Customer Segmentation Models for Healthcare
We also had some very detailed ideas submitted on segmentation models that can be used specifically for healthcare customers. I highly encourage you to read them, use it in your own work and give us feedback and case studies. In addition to the customer segmentation models put forward in the Osterwalder Model, the healthcare specific ones we came up with are listed below in alphabetical order:
Customer Segmentation by Archetype (Behaviors)
This looks at segmenting by different Archetype categories of people based on their needs, attitudes, and behaviors to healthcare decisions. Some of the defining elements are health behaviors and attitudes, the perceived control over health now and in the future, and individual preferences for seeking and receiving healthcare information. There are some excellent commercial models available.
Customer Segmentation by Life Condition (Health Status)
This looks at segmenting by the different health concerns that can affect us all as we age and seek to understand and assess our health status, and navigate a complicated and fragmented health marketplace. The “status” of health becomes more relevant to consumers once they have been diagnosed, so this model looks at both pre and post awareness of, and management of, a consumer’s health conditions. Life Conditions include segments such as high blood pressure, cholesterol, diabetes, etc.
In fact, Life Conditions are a actually better market indicator for how healthcare consumers will act rather than age. As an example, let’s compare music preferences. Seniors and 30 year olds rarely like the same music (unless it is Bruce Springsteen!) However, a 30 year old diabetic acts pretty much the same as a 65 year old diabetic. And correspondingly, a 65 year old “health nut” acts much closer to a 35 year old “health nut” than a 65 year old diabetic.
Customer Segmentation by Life Stage (Demographics)
This looks at segmenting by the major milestones each consumer reaches in life, such as birth, adolescence, young adulthood, adulthood, retirement, etc. With each of these Life Stages come significant healthcare decisions and the jobs-to-done associated within them. For example, the Life Stage for Becoming a Parent may involve the need to tackle multiple jobs-to-be-done such as getting pregnant, child birth, preparing the home environment, etc. action.
These milestones make for a natural way to define targeted value propositions. For example, seniors have very different healthcare needs than young adults who are starting a family. In fact, the three highest cost milestones in each person’s life are usually their early childhood (including birth), followed by when they have their own child, and then when they enter retirement through death.
Customer Segmentation by Life Style (Job-to-be-done – JTBD)
This approach is one that I developed nearly 4 years ago when I built a consumer health-focused ecommerce company called GuideWell. We decided to approach to a segmentation format based on Clayton Christianson’s concept of consumer jobs-to-be-done (JTBD). This is a non-traditional approach. Traditional segmentation puts a consumer into a single segment ‘bucket’. We realize that people are multi-faceted and segmenting them singularly leads to improper product market fit.
This looks at segmenting by each consumer’s JTBD at a specific place in time. For example, a physically fit individual may not want to have an extensive conversation about basic exercise principles, but may want to know a great deal (read exhaustive conversion) about better sleep. The same person has a different reaction to their different JTBD even though they are in the same Life Stage and Life Condition. Life Style segmentation is a way to look at people based on the tailored guidance they seek for the key activities they pursue. Companies that offer “Life Style” solutions seek to help consumers with their specific JTBD, such as “Look and Feel Younger,” “Get Ripped,” “Get Outside,” “Have a Better Smile,” or even “Go Green.”
The problem lies in making an educated guess on the consumer’s JTBD. This works well when your business model’s value proposition is designed to bring a tailored set of goods to the consumer from everything that is available, but narrowed down based on their specific JTBDs.
3rd – Questions to Ask on the Canvas for the Customer Segment Block
We also defined the questions that should be added to our business model canvas for helping practitioners define their customer segments.
What are the Questions that should be answered when developing Customer Segments for a healthcare business model?
In addition to the questions asked in Osterwalder’s model:
- For whom are we creating value?
- Who are our most important customers?
- What type of market is this business model: Mass Market, Niche Market, Segmented, Diversified, Multi-sided Platform?
We added the following as well:
- Is the User of our product, or its derivative, also the Buyer of the product?
- What is the relationship between the Buyer and the User?
- What nomenclature does the market use to define the User in this business model: Patient, Provider, Member, Insurers, Other?
- How do you define a lead (for your Buyers)?
- How do you define a customer (for your Buyers)?
- What model will be used to distinguish between various User types (customer segments): Archetype (Behaviors), Life Condition (Health Status), Life Style (Job-to-be-done), Life Stage (Demographics)?
- What is the total addressable market size (TAM), or the revenue opportunity available for the value proposition?
- What is the serviceable addressable market size (SAM), or the customers that can be reached out of the total addressable market (TAM)?
- What is the target market size (TM), or the size of the initial focus for your minimum viable product release of your value proposition?
What is Next?
Next up we are going to look at the Intermediaries who filter, persuade, and affect User healthcare decisions.
Interested in what we are doing? Step up to the plate an get involved.
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To your health,
The Team at imagine.GO